PRIVATE SECTOR SYNDICATION AND CO-FINANCING

October 2018

Private Sector Syndication

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Light up and power Africa

Objective: Unlock the

continent’s energy

potential in order to drive

much-needed

industrialization

Opportunity:~10.5million

MW of untapped power

potential.

Feed AfricaObjective: Transform

agriculture to increase

productivity, lower food

prices, enhance food security,

revive rural areas and create

jobs for Africans

Opportunity: Between

USD$32-40B annual

investment deficit in agro-

processing industry.

Industrialize Africa

Objective: Lead other

partners in the process of

industrializing Africa and

developing the private sector

to create wealth from natural

assets .

Opportunity: ~USD$56B

investment to be mobilized

over 10yrs.

Integrate AfricaObjective: Address barriers,

create regional value chains

and leverage

complementarities in order to

tap the continent’s huge

market potential

Opportunity: ~15% intra-

Africa trade vs +48% in

developing Asia.

Improve the quality of life for the people of Africa

Develop innovative flagship

programs to open up

opportunities for youth

employment, improve access to

basic services and create

economic opportunities for the

extreme poor

Opportunity: ~USD$5B

investment to be mobilized over

10yrs

Syndication and Co-financing opportunities drivers: The High 5s

High 5sInvestment Needs

USD 170 billion

Syndication & Co-Financing Objectives in the Private Sector

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In light of the H5 investment needs, historical portfolio mix and current capital resources, its imperative for

AfDB to crowd-in other private sector-financing partners to achieve Africa’s funding needs.

Need for more private sector crowd funding because of the changing market( ie. Regulation, risk capital

requirements for banks)

Other measures to free-up internal funding capacity and liquidity to fund the H5s are being spearheaded by other

teams i.e. balance sheet optimization, fine tuning products etc.

Loan syndication is focused on the private sector medium-term and long-term lending in the above areas (Loans

from 5 years onwards)

Syndications is promoting the Bank’s role as a DFI, its Preferred Creditor Status and its knowledge to be a leading

debt arranger in Africa in order to bring in new investors

Syndication & Co-Financing Objectives in the Private Sector

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Sectors and Eligible Companies

Sectors in the syndication pipeline are generally infrastructure projects such as transportation and power; andenvironmental and agricultural projects

Financed companies and projects are at various levels: for corporates from start-up/early stage to establishedentities; for projects from greenfield/ construction to brownfield

Commercial viability is a key issue to take a deal to syndicated loan market. Financial projections mustshow profitable turnover to cover companies’ financial obligations

All projects must meet the Bank’s environmental and social requirements

All projects will go through Due Diligence processes covering environmental, legal, technological, socialaspects, etc.

The Bank’s loans can be up to 33% of the total project costs

Traditional loan portfolio distribution

Traditional loan portfolio distribution

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~80% of portfolio has been sovereign lending historically however, the Bank is targeting to increase private sector

lending.

Syndications Role

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When the Syndication Team gets involved

As soon as the Bank’s sector teams have obtained a Mandated Lead Manager position from the borrower

allowing the Syndication Team to start its tasks

Syndication Team will start sound-out commercial investors’ for expected appetite, pricing levels and deal

structures to assist the Banking team in its project structuring process to have a bankable deal

Syndication Team will sell the deal to other lenders (primary or secondary market)

Who are our potential co-financiers

– Commercial banks

– Local banks as parallel lenders

– DFIs as parallel lenders

– Various funds (internally or externally managed)

– Private insurers

Loan Structure on Offer: Parallel Financing

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Borrower

AfDB Loan Parallel Loan(s)

Each lender or financing group of lenders enters into direct contracts with the Borrower

Parallel lenders do not share Preferred Creditor Status

Structure to be used when working with:

– Local banks as parallel lenders

– DFIs to lend under parallel facility agreements under a Common Terms Agreement

Loan Structures on Offer: A/B Loans – AfDB as Lender of Record

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B Loan Participants

BorrowerAfDB

Lender of Record

A/B Loan Agreement

B Loan Participation Agreement

One loan agreement, AfDB is lender of record for entire A/B loan

AfDB commits only to the A Loan portion

B Loan participant commit only to the B Loan portion

B Loan Participation Agreement transfers all risks to B lender

B lenders share Preferred Creditor Status

B Loan Participants

Other co-financing structures

Co-guarantees

Unfunded risk participation

Secondary loan and equity sale downs

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AfDB’s value proposition to co-financing partners

AfDB’s strong market and borrower credit knowledge :

– Extensive knowledge of the African market with boots on the ground- 41 offices across the continent.

– Good knowledge of borrower credit( especially for repeat borrowers)

AfDB’s private sector transactions:

– Done on commercial terms

– All risk will be shared equally with participants

– Within its development banking role the Bank can consider to take longer loan tenors than commercial banks in B loans

Costs and risk sharing:

– Shared technical, environmental, and financial due diligence.

– Benefit from AFDB’s loan administration, project implementation and monitoring expertise.

Access to AfDB’s projects pipeline

– Ready access to AFDB’s pipeline of pre-screened projects across different industries.

Benefits of the AfDB’s Preferred Creditor Status(for A/B loan structures):

– B loans are not subject to moratoria, rescheduling or restrictions on convertibility or transferability of hard currency

– AfDB is Lender of Record and B-loan participants will benefit from PCS

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AfDB Participation Benefits to the borrower

Benefits to Borrower

“A stamp of approval”. Deal has gone through AfDB’s detailed credit processes.

Cost and time savings- joint due diligence and single credit agreements reduce the transaction costs to the borrower.

Additional financing resources and better loan terms especially for borrowers outside the commercial banks’ risk

appetite ie SMEs and borrowers in fragile states.

AfDB’s PCS, knowledge and experience in its operating countries assists to find loans participants to provide longer

loan tenors

Introduces new banking and investor relationships

AfDB involvement introduces international environmental and social requirements which are increasingly key

concerns for loan providers

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Co-financing Project Outlook

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Fund Type Description

TRANSPORT Cote d’Ivoire, South-Africa

POWER Nigeria, Egypt, Mauritius, Cameroon, Senegal

AGRICULTURE Ghana

• AfDB EUR 115m A-Loan

• Triodos EUR 5.5m B-Loan

• AfDB EUR 20m Sr. Loan / Ekf

Euros 20mm Gtee

• Proparco Eur 50m Sr. Loan

• FMO Eur 35m Sr. Loan)

• PTA Bank EUR 10m Sr. Loan

• DEG EUR 20m Sub Loan

• AfDB EUR 5m Sub Loan

• EADB EUR 5m Sub Loan

• PTA Bank EUR 10m Sub Loan

LAKE TURKANA

EUR 275 Million

A-Loan USD 10mm

B-Loan

• Bank of China USD 150m

• BTMU USD150m

• Caixa Bank USD 100m

• Citi USD 50m

• HSBC USD 100m

• JPMorgan USD 115m

• KFW-Ipex Bank US$100m

• Siemens Financial USD 50m

• StanChart Bank US$150m

ESKOM

USD 965 Million

A-Loan AfDB – ZAR 2.703Bn

B-Loan

• Bank of China USD 90m

• BTMU USD 70m

• SMBC USD 110m

• Mizuho USD 90m

• HSBC USD 50m

TRANSNET

ZAR 2.703 Billion

USD 410 Million

Crowding-in resources through Syndication & Co-financing

Co-financing activities to be further scaled-up and

mainstreamed to improve capital efficiency

Preferred Creditor Status to benefit

commercial lenders

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What We Do

One stop shop for all sovereign co-financing facilities managed by the Bank and a Shared services platform providing the

following services:

Contracts Management,

Management information system

Financial management and reporting

Communication

Business Development

Lean team of dedicated partner liaison/co-financing coordinators for all co-financing facilities

Enhanced co-financing pipeline and portfolio management

Public Co-financing

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Fund Type Description Use of Available Resources Available Resources

Accelerated Co-

Financing Facility

for Africa (ACFA)

Co-financing agreement with

Japan International Cooperation

Agency (JICA) under the

Enhanced Private Sector

Assistance Initiative.

Joint / Parallel co-financing for

selected African Countries on

comparable or better terms.

USD 0.75 Billion for EPSA

III (2017 to 2019)

Africa Growing

Together Fund

(AGTF)

Special Fund with Foreign

exchange reserves from the

People’s Bank of China.

Joint co-financing for the Bank

Sovereign and Non-Sovereign

projects (80/20 split).

USD 1.8 Billion, including

USD 0.4 for non-sovereign

operations

EU- Africa

Investment Platform

(AIP)

Investment Platform with the

European Union

Blending finance: combination of

EU grants with loans or equity

from public and private

financiers, including the Bank.

Over EUR 490 million

(mobilized)

Public Co-financing – flagship facilities

Syndications & Co-Financing Contacts:

Contact points:

Syndications, co-financing (private)

Xavier Rollat

(x.rollat@afdb.org)

Public co-financing (trust funds)

Peter Ide

(p.ide@afdb.org)

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