Egypt has approved a $100 million commitment to Africa50 Infrastructure Fund, becoming the latest member of the group of 15 development institutions and national governments who have made commitments totaling $600 million, according to website Amwal Al Ghad, to the African Development Bank (AfDB) initiative so far.
The AfDB is looking to attract $3 billion in initial equity capital for the fund to help build credibility with the three broad groups of investors – African sovereign nations, institutional investors such as pension funds and sovereign wealth funds as well as the AfDB itself and other development finance institutions – before scaling the fund to $10 billion. The AfDB estimates that the fund will need $10 billion in equity before it can attract the total of $100 billion from local and global it seeks.
Africa50 is being structured as a commercially-operated but developmentally-oriented investment fund that, while legally independent, will complement the existing DFIs investing in Africa. Operational decisions will be in the hands of technically proficient investment and operational teams who will be made available to infrastructure projects from an early stage of development, sharing the costs and recovering its funding at financial close or through a carried interest in the project. Bridge equity, senior secured loans, refinancing and risk mitigation will be used to encourage investment in infrastructure financing.
The AfDB said that, depending on funding needs and the project pipeline, Africa50 will augment its financial capacity by raising debt in the international capital markets.