AfDB approves US$50mn investment in CEC Africa Investments

Lagos, Nigeria (Capital Markets in Africa):- The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, April 29, 2015, a USD 50 million investment in CEC Africa Investments Limited, a multinational power company headquartered in Nigeria and Zambia. CEC Africa (CECA) seeks to acquire and develop distribution and transmission assets and complementary greenfield generation projects throughout Sub-Saharan Africa. By investing across the energy value chain (generation, transmission, and distribution), CECA aims to reduce electricity losses while improving the overall economics in Africa’s power sector.

CECA has invested in two operating companies in Nigeria: Abuja Electricity Distribution Company and North South Power, which holds a 30-year concession on the 600 MW Shiroro Hydro Power Plant, both acquired during the recent Nigerian Power Sector Privatization Program. In addition, CECA has a number of greenfield power projects under active development in Southern and Western Africa, as well as a reserve pipeline spanning Eastern and Central Africa. Through these investments, CECA aims to become one of Africa’s leading power utilities, thereby catalyzing additional private sector participation in its energy markets.

To deliver on its growth strategy, CECA is targeting a capitalization of USD 500 million within the next 3 to 5 years. Thus far, CECA has been capitalized with assets in excess of USD 100 million by CEC Plc, a publicly-traded private utility with a 50-year history in Zambia and the DRC and a consistent track record of profitability. A number of other investors have already been identified by CECA and it is expected that a first closing of USD 150 million will be reached by third quarter of 2015.

Through its investment, the African Development Bank is acting as anchor investor and strategic partner, helping to shape CECA’s policies and strategies, while catalyzing additional private sector funding into Africa’s power sector. The operation is aligned with the Bank’s Ten Year Strategy, as it promotes: infrastructure development, regional economic integration, private sector development, governance and accountability, as well as skills and technology development.

“By supporting an indigenous power developer (CECA), the Bank is helping create a pool of pan-African investors besides assisting in mobilizing the necessary capital to increase access to energy in Africa,” said AfDB President, Donald Kaberuka.

CECA represents AfDB’s first equity investment into a power company with interests across Africa. The investment has been structured as part direct equity and part convertible debt, which demonstrates the ongoing financial innovation undertaken by the African Development Bank when it comes to supporting infrastructure development in Africa.