CDC Group Seeks to Double Africa Investments With Energy Bet

LAGOS (Capital Markets in Africa)  – CDC Group to invest 2 billion pounds ($2.6 billion) in African businesses over the next two years as the U.K.-owned investor looks to double its portfolio on the continent.

This is in addition to $400 million of deals already signed off, CDC Group Chief Executive Officer Nick O’Donohoe said in a statement. Those approved transactions include a $100 million trade-finance loan to Johannesburg-based Absa Group Ltd. and an agreement to provide $100 million to Commercial International Bank Egypt SAE to support small- and medium-sized businesses as well as micro-finance enterprises, it said.

The new funding aims to provide banks on the continent with additional liquidity to support entrepreneurs and renewable-energy projects. CDC is responsible for more than 10% of all capital invested through Africa-focused private-equity funds and has investments in about 700 African companies. The new drive comes as the U.K. looks for new trading partners as its exit from the European Union draws closer.

 “The commitments will accelerate the roll-out of solar power and other renewable technologies and support the growth of countless small and medium enterprises — the bedrock of any healthy economy,” said O’Donohoe. “We are looking at solar investment across the spectrum,” he said by phone.

While Africa is home to eight of the world’s 15 fastest-growing economies, the continent receives less than 4% of foreign direct investment, according to CDC, while countries from South Africa to Nigeria suffer from a lack of reliable electricity supplies.

Equity Stakes
One of its recent African deals includes a $180 million equity investment in Strive Masiyiwa’s Liquid Telecommunications Ltd. to accelerate the installation of fiber infrastructure across the continent. It also injected $92 million into the Nubian Suns project in Egypt, which is part of the largest solar-power installations in the world, CDC said.

Half of the 2 billion-pounds of investments will be allocated to banks and funds, O’Donohoe said. The balance will go toward deals like Liquid Telecoms’ purchase and the $200 million minority stake it took in Casablanca-based BMCE Bank of Africa, he said.

It will also consider investments in the agricultural supply and processing industries, as well as partnerships with primary producers, especially “high-value crops that can also be exported such, as macadamia nuts and cashews.”