The African Development Bank (AfDB), along with some partners across the globe, has announced the securing of $1bn to enable investment in infrastructure development across the African continent, including Nigeria.
The announcement, which was made in Ottawa, Canada, according to a statement made available to our correspondent by the AfDB, listed the partners in the multi-level securitisation to include the European Commission, Mariner Investment Group, LLC, Africa50 and Mizuho International Plc.
The portfolio tagged: Room2Run, is $1bn synthetic securitisation corresponding to a portfolio of seasoned pan-African credit risk.
According to the bank, Room2Run is the first-ever portfolio synthetic securitisation between a multi-lateral development bank and private sector investors, pioneering the use of securitisation and credit risk transfer technology to a new and previously unexplored segment of the financial markets.
Structured as a synthetic securitisation by Mizuho International, Room2Run transfers the multi-level credit risk on a portfolio of approximately 50 loans from among the AfDB’s non-sovereign lending book, including power, transportation, financial sector and manufacturing assets.
The portfolio spans the continent with exposure to borrowers in North Africa, West Africa, Central Africa, East Africa and Southern Africa.
Mariner, the global alternative asset manager and a majority owned subsidiary of ORIX USA, is the lead investor in the transaction through its International Infrastructure Finance Company II Fund.
Africa50, the pan-African infrastructure investment platform, on the other hand, is investing alongside Mariner in the private sector tranche. Additional credit protection is being provided by the European Commission’s European Fund for Sustainable Development in the form of a senior mezzanine guarantee, the statement said.
On the fund, the President, AfDB Group, Akinwumi Adesina, said, “Room2Run gives us fresh resources to invest in the projects Africans need most. Africa has the most promise, the greatest natural resources and the world’s youngest population. But we also have the world’s most persistent infrastructure deficits.
“The African Development Bank has the strategy to address these infrastructure finance gaps and Room2Run gives us the capacity to make it happen.”
Structured as an impact investment, Room2Run is designed to enable the bank to increase lending in support of its mission to spur sustainable economic development and social progress.
Credit: Punch Newspaper