The African Development Bank (AfDB) has invested $50 million investments in CEC Africa Investments Limited, a multinational power company headquartered in Nigeria and Zambia.
According to the pan-African development bank, it approved the facility to enable CEC Africa (CECA) acquire and develop distribution and transmission assets and complementary greenfield generation
projects throughout Sub-Saharan Africa.
It disclosed that the company through its investments in the energy value chain (generation, transmission, and distribution), intends 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.
The AFDB in a statement said through these investments, CECA aims to become one of Africa’s leading power utilities, thereby catalysing additional private sector participation in its energy markets.
It added in a bid to deliver on its growth strategy, CECA is targeting a capitalization of $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,” it noted.
In this deal, the AFDB is acting as an 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 bank explained that the CECA’s 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, adding that the investment has been structured as part direct equity and part convertible debt, which demonstrates the on-going financial innovation undertaken by the AFDB when it comes to supporting infrastructure development in Africa