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1 Frontier Markets Fund Managers Orli Arav Senior Investment Advisor.

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Presentation on theme: "1 Frontier Markets Fund Managers Orli Arav Senior Investment Advisor."— Presentation transcript:

1 1 Frontier Markets Fund Managers Orli Arav Senior Investment Advisor

2 2 Private Infrastructure Development Group - PIDG PIDG U.K. SWEDEN NETHERLANDS SWITZERLAND AUSTRIA WBG GUARANTCO TAF EAIF ASPIFF INFRACO FMFM Management Agreement Management Agreement will be signed soon

3 3 - FMFM

4 4 Frontier Markets Fund Mangers - FMFM A Fund Management Team Managing transactions for – Emerging Africa Infrastructure Fund; and – GuarantCo A group of multi nationals fluent in English; French; Dutch; Italian and Russian Based in London

5 5 - EAIF

6 6 Emerging Africa Infrastructure Fund - EAIF First dedicated debt fund for sub-Saharan Africa Size: US$305 million, refinanced to US$360 at the end of 2006 Original sponsor: UK Government – DFID 3 other European Governments joined (Sweden, Netherland, Swiss) Debt from three development finance institutions and two private sector international banks Public/private sector partnership Donor aid funds leveraged private sector capital for development purposes First multi-donor initiative by Private Infrastructure Development Group (PIDG)

7 7 EAIF – investment policy Lend to private sector owned, managed and controlled entities with infrastructure sector focus – Power – Transport – Telecoms – Water – Manufacturers of components of infrastructure e.g. cement – Infrastructure within mining, agribusiness projects Sub-Saharan Africa focus excluding Mauritius Investment Size:US$ million Tenor: up to 15 years Instruments: Senior and Mezzanine Debt (possibly with equity features) Dose not require a Political Risk Insurance (PRI)

8 8 EAIF - sample transactions Project:Ethiopian Airlines Sector:Transport Country: Ethiopia Description and Financing Parameters: – this is a unique project, EAIF has committed a US$ 36 million loan to the airline expansion project. – Ethiopian Airlines is a 100% publicly-owned entity often held up as a model business for other airlines in Africa. – The EAIF financing is bridging a crucial gap enabling the airline to purchase additional, new aircraft at a cost of US$ 460 million. Project:Celtel Nigeria Sector:Telecoms Country:Nigeria Description and Financing Parameters: – EAIF has committed a US$ 35 million loan to Celtel Nigeria, the third largest mobile operator in Nigeria. – The financing is part of a US$ 350 million financing package for the expansion and upgrading of their entire network.

9 9 EAIF - sample transactions (contd) Project:Moma Sector:Mining Country:Mozambique Description and Financing Parameters: – The developers of this titanium mineral sands project approached EAIF as a lender of last resort. – Located in one of the most under- developed regions of Mozambique, the US$ 413 million project is the second lowest cost producer of titanium in the world. – EAIF committed US$ 24.5 million of senior and subordinate debt (total debt package of US$270 m – illion) as Senior and Subordinated Lender. The project received deal of year awards from both the Mining Journal and Project Finance International publications. Project:Mnazi Bay Energy Sector:Power Country:Tanzania Description and Financing Parameters: EAIF arranged US$ 35 million – This is the first integrated utility project in Sub Saharan Africa, the project includes: – the development of an existing natural gas reserve; – the construction, operation and maintenance of a pipeline and gas processing facilities; – the installation, construction, operation and maintenance of a power plant; – the upgrade, operation and maintenance of a transmission and distribution system

10 10

11 11 GuarantCo Credit enhancement of local currency debt issuance by the private, municipal and Parastatal infrastructure sectors in lower income countries Covers similar infrastructure sectors to EAIF Operates globally

12 12 GuarantCo offers Guarantees covering default risk on underlying debt service - partial credit guarantees Guarantees covering default risk due to specific events - partial risk guarantees Cover for senior, mezzanine or sub debt; maturity, coupon or principal strips, carbon credits Other methods of risk transference e.g. insurance / reinsurance or CDS / derivatives Preference for risk sharing (defined on a case-by-case basis) Acceptance of certain local currency risks

13 13 GuarntCo - sample transactions Celtel Kenya Partial Credit Guarantee (75%) of a $50m equivalent 5 year bond issue for network expansion. Only the third commercial bond issued in Kenya and largest at that time – Closed Dec 05. – Refinanced in Feb 07 without credit enhancement Celtel Tchad 100% guarantee of $14m equivalent bank loan. Local lenders, Afriland First Bank and BDEAC, also lent $20m equivalent without guarantee – Closed April 2007 – Network expansion to more rural areas, which will aid both local communities and the significant nomadic population in Chad


15 15 We can provide TAF funding TAF provides grant funding to support the following activities; Infrastructure development strategies – studies intended to guide governments on options for financing of infrastructure Policy, regulatory and institutional reforms – advice and training on the design and implementation of specific reforms aimed at facilitating infrastructure financing by the private sector Pioneering or pilot transactions – support for the design and implementation of particular projects or transactions that are pioneering in some important respect or reflect some measure of innovation Capacity building – activities aimed at building government capacity and/or the capacity of local capital markets, financial institutions, and/or quasi-public enterprises

16 16 Infrastructure projects financed or in the process of financing by FMFM (*) * In Sub Saharan Africa

17 17 An example of companies we worked and are working with

18 18 Contact details Orli Arav Senior Investment Adviser Frontier Markets Fund Managers T: +44 (0) M: +44 (0) E:

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