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Changing the Game for Africa Mobilizing Institutional Investment in Africa Stockholm, 22th October 2014 Important Notice This confidential presentation (this “Presentation”) is being provided to prospective investors for information purposes only and is not intended to be, and prospective investors must not take it to be, the sole basis for an investment decision. The information set forth in this Presentation is given in summary form and does not purport to be complete. Prospective investors should not construe the contents of this Presentation to be investment, legal or tax advice. This Presentation has been furnished on a strictly confidential basis for the information of the person to whom it has been delivered and each such person, by accepting delivery of this Presentation, agrees not to divulge the contents hereof to any third party. Each person accepting this document hereby agrees to return it to the African Development Bank (“AfDB”) promptly following any request by the AfDB. The market analysis and projections presented in this Presentation represent the subjective views of the AfDB. Current estimates of Africa50’s future performance are based on a number of assumptions that AfDB believes are reasonable, but there can be no assurance that such estimates are correct or that Africa50’s investment objectives will be achieved. The projections included herein have been provided to assist prospective investors in evaluating an investment in Africa50, but should not be relied upon as a representation of future financial results. The information supplied herein is for illustrative purposes only and is not necessarily indicative of future results of Africa50 or its investments. Before acting on any information contained in this Presentation you should consider the appropriateness of the information having regard to these matters, any relevant offering document and in particular, you should seek independent financial advice. 2 Track Record of AfDB Private Sector Infrastructure Investments PPP or Private Infrastructure Investments between 2006 and 2014 49 projects delivered USD 3.1 billion invested USD 4.6 billion syndicated Facilitated USD 32 billion worth of PPP and Private Sector Projects Acted as Mandated Lead Arranger on 10 Projects 3 Not just a financier Leading the way from beginning to end ADB takes the …for a wide range of responsibilities… lead role in: ` ` ` Project structuring Project coordination Project financing Early involvement to contribute to project preparation As needed, bring in new partners Ensure quality and fairness of project contracts Assist Project Sponsors in coordinating all parties Work “behind the scene” to resolve problems Leverage on strategic partnership with Governments Play a lead role in the due diligence processes Mobilise and coordinate debt (and equity) financing Coordinate preparation of financing documentation Driving the transaction to Financial Close …to ensure that the transaction is: ` ` ` Bankable and sustainable… …Continuously moving forward… …Fully financed 4 4 Africa is on the Move Emerging as an Economic Success Story Today US$2.0 trillion Collective GDP in 2013 Africa’s Population 2013 Population in Urban Areas 2013 Tomorrow 1.1 billion 38% Consumer Spending 2013 US$ 1tr Collective GDP in 2050 US$5.5 trillion US$ 4.75tr 2.4 billion Africa’s Population 2050 60% Population In Urban Areas 2050 Consumer Spending 2050 5 African Infrastructure Market Market Opportunity Innovative Solution Africa50 6 African Infrastructure Market What is needed? PIDA Total Financing Required Size of funding requirement to finance PIDA and Project Development $68 billion Development Capital Required $2.5 billion per annum for 5 years PPF $80 m What is Africa50? A “One-Stop-Shop” Approach Project Development Company Providing steady deal flow of well-structured Projects Project Finance Company Sound investments generating commercial returns Africa50 will operate across the project life cycle through two separate companies each with dedicated investor groups 8 What is Africa50? A Capital Base at Sufficient Scale Paid-in Capital of $3billion Single “A” rating target Leverage 2-3 times capital reaching up to $10billion Project Development Capital of $500m INFRASTRUCTURE INVESTMENT OPPORTUNITY $100 Billion 9 What is Africa50? A New DNA, Flexible and Efficient A Corporation - Commercial Structure Autonomous - Own Rules & Procedures Independent - Legally & Financially Independent Capital Structure - A, B & C Shares A TRUE PUBLIC PRIVATE PARTNERSHIP 10 Commercial Attractiveness Long Term and Robust Returns Project Development Business Line Project Finance Business Line • Close end fund structure with a 10-year lifespan • Failure rate at 30% with stop loss mechanism • Strong returns from successful projects • Investor IRR of 15-16% • Open-end structure • Bridge financing and senior debt as the two main instruments • Project selection as an essential success factor • Investor ROE of 8% over a 15year period TRIPLE BOTTOM LINE Financial Return & Development Impact Business Opportunities 11 Accelerated Implementation Strong African Commitment African Development Bank Cornerstone Investor Project Development Company Seed investment of USD100 million over 3 to 4 years Project Finance Company Seed Investment of up to USD500 million in tranches AFRICAN GOVERNMENTS Initial Expressions of Interest USD650 million 12 How is Africa50 Governed? Corporate Structure Africa50 Shareholders Board Committees Board of Directors Executive Committees New Investment Committee Investment Committee CEO Nomination & Compensation Committee Portfolio Management Committee Management Team Audit & Risk Committee Risk and Compliance Management Committee 13 A Robust Pipeline Solid framework for Project Selection and Screening PROJECT SCREENING SELECTION CRITERIA 433 projects in PIDA-PAP 294 active 83 at concept stage Commercially viable Regional & national transformational projects Economical viable, E&S sustainable 13 short-term opportunities Taking Projects from Feasibility to Bankable and Operations14 A Robust Pipeline Transforming Africa 2014 -2015: 8 projects 2016 -2020: 21 projects Investing Investing USD1 billion USD15 billion Facilitating Project Value USD3 billion USD47 billion Facilitating Project Value 15 African Infrastructure Market Robust, Safe and Steady Returns AN ATTRACTIVE ASSET CLASS Secured cash flows backed by contractual agreements Long term investment horizons Responsible investments for institutional investors Historically, well-structured projects have generated returns of 16-18% IRR in Africa 16 African Infrastructure Market Low Default Rates Africa 138 1 0.7% 1 0.7% 17 Thank You Tas Anvaripour CEO Africa50 [email protected]