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The Norwegian Investment Fund for Developing Countries (Norfund) along with CDC and UK’s finance institution DFI have entered a new partnership to add at least 5,000MW of power to Africa’s power grid in the next 10 years, and eventually acquire Globeleq Africa
CDC has identified power in Africa as a “priority sector” and early-stage development in the area with the need for “patient and catalytic investment”.
Through the partnership, Norfund is expected to acquire a minority stake in Globeleq Africa from Actis Infrastructure 2 Fund, for a cash consideration of nearly US$225mn, stated Norfund officials. CDC, which holds a major indirect investment in Globeleq Africa via the Actis fund, will concurrently set aside a small part of its holding for Norfund and transfer the remaining majority stake in the new venture.
Accordingly, the new agreement would eventually result in the direct ownership of Globeleq Africa by Norfund and CDC at 30 per cent and 70 per cent shareholdings respectively, once it receives approvals from governments and third parties, added Norfund.
Diana Noble, chief executive of CDC, said, “As the original founder of Globeleq in 2002, we are delighted to partner with Norfund in this new chapter for the business. Power generation is a priority for Africa, given how vital it is for long-term economic growth and job creation. Early stage development is the bottleneck and the market desperately needs a committed, credible, expert developer of scale with a long-term investment horizon. Under DFI ownership, Norfund and CDC have a vision of Globeleq Africa where it will support the development of significant new generating capacity over the next decade, and continue to run its existing assets efficiently, thereby bringing reliable power to many millions of individuals, families and businesses across Africa.”
Kjell Roland, chief executive of Norfund added that the investment was a strategically important one for Norfund and established a platform for Norfund and CDC to expand power production in Africa, based on the combination of financial capacity, industrial expertise, local partnerships and collaboration with authorities. The investment would further expand Norfund’s presence in African power markets and widen technology choice.
Currently, only 32 per cent of the population in sub-Saharan Africa has access to electricity; roughly at the same stage that USA was in 1920 and the UK in 1929, said Norfund. In addition, progress in electricity generation is also slow.
Under the Norfund-CDC partnership, Globeleq will pursue early-stage and development opportunities in sub-Saharan Africa. Norfund and CDC aim to bring in more projects to the construction phase and expand access to reliable electricity in the region.