AFC raises $150 million from maiden sukuk to finance infrastructure projects

24 Jan 2017
Financial Nigeria


AFC said the Sukuk issuance would help to diversify the organization’s funding sources as it seeks to promote economic growth in Africa.

Andrew Alli, President and CEO, Africa Finance Corporation

The Africa Finance Corporation announced today that it has raised $150 million from its maiden Sukuk issuance to finance infrastructure projects across the continent. The Lagos-based multilateral lender said the Sukuk issuance would help to diversify the organization’s funding sources as it seeks to promote economic growth in Africa.

“The core values of Islamic finance, the need to invest ethically in assets that have a tangible positive social impact, made a Sukuk issuance a natural choice for us,” said Andrew Alli, President and CEO of AFC. "We offer global investors the chance to be involved in high-impact infrastructure projects that not only promote social and economic development across Africa but also generate economic returns for our investors.”

The Sukuk has a three-year tenor and will mature on January 24th, 2020. Emirates NBD Capital acted as the sole global coordinator on the issuance with the Mitsubishi UFJ Financial Group (MUFG) and Rand Merchant Bank acting as joint book runners and joint lead managers. The Murabaha Sukuk has been awarded an A3 senior unsecured rating by Moody's Investors Service.

The AFC said it initially sought to raise $100 million during the issuance, but increased the offering to $150 million owing to high demand from investors. The final book order for the offering closed at about $230 million. The corporation claims that the Sukuk issuance is the first of such transactions in 2017 and the first to be issued by an African supranational entity.

According to the AFC, the Sukuk issuance is the lender’s second foray into Islamic finance. In 2015, the corporation said it accepted a $50 million 15-year funding line from the Islamic Development Bank (IDB) to finance Islamic finance-compliant projects located across the numerous African IDB member-countries.

“Emirates NBD Capital is delighted to have supported the inaugural $150 million 3-year Sukuk issuance,” said Ahmed Al Qassim, CEO of Emirates NBD Capital. “The successful completion of the transaction is a testament to AFC’s standing with the international investor community and AFC’s commitment to develop new sources of funding.”

With the latest Sukuk offering, the AFC said it has further diversified its funding base, having raised funding from sources in different markets around the world. In 2016, the lender said it raised 100 Swiss Francs (CHF) via its debut Swiss Franc-denominated three-year bond and accepted a $150 million 15-year loan facility from KfW, the German development bank. Furthermore, the AFC said it issued a $750 million 5-year international bond in 2015, which was oversubscribed with orders of up to $4.7 billion from investors in Asia, Europe, Middle East and the United States.

“This Sukuk represents a milestone in our financing activities, a milestone that will enable us to further diversify our funding sources, to build new relationships with key investors in international markets and help us diversify our portfolio of projects to continue delivering real impact across the continent,” Alli said.

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