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Oragroup, the Togo-based regional commercial banking holding company with operations spanning six countries in West and Central Africa, today announced that it has attracted a US$20 million growth equity investment from Development Finance Institutions (DFIs) BIO (US $7m) nd PROPARCO (US$13 m).

This investment marks the latest in an ongoing focus on fundraising and growth expansion at Oragroup, led by pan-African private equity specialists Emerging Capital Partners (ECP). By the end of 2011 Oragroup will have raised in excess of US$85 m through a combination of debt and equity financing from a diversified investor base which includes local, regional and international investors, adding both retail and institutional shareholders to Oragroup’s share capital. ECP continues to hold a majority stake and control the board of Oragroup.

The Bajo Frio hydropower project is owned and being developed by Fountain Intertrade Corp., Panamá; a joint venture between Norwegian Agua Imara through its subsidiary SN Power ACA Holding and Panamanian Credicorp Group Inc through its subsidiary Panamá Hydroelectric Ventures, Inc. (PHV). Total project costs amount to US$ 224 million.

The Bajo Frio hydropower project comprises a 60 hectare reservoir, a dam measuring 45 by 300 meters, a two-kilometer open-head canal, two power stations of 28 MW each, a 2MW turbine for the eco-flow, and a three-kilometer transmission line. The projected electricity generation amounts to approximately 243 GWh annually. A reforestation program will be carried out to compensate for habitat loss in the submerged area. The project is requesting to be registered under the UN CDM and will reduce CO2 emissions by 160.000 tons per year.

“Agua Imara is proud to announce that the Bajo Frio project in Panama now has its debt financing in place. The Western European financial institutions FMO, DnB NOR, PROPARCO and DEG have all deep understanding and experience in international project finance. This ensures our commitment to the Panamanian society to have Bajo Frio in operation before the end of 2014”, said Einar Stenstadvold, CEO of Agua Imara.

“FMO is very pleased to support this important private initiative. Project sponsors Agua Imara and CrediCorp Group/PHV have adhered to the highest possible environmental and social standards throughout the process, and it has been a pleasure working with them, as well as with our co-mandated lead arranger, DnB NOR, and our co-lenders DEG and PROPARCO,” said Nanno Kleiterp, CEO of FMO.

ABOUT

CCG (Credicorp Group, Inc.) is a Panamanian holding company with interests in financial and trust services, insurance and real estate. With a total of USD 1.3 billion in consolidated assets, it compromises 17 subsidiaries among them are Credicorp Bank, an important retail banking institution and Compañia Internacional de Seguros (CIS), the oldest insurance company in the country with over 100 years of operations.

Agua Imara AS is a company in the SN Power Group. Its overall business concept is to develop, build, acquire, own and operate sustainable renewable energy projects, with a main focus on hydropower, throughout sub-Saharan Africa and Central America. The company acquired earlier in 2011, through its subsidiary SN Power ACA Holding, a majority stake in two hydropower plant in Zambia. Agua Imara was founded 2009.

FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on four sectors that have high development impact: financial institutions, energy, housing, and agribusiness. With an investment portfolio of EUR 5 billion, FMO is one of the largest European bilateral private sector development banks. www.fmo.nl

DnB NOR is Norway's largest financial services group with a total combined asset of NOK 1 600 billion. DnB NOR has a global reach within selected segments in energy and more than 30 years of experience in serving clients in this segment. Assets in renewable financing amount to more than NOK 30 billion with a predominant position within the hydropower sector. www.dnbnor.no

PROPARCO is a Development Finance Institution jointly held by Agence Française de Développement (AFD) and public and private shareholders from the North and South. Its mission is to catalyze private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals (MDGs). PROPARCO finances investments that are economically viable, socially equitable, environmentally sustainable and financially profitable. PROPARCO is one of the main bilateral development finance institutions in the world. It invests on four continents encompassing the major emerging countries and the poorest countries, particularly in Africa, and has a high level of requirements in terms of social and environmental responsibility. www.proparco.fr

DEG, member of KfW Bankengruppe, is one of the largest European development finance institutions. For nearly 50 years, DEG has been financing and structuring the investments of private companies in developing and emerging market countries. DEG’s aim is to establish and expand private enterprise structures in developing and emerging countries, and thus create the basis for sustainable economic growth and a lasting improvement in the living conditions of the local population. www.deginvest.de

In just the last decade or so, private equity has carved out a new territory for itself in sub-Saharan Africa. For the region this is a fantastic opportunity to attract new investors whose funds are entrusted to specialist professional management teams. For many companies – from major corporations to start-ups – it is an opportunity to access not only the long-term funding vital for their growth but also close support in terms of defining their strategy, improving their governance and accessing international professional networks.

To date private equity has remained over-focused on a few sectors and geographic areas – yet increasingly it is venturing into new terrain, via specialist funds, and developing innovative strategies.

However, this development tool attracts criticism on numerous counts. And indeed its impact, which is undeniable, should not overshadow the limitations of this investment model. Focusing on profitability – in itself justified, in terms of making the business sustainable and attracting investors – can lead fund managers to neglect particular sectors, and SMEs in particular. It can instil a short-termist bias. It can also lead some fund managers to distort the model by siphoning precious fiscal resources from national governments through aggressive tax optimisation schemes.

Yet what makes private equity effective is that it enables economic players to build long-term partnerships, selecting and supporting the businesses most capable of generating growth, employment and innovation.

The challenge is therefore to make private equity in Africa a virtuous tool of growth and development, creating wealth for the largest possible number of people while also enforcing rigorous standards of governance and accountability.

You can find articles of the following authors: Yvonne Bakkum (FMO), Jennifer Choi (EMPEA), François d’Aubert (French Ministry of Finance), Jeanne Hénin (Proparco), Jeroen Horsten (FMO), Kiriga Kunyiha (Aureos Capital), Jean-Michel Severino (I&P), Davinder Sikand (Aureos Capital), Aglaé Touchard (Proparco), Alexandre Vilgrain (SOMDIAA).

ABOUT

Private Sector & Development is a bimonthly magazine that compares the views of experts in different fields on issues relating to the role the private sector plays in the development of low-income countries of South countries, particularly in Sub-Saharan Africa. By comparing complementary approaches, Private Sector & Development aims to help us get a better grasp of the mechanisms through which the private sector can contribute to the development of these countries.

The AAF is a private equity fund designed to respond to the food crisis that severely impacted the continent in 2008 in the wake of escalating food prices. AAF was initiated by European development institutions (Agence Française de Développement - AFD, the Spanish Agency for International Development - AECID - and the International Fund for Agricultural Development  - IFAD) and African sponsors (the African Development Bank and three Sub-Saharan regional banks). AAF investment thesis primarily lies in food production, processing and distribution in cereals, livestock farming, dairy, fruit and vegetables, crop protection, logistics, fertilizers, seeds, edible oils, smallholders and agri services. To achieve optimal diversification within the sector, the Fund will invest across the value chain (from primary production to processing and tertiary services) and pan-Africa. AAF reaches its first closing at more than US$ 150m in December 2010 including  US$ 30m from AFD and US$ 10m from FISEA, a fund owned by AFD and managed by PROPARCO.

The AAF, with the support of its development finance institutional investors, will fund the construction of a new mill on the site of a previous factory that was destroyed during the civil war in 1991. Currently, the ‘in country’ processing method is on a traditional/informal basis, which is inefficient and unsafe in terms of the oil extraction process, produces a low quality consumer product and results in unwarranted water pollution. The Goldtree mill will be the first commercial crude palm oil mill to operate in Sierra Leone since the war.

Goldtree management has a close and cohesive relationship with the community. The Company leases, rather than owns, its nucleus palm oil plantation land from the village council at two sites, with the input and guidance from the Government of Sierra Leone. There are some 30,000 hectares of outgrower palms owned by over 8,000 growers within a 40 km radius of the mill in Daru, which will be the major source of fresh fruit bunches to Goldtree and provide a more stable source of income to the villagers.

The Fund aims to use part of its Technical Assistance Facility, funded by the European Commission, managed
IFAD and implemented by TechnoServe - to upgrade feeder roads and initiate a replanting programme.

“The Government (led by President Ernest Bai Komora) has articulated its vision for Sierra Leone, prioritising four key areas of which enhancing agricultural productivity is one and in our view, the most important,” Valentine Chitalu, Chairman, Phatisa commented. “You can argue that here in Africa, agriculture and economy are synonymous, you cannot ignite the economy of a country without investing in its agriculture.”

Phatisa’s strategic investment in Goldtree represents a pioneering step into West Africa and acts as a springboard for similar private equity, food and agri transactions in the region. The ability to execute innovative
deals affirms Phatisa’s standing as the African agri/food equity partner for growth, giving the African Agriculture
Fund a solid foundation to further expand its portfolio of African food businesses.

ABOUT

The Phatisa Group is a private equity fund management, corporate finance advisory company, servicing a range of sectors in a number of sub-Saharan African countries, with offices in Mauritius, Kenya, Zambia, South Africa and West Africa in the near future. www.phatisa.com

PROPARCO is a Development Finance Institution jointly held by Agence Française de Développement (AFD) and public and private shareholders from the North and South. Its mission is to catalyze private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals (MDGs). PROPARCO finances investments that are economically viable, socially equitable, environmentally sustainable and financially profitable. PROPARCO is one of the main bilateral development finance institutions in the world. It invests on four continents encompassing the major emerging countries and the poorest countries, particularly in Africa, and has a high level of requirements in terms of social and environmental responsibility. www.proparco.fr

FISEA is an investment fund that makes equity investments in businesses, banks, microfinance institutions and investment funds operating in sub-Saharan Africa. It aims to be a lever for economic growth in this region. The fund has an annual investment target of €50M and is expected to finance roughly sixty projects over the next five years and create over 100 000 jobs in Africa.

Thanks to this accreditation, the company can now give investors the opportunity to include carbon assets in their management, with all the security and transparency of a regulated entity. This accreditation rewards CDC Climat and PROPARCO’s strong commitment to the development of this new asset class that is uncorrelated with traditional assets and makes it possible to combine financial profitability with social and environmental responsibility.

Guido Schmidt-Traub, Chief Executive Officer of CDC Climat Asset Management, says: “The AMF accreditation of the management company is a new step forward for us today, as we can now introduce a range of regulated investment products in Paris made up of high quality carbon credits from projects which reduce greenhouse gas emissions. The products that we are developing are tailored to investors’ needs, especially investors seeking to play an active role in the challenge of combating climate change.”

Pierre Ducret, Chairman and CEO of CDC Climat, adds: “This accreditation provides a framework for fully reliable and secure third-party management on carbon markets.”

ABOUT

CDC Climat is the 100%-owned subsidiary that the Caisse des Dépôts created in February 2010, in order to combat climate change through three types of business activities: investing in carbon assets, developing carbon market services and researching the economy of climate change. It invests in carbon assets either directly or in the form of innovative funds open to other long-term investors. It aims at reducing CO2 emissions by 60Mt before the end of 2014. Its investments are managed by its subsidiary CDC Climat Asset Management. CDC Climat develops, either alone or with its partners, secured climate and carbon market services: registries and solutions for carbon assets transactions and custody, MRV tools. It invests in innovative companies that contribute to a low carbon economy. As such, CDC Climat is notably a strategic shareholder of the exchange BlueNext. Its research team, CDC Climat Research, conducts independent, non for profit analyses for public authorities, market players and the general public. On the strength of its experience in Europe, CDC Climat supports the introduction of international, national and regional climate policies. CDC Climat is part of Caisse des Dépôts Group, a long term investor serving general interest and the economic and sustainable development. www.cdcclimat.com

PROPARCO, a financial development institute, is owned by the French Development Agency (AFD) and private shareholders in Northern and Southern Hemisphere countries. Its aim is to act as a catalyst for private investment in emerging and developing countries, in growth and sustainable development, as well as in order to meet Millennium Development Goals. PROPARCO ranks among the world’s major bilateral development finance institutions. It is active in four continents, and its scope ranges from major emerging markets to the poorest countries, especially in Africa. PROPARCO has high requirements in terms of social and environmental responsibility. www.proparco.fr

CDC Climat Asset Management is the carbon asset management subsidiary created by CDC Climat in September 2010. The Company combines multiple skills in the finance, carbon project and risk management fields, and invests in high-quality environmental projects, which it manages in the best interests of its investors. www.cdcclimat-am.com

The report, International Finance Institutions and Development through the Private Sector, was launched during the World Bank-IMF Annual Meetings. It was produced by 31 international finance institutions (IFIs). Senior officials of more than 20 IFIs are attending the launch event.

PROPARCO is a Development Finance Institution jointly held by Agence Française de Développement (AFD) and public and private shareholders from the North and South. Its mission is to catalyze private investment in emerging and developing countries with the aim of supporting growth, sustainable development and the achievement of the Millennium Development Goals (MDGs). PROPARCO finances investments that are economically viable, socially equitable, environmentally sustainable and financially profitable. PROPARCO is one of the main bilateral development finance institutions in the world. It invests on four continents encompassing the major emerging countries and the poorest countries, particularly in Africa, and has a high level of requirements in terms of social and environmental responsibility.
www.proparco.fr