Yemisi Izuora
Amaya Capital Ltd and Azura Power Holdings Ltd, have reached financial close for Amaya Capital’s Flagship West Africa power investment, the 450MW Azura-Edo Independent Power Project (IPP) which is located in Edo State.
The project will pave way for other project financed IPPs in Nigeria and represents second major infrastructure investment in Nigeria by Amaya Capital
The $876 million transaction is the first of a new wave of project-financed greenfield IPPs currently being developed in Nigeria.
The financing of the Azura-Edo IPP involves $190 million of equity and $686 million of debt from a consortium of local and international financiers.
The completion of financing for Azura represents the second major infrastructure investment by Amaya Capital, the first being Seven Energy, the gas infrastructure company.
Through its investments in Seven Energy and Azura, Amaya Capital has been the lead sponsor and active investor in two companies responsible for the deployment of over $3 billion of capital in the gas and power segments of the energy sector in Nigeria.
These early stage investments have contributed to the development of a commercially viable markets in gas and electricity in Nigeria, two fundamentally important market segments for Nigeria’s evolving energy sector, but where private sector investment had been hitherto limited.
The Azura-Edo IPP is the first Nigerian power project to benefit from the World Bank’s ‘Partial Risk Guarantee’ structure, specifically created to meet the developing needs of emerging markets world-wide, and political risk insurance for equity and commercial debt from the Multilateral Investment Guarantee Agency, also part of the World Bank group.
Significantly, the overall transaction will be underpinned by financial support provided by the Federal Government of Nigeria through a Put and Call Option Agreement complementing the Power Purchase Agreement between the Azura-Edo IPP and the Nigerian Bulk Electricity Trading PLC.
The project comprises a 450MW open cycle gas turbine power station; a short transmission line connecting the power plant to a local substation and a short underground gas pipeline connecting the power plant to the country’s main gas-supply.
It also represents the first phase of a 1,500MW power plant facility.
This first phase of the plant, which is targeted to come on stream in 2017, is forecast to create over 1,000 jobs during its construction and operation and to supply over 12 million people in Nigeria.
Dr. David Ladipo, Managing Director of Azura,commenting on the deal said, “Nigeria should be proud, particularly at this difficult time when the world is facing so much uncertainty, that it has been able attract over a billion dollars of financing to build a power and a gas facility from the world’s best-in-class financing institutions across 14 countries as well as local financing from Nigeria itself.
We are excited at the prospect of this landmark transaction opening the doors for additional much needed financing across the whole power sector to bring electricity to Nigeria.”
Mr Sundeep Bahanda and Mr. Phillip Ihenacho, co-founders of Amaya Capital said, “Azura is a demonstration of Amaya Capital’s long-term commitment to investing in gas and power infrastructure in West Africa, and represents Amaya’s second major investment after Seven Energy, the gas infrastructure company.
Amaya Capital is proud to be the catalyst and investor in two companies that are actively addressing infrastructure and energy demand that are fundamental to Nigeria’s development.
We see Azura and Seven Energy as solid platforms for further investments in the energy infrastructure and power generation sector, and we are actively developing new opportunities in this area.”
The fundraising was led by Standard Chartered Bank as Global Mandated Lead Arranger, with the International Finance Corporation (IFC), Financierings-Maatschappij voor Ontwikkelingslanden (FMO), Rand Merchant Bank (RMB) and First City Monument Bank (FCMB) acting as Mandated Lead Arrangers and the Core Lender Group.
Other lenders include Siemens Bank, Standard Bank, KfW, DEG, Proparco, Emerging Africa Infrastructure Fund, ICF Debt Pool, Swedfund, CDC and OPIC.
The debt facilities were split across a commercial tranche of $234m (backed by a mixture of MIGA PRI and IBRD PRG products), a $267m DFI tranche, a Naira 24bn ($120m) local bank tranche with a natural hedge and a $65m mezzanine facility from the DFIs.