Africa Finance Corp. Says S&P Rating May Help it Add Investors

Samaila Zubairu Photographer: Christopher Pike/Bloomberg Photo by Christopher Pike /Bloomberg

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(Bloomberg) — Africa Finance Corp. expects its inaugural investment grade credit assessment from S&P Global Ratings to bolster the drive to expand its shareholder base, slash borrowing costs and diversify funding.

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S&P assigned the Lagos-based infrastructure investor a long-term foreign currency rating of A, the agency’s fourth-highest assessment, and assigned a positive outlook. Further upgrades could depend on the AFC adding to its sovereign shareholder base, S&P said in a statement late on Wednesday. 

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“Over the next couple of months we’ll see some results in that space,” Samaila Zubairu, president and chief executive officer of AFC, said in an interview on Thursday. “We are in advanced conversations with a couple of shareholders from outside the continent. They’re both countries and institutions,” he said, declining to be more specific. 

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To date the group’s only non-African shareholder is Turk Eximbank, which invested on behalf of the Turkish government.

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AFC’s bid to woo more shareholders comes as it bolsters its role as a leading Africa-based investor in ports, mines, industrial projects, renewable energy and transport routes. Its investments have included assets ranging from ports in Ghana to the rail line to the port of Lobito in Angola. 

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The rating from S&P, as well as a slightly lower assessment from Moody’s Ratings that was already in place, means that the AFC ranks only behind the African Development Bank in terms of ratings of African multilateral financial institutions, Zubairu said. It also has ratings from Chinese and Japanese agencies. 

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While the group has 60 shareholders ranging from sovereigns to pension funds and other multilateral lenders, S&P said the sovereign shareholders need to raise their investments to “more than token stakes.”

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“It’s a mix of existing shareholders, African countries, African pension funds, and then new shareholders from outside the continent that we’re talking to,” Zubairu said. 

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The AFC has invested more than $18.5 billion in 36 African countries since it was founded in 2007.

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The new rating “validates our business model,” Zubairu said. “We’re an investment grade supra-national with a clear path to go higher.”

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