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Banks increase AFC shareholding as firm pays first dividend

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Nigerian banks have increased their holding in the Africa Finance Corporation (AFC) as the corporation announces plans to pay its first dividend.

The AFC with a paid up capital of $1.2 billion (N189.6 billion) is a supranational financial institution which was set up in 2007, to acquire, finance and manage infrastructure, industrial and financial assets across Africa and is majority owned by the Central Bank of Nigeria (42.5 percent), a consortium of Nigerian banks (47.6 percent) and several industrial and corporate shareholders (9.8 percent).

“Following the recent banking sector reforms in Nigeria, Access Bank Plc and First City Monument Bank Plc increased their shareholding,” Adebayo Ogunlesi, chairman of the AFC said in a statement to shareholders in its 2012 annual report.

“Ecobank Nigeria Plc and Sterling Bank also became shareholders of the bank.”

The corporation will make its first dividend payment of $0.03 or N4.74 per share, due to its increased financial performance for the year, Ogunlesi said.

Net income for the 2012 financial year rose by 140 percent to $83.2 million (N13.1 billion), compared with $34.7 million (N5.4 billion) for the 2011 period, driven by better operating performance and gains on equity investments.

Earnings per share were up 119 percent to $6.99, while total assets rose 35 percent to $1.6 billion (N252.8 billion) from $1.25 billion (N197.5 billion) in 2011.

Sub-Sahara Africa economies expanded at a rate above 5 percent in 2012 and the AFC leveraged on it to make notable investments in the infrastructure space across the continent, according to Ogunlesi.

The total investment portfolio at the end of the financial year was $881 million (N139.1 billion), with landmark investments including a $350 million (N55.3 billion) bridge in Abidjan, Ivory Coast, and a $50 million (N7.9 billion) convertible debt investment in ARM Cement, Kenya.

Perhaps reflecting a lack of investment opportunities in Nigeria due to its dearth of bankable PPP projects, and an inadequate legal framework, the AFC had little new projects financed in the country, although the corporation provided advisory services under the Central Bank of Nigeria (CBN) $2 billion (N316 billion), power and aviation infrastructure fund.

The corporation also acted as advisors and lead arrangers in the Bonny gas transport (a subsidiary of the NLNG), fleet expansion, as well as partnered with Vigeo Holdings Limited and Tata Power Delhi Distribution Limited for the acquisition of power distribution assets in the current power privatisation process.

The corporation was successful in closing a $200 million (N31.6 billion) 10-year loan facility from the African Development Bank (AfDB), aimed at raising its capital structure to enable the financing of new investments.

The corporation’s staff strength increased to 66 in 2012.

The AFC will seek to consolidate its achievements in 2013, “as the African markets continue to create investment opportunities,” Ogunlesi said.

The corporation will continue to closely monitor activity in the international debt market given its future need for liquidity and the goal of raising additional financing in the near future, he said.

Nigeria needs at least $20 billion (N3.1 trillion) a year, or up to $200 billion (N31 trillion) in the next 10 years to finance its huge infrastructure deficit, according to the Urban Development Bank of Nigeria.

The AFC was set up to help bridge that infrastructure gap by providing early stage risk capital and project structuring capacity, although it has been criticised in the past by analysts for having most of its investments outside of the country.