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Korean banks join Africa Finance Corporation’s Asian investor list

Lagos-based energy and infrastructure fund closing a $140m Korean syndicated loan

Korean banks have become the latest Asian investors to finance the Africa Finance Corporation with the closing of $140m so-called “kimchi” facility by the Lagos-based energy and infrastructure fund.

The AFC, a pan-African multilateral development fund partly owned by the central bank of Nigeria, will on Wednesday announce the completion of the Korean syndicated loan, bringing the amount it has raised from Asian investors to about $1.2bn in just over a year.

The AFC, founded in 2007, closed a $225m samurai bond in September and a $300m loan through China’s Export Import Bank last October. Investors from Hong Kong, Taiwan, Singapore and Malaysia have also been buyers of the AFC’s Eurobond issues.

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Samaila Zubairu, president and chief executive of AFC, using a term to denote Asia, said the capital raising “signifies the East’s growing appetite for African investments, which are particularly attractive considering today’s negative-yield environment”.

He declined to specify the coupon on the Korean bond, but said it was narrower than could be obtained from either US or European lenders. He estimated Asian investors now accounted for about one-fifth of the AFC’s borrowings.

Mr Zubairu said his institution had a good record of investment returns, saying it had only one “past-due loan” in its $6.6bn portfolio of projects across 30 African countries. He highlighted the group’s investment in renewable energy, including wind farms in Djibouti and Cape Verde and hydroelectric dams in west Africa.

Although Nigeria’s government is the largest shareholder, the AFC is majority owned by private investors, mostly African banks.

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