GE, Mara Group, Atlas joint venture to invest in infrastructure equity projects

General Electric, Mara Group and Atlas Merchant Capital have formed a joint venture (JV) dedicated to investing in the highly underdeveloped African infrastructure sector.

The JV agreement, signed at the ongoing African Development Bank (AfDB) meetings in Lusaka, Zambia, seeks to invest in infrastructure equity projects in selected countries in Africa.

The three institutions recognise that more than 50 percent of African nations including Nigeria, Kenya, Ethiopia, Tanzania and the Democratic Republic of Congo (DRC) don’t have access to electricity, and an infrastructure investment of about $360 billion in power production, power transmission, water storage, modern railways, port capacity and modern highways will be required until 2040.

The JV will focus on this broad set of segments by facilitating access to capital, thus offering the ability to execute and fully finance both advanced and early development stage projects. The hurdles to address are rapid urbanisation, and a growing middle class devoid of infrastructure.

Also, the JV is well placed to act as a leading shareholder alongside sponsors of infrastructure projects and will use its relationships with lending banks and connectivity to power Africa and related institutions to meet the debt component of its funding.

Africa presents high growth prospects in power generation, transport, oil and gas and other infrastructure areas including mining. With the African population set to rise to 1.5 billion by 2025, the continent’s economic growth potential is significant. Africa needs to spend $90 billion a year for the next decade in order to upgrade and maintain its existing infrastructure alone.

Jay Ireland, president/CEO, GE Africa, said, “This JV unifies three businesses with a strong commitment and expertise in infrastructure in Africa. The JV is our response to an integrated infrastructure approach in Africa. We are proud to partner with the expertise and talent of Atlas Merchant Capital and Mara Group, who have an extensive footprint in Africa, to address the necessities of the African continent.

“We have been significantly involved in social enterprises to date and will seek to further enhance and promote social and community development in the region to complement their expertise, knowledge and entrepreneurial spirit.”

Ashish J Thakkar, founder, Mara Group, said, “Africa is a continent of 54 countries, but there is very low connectivity between them. Intra-African trade, a key driver for economic growth, represents only a fraction of Africa’s total trade over the past decade and this is largely due to a growing shortfall in infrastructure development.

“Through our JV with GE and Atlas Merchant Capital, we hope to tackle the funding deficit by creating a platform that has the power to truly change the lives of those living on the continent.”

Akinwumi Adesina, president, AfDB, said, “We are delighted to see this partnership between three world-class players who, together, can have a real impact on infrastructure development in Africa.

“We all know painfully well the imperative to fill Africa’s annual $50 billion infrastructure funding gap. Partnerships like these are a crucial part of the development agenda, as we seek to promote social and economic development and fight poverty in Africa.”