(Bloomberg) -- Africa Finance Corp. expects to sell its first Islamic bond in almost a decade by the end of the year, as part of efforts to cash in on growing interest from Gulf nations to fund and develop infrastructure projects on the continent.
The development finance institution is in the market for a $300 million facility that complies with Islamic law, the firm said in an emailed response to questions. First Abu Dhabi Bank is the global coordinator on the deal, and the AFC is working with other lenders including Emirates NBD Capital and SMBC.
The entity last sold Islamic bonds in 2017. Founded in 2007 and headquartered in Nigeria, the AFC is owned by African governments, banks and private equity funds. It serves as an alternative to the African Development Bank in providing financing for the continent’s infrastructure needs and has disbursed $13 billion for projects across 36 countries in the region.
AFC saw “a lot more interest” and participation from Gulf nations in its recent debt issuances, Chief Executive Officer Samaila Zubairu said in an interview. It allocated 15% of its five-year $500 million Eurobond issued last month to investors in the Middle East.
The AFC will continue to deepen collaboration in the region through its equity shareholder, the Arab Bank for Economic Development in Africa, he said.
Already this year, the firm has signed a memorandum of understanding with Saudi Export-Import Bank. That came months after a similar deal with the Saudi Fund for Development aimed at boosting trade between the kingdom and AFC’s member countries.
African nations are well positioned to supply Saudi Arabia with the materials needed to fuel Crown Prince Mohammed bin Salman’s Vision 2030 plan that seeks to diversify the economy away from oil, Zubairu said.
Financing Targets
AFC expects to end the year with total debt financing of about $2.8 billion and has set a fund-raising target of $4 billion for 2025.
Its plans for the new year include exploring joint-financing opportunities for infrastructure projects in Africa and abroad with one of its new shareholders, Angola’s sovereign wealth fund. The firm, which signed a memorandum of understanding with Kenya’s CPF Financial services last year, said it will work closely with the nation’s pensions funds to to support co-investments in strategic infrastructure projects.
The AFC is looking to sell as much as 24% of the bank to shareholders outside Africa to boost investments across the continent and is in conversations with a couple of parties, Zubairu said, declining to name them. It offloaded a 3.25% share to Turkiye Ihracat Kredi Bankasi for $110 million in 2023, marking the first such stake sale to a sovereign shareholder outside Africa.
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