Agence Française de Développement provides EUR 100 million callable funding facility to GuarantCo to further develop its climate change mitigation portfolio
Agence Française de Développement (AFD), the development arm of the French Government, is providing GuarantCo, a Private Infrastructure Development Group (PIDG) company, with a EUR 100 million callable funding facility with a tenor of 15 years.
Agence Française de Développement (AFD), the development arm of the French Government, is providing GuarantCo, a Private Infrastructure Development Group (PIDG) company, with a EUR 100 million callable funding facility with a tenor of 15 years. AFD’s facility will enable GuarantCo to further develop its climate change mitigation portfolio, continue its growth and enable the company to realise its vision to assist with the alleviation of poverty in lower income countries across Africa and Asia.
The funding will provide GuarantCo with further capacity to grow its climate change mitigation portfolio and diversify its funding base which is currently supported by the governments of the United Kingdom, Switzerland, Australia and Sweden through the PIDG Trust, and the Netherlands through FMO and the PIDG Trust. The AFD callable funding facility will provide a leveraging of three times, thereby providing GuarantCo with up to a further EUR 300 million guarantee capacity.
Through the provision of a callable funding facility to GuarantCo, this substantial investment by AFD aims to develop climate resilience infrastructure projects that contribute to low-carbon economic development in PIDG markets by mobilising private investment.
Aligned with the PIDG’s climate change approach, climate change mitigation projects are an important part of GuarantCo’s origination strategy. This builds on the various portfolio examples of GuarantCo’s pioneering approach to renewable energy projects in lower income countries across Africa and Asia.
Rémy Rioux, CEO of AFD, said “AFD is proud to support GuarantCo and its innovative business model which contributes to unlocking the potential of green finance by facilitating access to long-term local currency financing and mobilizing private sector resources. By leveraging up to three times on AFD’s EUR 100 million standby facility, GuarantCo will encourage the low carbon transition of African and Asian economies. Building on the momentum of the Finance in Common Summit, this new cooperation between the AFD group, GuarantCo, the Private Infrastructure Development Group (PIDG) and the members of the PIDG marks the beginning of a long-term partnership to scale-up climate finance and contribute to the achievement of the SDGs.”
Lasitha Perera, CEO of GuarantCo, said: “We are proud that AFD is investing in GuarantCo so we are well positioned to originate more long-term, local currency credit solutions for climate mitigation and adaptation projects across Africa and Asia. Climate change has become a key focus for GuarantCo and will further enhance the impact that we are creating on people’s lives in lower income countries. We are confident that the continued progress and success of GuarantCo will to make a difference to further build local capital markets including through our Blended Knowledge initiative addressing the need for blended finance to support private investment at the scale required to meet the SDGs.”
Yukiko Omura, Chair of the GuarantCo Board and Director of PIDG, said: “We are delighted that AFD has decided to invest in GuarantCo. Through the provision of a callable funding facility, we are particularly pleased that this substantial investment aims to develop climate resilient infrastructure projects in the lowest income countries across the Africa and Asia. In particular, 2021-2023 will be crucial for us to set on a path towards meeting the goals of the Paris Agreement on climate change. As a group, PIDG is adopting an ambitious yet pragmatic climate change agenda which includes reducing PIDG investments’ carbon footprint, promoting innovation in low emission infrastructure solutions and ensuring that the transition to zero carbon is context specific for low emitting countries with great development needs.”
Philippe Valahu, CEO of the Private Infrastructure Development Group (PIDG), said: “PIDG is fully committed to the goals of the Paris Agreement on Climate Change and to invest in projects that assist countries to transition towards a global net zero carbon economy by 2050. Developing and structuring infrastructure projects that can attract green finance in emerging markets is critical to achieving the SDGs and the Goals of the Paris Agreement on climate change in an equitable manner. We are excited about the new partnership with AFD and joining forces to accelerate progress in this crucial area of work. AFD’s support will not only enable GuarantCo to expand and diversify its portfolio but also provides its counterparties with the reassurance of additional risk capital from another highly-rated sovereign counterparty.”
GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, and the Netherlands, through FMO and the PIDG Trust and France through a stand-by facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development. www.guarantco.com
The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 157 infrastructure projects to financial close and provided 209 million people with access to new or improved infrastructure. PIDG is funded by six governments (the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. www.pidg.org
The Agence Française de Développement (AFD) Group funds, supports and accelerates the transition to a fairer and more sustainable world. Focusing on climate, biodiversity, peace, education, urban development, health and governance, our teams carry out more than 4,000 projects in France’s overseas departments and territories and another 115 countries. In this way, we contribute to the commitment of France and French people to support the Sustainable Development Goals (SDGs). www.afd.fr/en