Norfund, the Norwegian Investment Fund for Developing Countries, and CDC, the UK development finance institution (DFI), have formed a partnership to boost power generation in Africa by adding at least 5,000 megawatts (MW) of generating capacity over the next 10 years.

Through the partnership, Norfund will acquire a significant minority stake in Globeleq Africa from the Actis Infrastructure 2 Fund for a cash consideration of approximately $225m, subject to completion adjustments and including capital to further fund two expansion projects.

Kjell Roland, Norfund CEO, said this is a strategically important investment for Norfund.

"Inadequate and unreliable power supply is a major constraint on economic and social development in sub-Saharan Africa," he said.

"This investment establishes a platform for Norfund and CDC to expand power production in Africa, based on the combination of financial capacity, industrial expertise, local partnerships and collaboration with authorities. This investment will expand Norfund’s presence in African power markets and widen our technology choice,” he added.

CDC, which already holds a major indirect investment in Globeleq Africa via the Actis fund, will concurrently sell a small part of its holding to Norfund and transfer its remaining majority stake into the new venture.

Diana Noble, CDC CEO, said: “As the original founder of Globeleq in 2002, we are delighted to partner with Norfund in this new chapter for the business. Power generation is a priority for Africa, given how vital it is for long term economic growth and job creation."

"Early stage development is the bottleneck and the market desperately needs a committed, credible, expert developer of scale with a long term investment horizon. Under DFI ownership, Norfund and CDC have a vision of Globeleq Africa where it will support the development of significant new generating capacity over the next decade, and continue to run its existing assets efficiently, thereby bringing reliable power to many millions of individuals, families and businesses across Africa.”

The agreement, which will result in direct ownership of Globeleq Africa by Norfund and CDC at 30% and 70% shareholdings respectively, is pending government and other third party consents.

Under Norfund and CDC ownership, Globeleq will pursue early-stage and other development opportunities in power generation in Africa in order to alleviate the critical shortage of reliable electricity.

Globeleq Africa is an operating power company, actively developing energy projects across sub-Saharan Africa.

It has eight major generating assets in Côte d’Ivoire, Cameroon, Kenya, South Africa and Tanzania with a total gross capacity of 1,095MW.

The company develops electricity generating plants that support the continued development of the power sector in these regions and actively participates in the communities in which it operates.

CDC and Norfund will work with Globeleq Africa to help meet the demand for power across sub-Saharan Africa.

Only 32% of the population in the region has access to electricity – this is roughly the same stage as the US in 1920 and UK in 1929 – and progress is slow.

If successful, the new strategy will result in over 5,000MW of new generating capacity.

One thousand megawatts alone is enough to support the development of over 20,000 businesses, which could provide over 800,000 salaried jobs

The agreement for Norfund and CDC to take direct ownership and control of Globeleq Africa is pending government and lender approval.