Insights From the Financiers:

Scouting for Investment Opportunities

The financial institution: Africa Finance Corporation (AFC)

“AFC continues to have a multipronged approach to investment. Our aim is to tackle the infrastructure gap, which is one of the main reasons why many projects in Africa are not financed. In fact, we have invested in the Nouvelle Gabon Mining (NGM) project to connect the entire ecosystem and to address the wider infrastructure challenges. In West Africa we will continue implementing our ecosystem strategy, which implies using mining as a catalyst for investment in other areas including the power sector, the railway sector and other ancillary infrastructure sectors. We are trying to replicate this ecosystem approach in countries such as Sierra Leone, Liberia and Guinea.

One of the institution’s top objectives is to grow its balance sheet from US$7.5 billion to US$10 billion within the next 2-3 years, while maintaining its risk profile as low as possible through risk management. This year alone we have added five new member countries, making 32 member countries in total, reflecting our commitment to make AFC a truly pan-African institution. We also recently successfully issued a Eurobond at its lowest yield to date thanks to our funding in the financial markets.”

Osam Iyahen, Senior Director, Africa Finance Corporation (AFC)

The private equity firm: Ibaera Capital

“Ibaera invests exclusively in the development of new projects that will increase the world’s supply of what we call ‘Future Facing Minerals’ - those minerals that are essential to achieving the world’s aspirations for energy transition that will underpin global decarbonization and a greener economy. Metals such as copper, gold, nickel, cobalt and zinc.

The entire future-facing minerals portfolio represents an attractive investment opportunity. Not only do we expect to see continued escalation in future-facing commodity prices, but quality, construction-ready assets in this sector are becoming very scarce and more highly valued. We are not specifically focused on one commodity over another; instead, we look at whether there are assets out there that can be effectively developed.

Our investors are very large, sophisticated international investment firms or high net worth individuals that are committed to leading the world to net zero emissions. The minimum investment made by any one investor in our 2017 fund was US$5 million and we expect a similar threshold for the current fund.”

James Wallbank, Managing Partner, Ibaera Capital

The mining royalty generator: Altus Strategies

“Our business model remains unchanged: to generate low-risk exposure to the exceptional returns that can be generated in our notoriously high-risk industry. We achieve this by growing a diversified portfolio, by working with third parties to finance the development of our projects and by retaining as well as acquiring royalty interests. We call this the ‘sweet spot’ of mining investment: the combination of short-term discovery upside with long term perpetual royalty income.

In terms of the assets we’re after, we prioritize geology and exploration risk rather than acquiring second-rate ground in lower risk jurisdictions. Except for South Africa, the average discovery depth in Africa is only nine meters below the surface, so discoveries are both faster and cheaper on the continent. After 10 years of underinvestment in the sector, I expect investment in exploration to increase substantially in the years ahead, with many more gold, copper and other discoveries to be made in Africa.”

Steven Poulton, CEO, Altus Strategies

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Interview: Firefinch