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03 April 2023

Uxolo Pathfinder Awards 2022: Small can be beautiful

Reporter at Uxolo
The financings, grants and guarantees that punched above their weight in 2022. Uxolo picks the winners and looks at why they’ll have a big impact.

Size is not everything in development finance. Small transactions can be as, if not more, impactful when they are pathfinders for new markets and asset classes, or revolutionise the way traditional development projects have been financed. 

Uxolo’s 2022 Deals of the Year recognised firsts in the markets that it covers and impact where progress had previously been difficult or impossible. The winners all featured either structural, sector or country firsts. They stretch from landmark conservation bonds, to complex blended finance applications, to inventive and impactful grants and guarantees.

Capital Markets Deal of the Year - TNC Barbados Blue Bond Refinancing 

The Nature Conservancy put together a structure that pushed Barbados’ sovereign debt towards a more sustainable level and facilitated a measurable and impactful conservation strategy. Drawing on the template of a deal for Belize that closed in 2021, the deal comprised a $146.5 million dual-currency blue loan, partially funded by an issue of blue bonds, that refinanced a portion of Barbados's sovereign debt at pricing of 200bp less than Barbados was paying on its 2029 Eurobonds and 2043 Series E bonds.

Conservation Deal of the Year - Wildlife Conservation Rhino Bond

The World Bank’s Rhino Bond is a five-year $150 million sustainable development bond with a conservation twist. It has been structured to help conserve South Africa’s black rhino population, replacing a fixed coupon with an outcome-based success payment at maturity. The level of increase in the black rhino population will determine how much investors receive in addition to the repayment of principal redemption.

 Power Deal of the Year - Singrobo-Ahouaty Hydropower

The 44MW Singrobo-Ahouaty hydropower project is the first hydroelectric independent power project to reach financial close in West Africa. The financing endured a long development history and some macroeconomic headwinds. But a strong cast of lenders and sponsors, a sensible allocation of hydrology risk, and good management of environmental and social issues brought the plant over the finish line.

Social Investment Deal of the Year - MIGA Findeter Guarantee

Inflation, higher debt costs and foreign exchange volatility are all making it harder to mobilise cross-border debt investments in sustainable projects.  MIGA’s three-year guarantee on a local currency loan of COP877 billion ($201 million) from JP Morgan to Findeter, a Colombian domestic DFI, protects the bank against non-payment and protects the borrower from FX risk.

 Energy Transition Deal of the Year - Gridworks Uganda Pilot Transmission

Gridworks is owned by British International Investment, the rebranded CDC, and targets transmission, distribution and off-grid electricity in Africa. It will develop and finance the upgrading of substations on Uganda’s electricity grid with $90 million in equity funding. The first-of-its-kind Amari project will give private sector investors exposure to distributed electricity infrastructure through the platform.

Transport Deal of the Year - Axis E-Mobility Ecosystem

Each eligible loan that India’s Axis Bank makes to borrowers that build out EV infrastructure will benefit from an ₹16.29 billion ($200 million) guarantee from GuarantCo. The guarantee is designed to accelerate the already blooming e-mobility sector in India, which holds huge potential but presents some challenges in terms of market and technology risk.

Development Deal of the Year - Ninh Thuan Wind

The 88MW Ninh Thuan wind project reached financial close despite Covid-19 delays, and featured a diverse blended finance consortium, with ADB providing $25 million, JICA $25 million, and local and international commercial lenders the remaining $57 million. A privately-funded philanthropic $5 million grant de-risked some of the construction for the sponsors and ADB – a robust and truly blended finance transaction.

Sustainable Deal of the Year - UNECA LSF Repo

The United Nations Economic Commission for Africa launched its Liquidity and Sustainability Facility with a $100 million Citi-led and Afreximbank-assisted repo transaction. The deal is designed to bring the benefits of the repo market to Africa and enhance the liquidity of bonds issued by Egypt, Kenya and Angola, among others.

Impact-Linked Deal of the Year - Intesa Sanpaolo Credit Line

EIB’s novel financing to Intesa Sanpaolo Bank Bosnia & Herzegovina (ISP BiH) consists of an €20 million impact finance credit line aimed at supporting local SMEs and mid-caps. The twist is that on-lending will only be available to local companies that commit to tailor-made, socio-economic KPIs, including gender, youth and social inclusion, and – upon achievement – entitle the beneficiary to a grant reward. 

DFI of the Year - PIDG

If there’s an investor deploying capital in emerging markets using off-beat structures, there’s a very good chance that the Private Infrastructure Development Group is behind it. Devco, Guarantco, Infraco, InfraCredit, and the Emerging Africa Infrastructure Fund all have their roots in this joint venture of the governments of UK, the Netherlands, Switzerland, Australia, Sweden and Germany, as well as the IFC. It is more of a criticism of other DFIs and investors that it seems to have an outsize role in African renewables.

Impact investor of the Year - JP Morgan

JP Morgan has a bit of a leg up on its rival banks after launching its own development finance institution in 2020. It has spent 2022 selling the wider markets on the benefits of a more standard development impact methodology across global capital markets. The Findeter transaction was just a hint of what its vision of public/private crowding in might look like.

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