African Development Bank (AfDB), the Development Bank of Southern Africa (DBSA), and leading institutional investors—including Academy Securities, Africa50, and Newmarket—signed a Letter of Intent to explore the creation of a groundbreaking multi-originator synthetic securitization platform at the recently held Africa Investment Forum Market Days 2024 in Rabat, Morocco.
The collaboration marks a key milestone in the African Development Bank's Ten-Year Strategy 2023-2032, which focuses on mobilising private capital and enhancing de-risking strategies to accelerate progress toward the Sustainable Development Goals (SDGs).
Building on the success of AfDB’s inaugural $1 billion synthetic securitisation transaction under its Room to Run Program in 2018, the new platform is designed as a revolving, evergreen structure aimed at de-risking the balance sheets of African development finance institutions (DFIs) while offering attractive investment opportunities for private sector stakeholders.
The platform will feature a diversified portfolio of approximately $1.5-2 billion, spanning various sectors, regions, and risk profiles. This portfolio will include loan and guarantee exposures aligned with AfDB and DBSA’s strategic priorities, especially in climate finance, infrastructure, and financial intermediation. It will serve as a vehicle to transfer mezzanine tranche credit risk to private investors while retaining senior tranche risk with the originators, thereby unlocking additional lending capacity for high-impact development projects and providing regulatory capital relief.
Dr. Akinwumi Adesina, President of the African Development Bank, emphasised the importance of such initiatives, stating, "The proposed multi-issuer securitisation vehicle we are shaping – just like with SDR rechanneling through hybrid capital and other innovations we continue to explore - exemplifies how collaboration between multilateral development banks and private sector investors can unlock transformative capital flows to address Africa’s financing gaps.”
Boitumelo Mosako, CEO of DBSA, partner originator to this ground-breaking proposal said, “It is imperative that multilateral development institutions, asset managers, and institutional investors work as a system to scale up financing available for Africa’s growth.”
Molly Whitehouse, Co-Founder & Managing Director of Newmarket, an investor in the successful landmark first multilateral development bank securitization transaction launched in 2018, said, “We are proud of Newmarket’s role in the groundbreaking Room2Run transaction and excited about the growing opportunity set in the MDB sector. With the SST Platform, we can extend these successes as we build on our partnership with AfDB and now DBSA.”
Dan Schaeffer, Executive Director of ABS Capital Markets, expressed his enthusiasm to investigate how the asset management community can do more to encourage ESG and sustainable lending across the continent through partnerships with development finance institutions such as African Development Bank and DBSA. “This signing showcases the innovative spirit of the Africa Investment Forum and our commitment to delivering impactful solutions to emerging market development challenges," he added.
Alain Ebobissé, Chief Executive Officer of Africa 50, an investor in the first Room2Run transaction said: “The original Room2Run investment was a landmark synthetic securitization and Africa50 is proud to have been a key participant in that transaction. We are thrilled to now continue building on its success. This initiative represents a pivotal opportunity to free up vital capital that can be strategically deployed to help bridge Africa’s infrastructure gap.Together, we can drive meaningful change and unlock the continent's potential for sustainable growth.”
The Africa Investment Forum is a multi-stakeholder, multi-disciplinary platform that advances projects to bankable stages, raises capital, and accelerates deals to financial closure. Its vision is to channel capital towards critical sectors to achieve the Sustainable Development Goals, the African Development Bank’s High 5s and the African Union’s Agenda 2063.
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