IFC Backs Umeme IPO to Support Uganda’s Power Sector
IFC, a member of the World Bank Group, invested $4.9 million equity in Umeme Ltd. as part of the company’s public offering on Uganda Securities Exchange to help localize its business and increase the quality of power in Uganda.
IFC first invested in Umeme in 2009, with a $25 million loan as part of a broader World Bank Group project for Uganda’s power sector.
Oumar Seydi, IFC Director for East and Southern Africa said, “Having earlier made a loan to Umeme, IFC is pleased to become a cornerstone equity investor in the company. The new investment will help diversify Umeme’s shareholder base, and provide financial support to boost electricity supply in Uganda. Supporting IPOs is part of IFC’s strategy to build stronger local equity markets.”
Owned by the UK based Infrastructure fund, Actis, Umeme has been one of the few privately-owned power distributors in Africa. The company started operations in 2005, following the unbundling of the Uganda’s power sector and the privatization of electricity distribution. Since that time, despite the difficulties faced by the Ugandan energy sector, the Company made remarkable strides in improving power efficiency, reducing losses and connecting more Ugandans to the grid. Umeme currently has a customer base of more than 500,000 customers and employs over 1,300 staff.
Charles Chapman, Managing Director of Umeme, said “We are extremely pleased that the IFC, a highly reputable development institution, has decided to participate in the IPO. This investment is a further endorsement of the restructuring of the power sector in Uganda which led to Umeme’s formation. With this investment IFC will join other many new investors in supporting the long-term growth of Uganda’s energy sector as Umeme continues to invest in technologies such as prepayment meters and energy loss reduction.”
The International Development Association (IDA) has been involved with Umeme since the company’s inception in 2005. IDA facilitated the privatization of Uganda’s power distribution sector by backstopping regulatory risk through its Partial Risk Guarantee instrument. At the time, the Multilateral Investment Guarantee Agency also issued political risk insurance for foreign equity investors.
IFC’s engagement in the IPO demonstrates ongoing collaboration for Umeme’s growth. Supporting power generation in sub Saharan Africa is at the heart of IFC’s strategy for infrastructure development. IFC invested over $1 billion in infrastructure and natural resources projects in Africa in fiscal year 2012.
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org.
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