IFC to invest $165m in Bangladesh energy firm
The International Finance Corporation (IFC), the investment arm of the World Bank, has agreed to provide $165 million in debt financing to the Bangladeshi subsidiary of Singapore-based energy firm Sembcorp Utilities.
The investment will consist of a $103 million loan from IFC's own account and $62 million mobilized through third-party investors. Sembcorp will use the financing to set up a greenfield dual-fuel power plant that is expected to produce 414 megawatts of electricity. UK development finance institution CDC Group and Singapore-based Clifford Capital will each contribute an additional $103 million to the project, which is estimated to cost around $412 million in all, according to a release.
Development of the plant will be handled by Sembcorp North-West Power, a joint venture between Sembcorp and North-West Power Generation, a Bangladeshi state-owned utility company. IFC hopes the success of the project will demonstrate to other international investors that public-private partnerships in Bangladesh can be run sustainably and profitably, and consequently attract additional foreign direct investment to the country's energy sector.
As of June 2016 IFC had invested around $1 billion in Bangladesh across 47 projects in a range of sectors, including infrastructure, manufacturing and financial services. In September it added another electricity investment, committing $175.5 million alongside EMA Power Investment to independent power producer Summit Corporation.
In addition, IFC is active as an LP in Bangladesh, having invested $20 million in Brummer & Partners' Frontier Bangladesh II fund in 2014. That fund was the successor to Frontier Fund, the first dedicated Bangladesh PE fund, in which IFC also invested.
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