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CDC makes biggest-ever direct debt deal

The UK development financier is joining forces with the IFC and Clifford Capital to plug $371m into a Bangladeshi power plant.

Two development institutions and a private lender will provide a combined financing package of $371 million to a subsidiary of Singapore-listed Sembcorp Corporation to develop a 414MW dual-fuel power plant in Bangladesh. 

The International Finance Corporation will provide $165 million in debt financing to the project, which is expected to cost around $412 million. The sum comprises a $103 million loan from its own account and an additional $62 million garnered through partners. 

CDC Group, the UK government’s development arm, and Clifford Capital, a Singapore government-backed project finance firm, will each provide $103 million in debt to the facility. 

CDC’s commitment is its biggest-ever direct debt investment so far, according to Holger Rothenbusch, the organisation’s managing director and head of debt. He added that CDC would seek to work with Sembcorp on energy projects in other South Asian countries. 

Clive Kerner, chief executive of Clifford Capital, said the transaction was in line with the firm’s mandate of supporting Singapore companies through the provision of cross-border financing. Temasek, Singapore’s sovereign wealth fund, owns a 40.5 percent stake in the firm while Prudential owns a 19.9 percent share. Four other shareholders, including Singapore’s DBS, Japan’s SMBC, the UK’s Standard Chartered and Canada’s Manulife own an equal share of 9.9 percent in the lending firm. 

The World Bank’s Multilateral Investment Guarantee Agency will cover a portion of Clifford Capital’s tranche, and provide a risk guarantee to Sembcorp to cover its $103 million equity investment in the project. 

A joint venture of Sembcorp and Bangladesh’s state-owned North-West Power Generation will develop the project, which is set to provide power to the country over 22.5 years upon its completion.   

The build-own-operate project, located at Sirajganj, will be the second-largest power plant in Bangladesh and represents the largest foreign direct investment into the country’s power sector in recent years. It is also the first greenfield investment by the Singapore utility in the Asian nation. 

For its part, IFC hopes the success of this project will demonstrate the profitability and sustainability of PPPs in Bangladesh’s power sector to international players, helping attract additional capital to the area.