Gemcorp joins Madagascar to raise $5bn for energy, mining
Madagascar wants to raise as much as $5-billion by teaming up with asset manager Gemcorp Capital Management to fund energy, infrastructure and mining projects in the island nation.
The partnership was unveiled late last month as a key pillar of the new government’s efforts to drive economic growth in one of the world’s poorest countries. The London-headquartered firm intends to set up an office in the capital city, Antananarivo, before the end of the year.
The collaboration will provide “an investment platform to attract international capital and strategic partners” for priority initiatives identified by Madagascar’s government, said Andry Raharinomena, chairperson of the Fonds Souverain Malagasy, or FSM, which signed the agreement with Gemcorp.
The sovereign wealth fund is already involved in about a dozen projects that require financing and is discussing others with various ministries, according to Raharinomena. He wants Gemcorp to support the FSM in mobilising as much as $5-billion over four years.
Gemcorp is ready to assist the government body in meeting that fundraising ambition, said Gaj Wallooppillai, the company’s head of strategy.
The FSM plans to drum up money to build three hydropower plants and some smaller solar facilities, as well as turning deposits of minerals including graphite, cobalt, nickel and rare earths into viable ventures.
Most of Madagascar’s mineral deposits are undeveloped and there are currently only a handful of commercial operations in the country.
Gemcorp is an emerging markets-focused firm that’s deployed over $10-billion since being founded in 2014 and is one of the largest private investors in Africa. The nature of the work with the FSM will be advisory, at least initially, Wallooppillai said.
The firm “has a track record of making strategic projects bankable,” Wallooppillai said in an interview. “That expertise is where we think we can drive enormous value.”
Gemcorp can help the FSM navigate African development finance institutions and other sovereign lenders including those in the Gulf, according to Wallooppillai, who’s based in Abu Dhabi.
The partnership will strengthen “our sovereign wealth fund which is still very young,” said Raharinomena. For now, FSM will raise all capital externally because we “don’t have financial capabilities yet to directly invest,” he said.
Raharinomena said the sovereign wealth fund has already taken over the state’s interests in a mineral sands project owned by Rio Tinto.
Madagascar President Michael Randrianirina, an army colonel who assumed power a year ago following a coup, appointed Raharinomena – a former ambassador to the UK – to run the FSM in July.
The sovereign wealth fund has “a new lease of life with a real focus of being the catalyst for attracting foreign capital,” said Wallooppillai. “To do that, you have to have strong relationships with those who are investing already in Africa.”
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