Africa Finance Corporation (AFC) has raised $400m through a sharia-compliant commodity murabaha facility, marking its first Islamic finance transaction since 2017.

The facility, initially launched at $300m, was upsized following strong demand, attracting participation from 11 Islamic financial institutions, including new partnerships with Abu Dhabi Islamic Bank, Al Rajhi Bank and Emirates Islamic Bank.

Emirates NBD Capital, First Abu Dhabi Bank, and SMBC Bank International acted as joint lead arrangers and bookrunners for the facility, which reinforces AFC’s commitment to diversifying its funding base. The transaction follows AFC’s recent $500m hybrid bond issuance and top-tier credit ratings from S&P Global (China) and China Chengxin International ahead of a potential panda bond.

AFC's successful return to the Islamic finance market underscores its strategic initiative to tap into this expanding sector.

Proceeds from the three-year facility will support AFC’s infrastructure investment strategy across Africa, including projects such as the UK-based startup Xlinks’ renewable energy initiative, in which AFC invested $14.1m in April 2024, and the expansion of Lekela Power, which targets 3GW of renewable capacity by 2026.

The deal also highlights Africa’s growing role in the Islamic finance market, with Murabaha structures aligning with AFC’s sustainable investment approach.

The global Islamic finance industry has been experiencing significant growth. According to S&P Global Ratings, the industry's assets are expected to see high single-digit growth in 2024-2025. This upward trend reflects a healthy industry driven by strong balance sheets, high profits, regulatory support, and sustained demand by both customers and investors across different regions.