335

London-based private equity firm Actis has confirmed its ambitions to become a major player in African generation with a ground-breaking deal in Nigeria to launch its new pan-African investment platform

Private equity firms Actis and Amaya Capital are launching a new investment company with equity capital of $500m divided between them to develop up to 3GW of baseload gas and hydroelectric power in Africa. The deal confirms that Actis is re-emerging as a more proactive developer following the transfer last year of its equity in generation company Globeleq to development finance institution investors Norfund and CDC Group.

In the first stage of the transaction, Amaya Actis has closed the purchase of American Capital Energy and Infrastructure (ACEI)’s 43.5% holding in Azura Power Holdings Ltd (APH), which holds a 51% stake in the 450MW Azura-Edo independent power project (IPP) in Nigeria. The venture intends to increase this to 60%, with Amaya retaining 40%. APH will then seek out projects elsewhere in Africa, with South Africa’s gas IPP procurement programme a particular focus. 
In a wide-ranging discussion of Actis’s strategy, director Adrian Mucalov told African Energy that, in Nigeria, APH is concentrating on expanding the Azura-Edo complex to 1.5GW installed capacity. Although not focused on renewables, the venture has also acquired a majority stake in the 125MW Nova Power solar photovoltaic project in Katsina State, which has been developed by Amaya and is anticipated to reach financial close next year.

Actis and Amaya have been putting together an experienced team for the venture, which will be led by two managing directors: Azura-Edo veteran and Amaya director David Ladipo, leading in Nigeria, and former Fieldstone managing director Alan Muir, who has 25 years of advisory experience, in the rest of the continent. ACEI’s Lisa Pinsley joined Actis in September; she is based in South Africa.

ACEI has been selling its international assets in parallel to its parent American Capital (with around $20bn of assets under management) concluding its merger with the even larger Ares Capital Management (with approximately $94bn of assets under management as of 31 March 2016). The merged company is focusing on US infrastructure. ACEI said on 10 November it had exited all of its energy investments, which were expected to generate a compound annual return of 18.1% and a 1.32-times multiple on invested capital.

ACEI’s portfolio consisted of interests in APH, the BMR Energy 36MW wind generation project in Jamaica, the Taïba Ndiaye wind project in Senegal and PT Arkora Hydro, the developer and operator of an 84MW portfolio of ten mini-hydro projects in Indonesia. Actis had considered buying ACEI’s Indonesian and Caribbean assets, but decided to buy only the African investments.

Actis holds a 60% stake in the Lekela joint venture with Ireland’s Mainstream Renewable Power, which is making progress on Taïba Ndiaye. The 215MW project is on track to reach financial close by end-2016, with the power purchase agreement in place and long-form documentation almost complete.

“Steady progress” has been made on Lekela’s 225MW Ayitepa wind power project in Ghana, although, as with many projects, the pace has slowed in the run-up to the 7 December general election. Added to its South African operations, the Senegalese project gives Lekela “scale”, which, once Ayitepa is in place, will give the renewables subsidiary a near 1GW platform, Mucalov said.

Actis’s more assertive role in generation investment – and continued interest in expanding its distribution portfolio – reflects an ongoing shake-out among investors focused on African electricity supply industries (AE 325/1, 306/1, 294/20). Its former investor CDC is also taking a more proactive role in identifying projects in addition to those developed by its subsidiary Globeleq.

Under chief executive Henry Aszklar (AE 307/1), Globeleq has been focusing on restructuring its operations and hiring new staff. Aszklar aims to make Globeleq a more proactive lead developer of greenfield projects, as well as a specialist in financial engineering and project management.