• Sales and Purchase Agreement signed with ACTIS for the acquisition of 100% of BTE Renewables, one of Africa’s leading renewable energy companies in South Africa and Kenya
• Addition of 340 MW operating assets and a portfolio of more than 3 GW of advanced development projects for ENGIE in South Africa
• Investments in 250 MW wind and solar projects in operations and development in Kenya by Meridiam

ENGIE and Meridiam have signed a Sales and Purchase Agreement with ACTIS on the full scope of BTE Renewables, a developer, owner and operator of renewable assets on the African continent, with an operating presence in South Africa and Kenya.

The deal includes a carve-out of the Kenyan assets by ENGIE to Meridiam at closing.

The acquisition of BTE will bring an additional 340 MW net of renewable operating assets to ENGIE (150 MW of onshore wind and 190 MW of solar photovoltaic (PV), a portfolio of more than 3 GW of advanced development pipeline/projects in a growing renewables market with robust regulatory framework and a team of around 80 recognized professionals.

This acquisi- tion reinforces ENGIE’s strong presence in South Africa and will capitalize on the Group’s industrial value in the country, where ENGIE already operates 315 MW of renewable assets (200 MW of concentrating solar-thermal power plants (CSP), 21 MW of solar PV assets and 94 MW of onshore wind assets).

Meridiam acquires the 100 MW Kipeto Wind Farm, which is located approximately 70 kilome- ters south of Nairobi, and has been operational since July 2021.

Also included is the 50 MW Siruai greenfield wind project with storage under development. Located adjacent to the current Kipeto site, it is scheduled to become Kenya’s first battery storage facility. In parallel, more than 100 MW of additional solar PV projects’ opportunities have been identified.

Paulo Almirante, ENGIE Senior Executive Vice President Renewables, Energy Management and Nuclear said: 

“The acquisition of BTE is bringing to ENGIE high-quality operational assets and a strong project pipeline. We are looking forward to welcoming the BTE team within the Group. The integration of BTE will contribute to our growth ambitions in the AMEA region. It will also contribute to South Africa’s ambitious energy plan and renewable targets.”

Mathieu Peller, Partner and Deputy CEO of Meridiam said: 

“This transaction reinforces our footprint both in Kenya and more globally in Africa where we invested more than €5 billion to date. Kipeto, our first wind farm asset on the continent, will greatly complement our existing renewable portfolio which already comprises solar, hydro, biomass and geothermal assets. Taking also into account the pipeline assets, this project will double our total renewable gene- ration capacity in Africa and bring it to over 500 MW”.

Completion of the transaction is expected by Q4 2023, subject to the fulfilment of certain authorizations including merger control clearance from relevant competition authorities.

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These are all serious challenges that businesses across the African continent currently face, or will face in the near future.

But with the right approaches, they also represent significant opportunities. In order to make the most of those opportunities, however, more funding – and debt-based funding in particular – is needed across the continent.

That was the consensus of a panel held this week in Johannesburg, South Africa, which brought together several experts who have a long track record of investing in a broad range of sectors across the continent.

On the panel were Bryan Turner, Partner at private equity firm Spear Capital; Philani Mzila, Investment Manager at venture builder Founders Factory Africa; and Zubair Suliman, Investment Director at Norsad Capital.

All three panellists and the companies they represent invest in companies of different sizes and at different stages in their growth journeys. Nonetheless, the challenges, opportunities, and solutions they all expect to see across Africa in the coming months are remarkably consistent.

Opportunities amidst crisis 

They all agreed, for instance, that the past few years – progressing from the COVID-19 pandemic to Russia’s war in Ukraine and a looming global recession – have shown that there are always investment opportunities in Africa, no matter what the prevailing conditions might be.

“In the African context, you have to invest in a very uncertain environment with a lot going on with different sorts of investment climates and factors,” said Mzila. “What that’s allowed us to do is to identify opportunities, even within a highly volatile market. We’re really bullish about the opportunities on the African continent.”

Turner, who experienced the 2008 Financial Crisis first-hand while working in London’s banking sector, said it was actually the opportunities present on the continent that drew him back and towards working for Spear.

“The rest of the world looks at Africa as though there’s no opportunity,” he said. “They’ll argue there’s no opportunity or that it’s too risky and it doesn’t work. But there are billions of people on this continent that need to eat, that want to be themselves. They want a better life and a better economy. Someone’s got to roll up their sleeves and do it.”

Suliman concurred, pointing out that his own experiences growing up in wartorn Mozambique exposed him to the importance of taking opportunities, no matter what the underlying circumstances might be.

“What I’ve learned from my family and friends is to find opportunities,” he said. “They’ve turned out to be some of the wealthiest people in the region because they identified those opportunities.”

He added that this ability to grab hold of opportunities has also been evident in his investment career, as well as the approach taken by Norsad Capital.

“Where others shy away from frontier markets, Norsad is there,” he said. “What makes it so exciting for me is that there’s no cookie-cutter cut and paste. But all of the companies we invest in have the ultimate purpose of building a better Africa.”

Riding the renewables charge

Turner, Mzila, and Suliman all believe that some of the most significant of the continent’s opportunities will be in the renewables sector. In saying that, they also emphasised that the focus on renewables shouldn’t just be about delivering renewable energy.

In fact, there is a need for the concept of renewables to be addressed in other areas. For instance, Mzila pointed to the example of a company in South Africa’s Limpopo province which uses discarded macadamia nut shells for water filtration.

“The water renewable space is underrated,” he said.

Turner meanwhile believes that there is significant opportunity around the minerals Africa is so rich with and which are so crucial to renewable energy. But, he pointed out, the old approach of purely resource-based economies in Africa is no longer fit for purpose.

“We want to create circular economies,” he said. “We’re tired of Africa being seen as nothing but the resources extraction point.”

For Suliman, getting renewables (in every sense of the word) right in Africa will require a very specific approach.

“It’s important to find things that have an immediate impact, allow you to capture the consumer, and then find ways to minimise international plays and grow the region,” he said.

Resilience required 

When it comes to the characteristics required for entrepreneurs to make the most of those opportunities, all three also agree that having a solid foundation and a sense of resilience are vital.

“You’re seeing businesses with really great fundamentals rise to the top,” said Mzila.

Suliman agreed, pointing out that, “It’s the businesses with good fundamentals, and good management, the resilient companies that navigate challenging times successfully.”

A lot of the time, that resilience comes down to the characters of the entrepreneurs concerned.

“We look at the character of the people at our companies and their leaders,” said Suliman. “And then we look into the company and see how they can make an impact.”

“The reality is that you have to buy into an entrepreneur’s vision and see beyond the pitch deck and spreadsheet,” Turner added.

More deals, demystifying debt 

Ultimately, however, the panellists noted that their organisations can only do so much and that really unlocking Africa’s entrepreneurial potential requires a greater number of investors doing deals.

“We found there are so many opportunities on the continent where we’re the only show in town,” says Turner. “It shouldn’t be like that. It should be competitive. There should be a lot of companies competing for good deals.”

Mzila concurred.

“My ideal outcome is more people in the ecosystem, more risk appetite, and more deals,” he said.

But they also believe that there needs to be a shift away from equity-style funding on the continent to a debt-focused one.

“There’s not enough understanding of the power of debt,” said Turner. “Debt isn’t scary – it’s how the world creates wealth and we need more of it to ensure that entrepreneurs are able to get funding without having to dilute equity and hand it over to investors who’d happily take the shirts off their backs.”

According to Suliman, venture debt (a type of loan aimed specifically at early-stage, high-growth companies with venture capital backing) could prove particularly important on the continent.

“There’s a gap missing in the debt space and it is venture debt,” he said. “Venture debt would be best. The opportunities are there – they need to be packaged.”

In order for that to happen, the panellists said, belief in and understanding of Africa’s potential needs to be more widespread.

“The thing that stands out for me is the potential of Africa,” Mzila concluded. “It was the only region around the globe that attracted more funding in 2022 than in the previous year. It’s about belief in the broader ecosystem.”

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