Actis, the emerging markets private equity firm, has launched a pan-African renewable energy generation platform along with wind and solar developer Mainstream Renewable Power (Mainstream).
Dubbed Lekela Power, the platform aims to deploy $1.9 billion through a combination of equity and debt in a portfolio of assets capable of providing between 700 and 900 megawatts (MW). Actis owns 60 percent of the platform, with Mainstream, a long-time partner of the London-headquartered fund manager, holding the remainder.
The initiative closely trails the creation of Ostro Energy, a platform launched last week with the aim of developing about 800MW of mostly wind capacity in India by 2019. Actis invested $230 million of equity in the scheme.
Lekela, the eighth renewables energy platform created by the firm, follows in the footsteps of Globeleq Mesoamerica in Central America, Aela Energía in Chile, Atlantic Energias Renováveis in Brazil and Mexico’s Zuma Energía.
“Controlled platforms allow investors to choose optimal projects and financing structures, and reduce development risk. This model also allows shareholders to capture value as the platform achieves scale, resulting in higher exit valuations,” said Torbjorn Caesar, co-head of energy at Actis.
Three South African wind projects, the financial close of which was announced last week, will serve as seed assets for the portfolio. Located in the Northern Cape, they have a combined capacity of 360MW.
The firm is also eyeing a pipeline of assets that includes the 225MW Ayitepa wind project in Ghana, wind and solar projects in South Africa and 100MW of wind and solar power in Egypt.
“While the region has significant natural and fossil fuel resources a lack of long-term investment has led to a reliance on emergency and short-term diesel generation. An improvement in the regulatory regime in many African countries has opened up the sector for further investment,” said Lucy Heintz, a partner and head of renewable energy at Actis.
The news comes two weeks after Norwegian DFI Norfund and UK counterpart CDC announced their intention to take direct control of Globeleq, currently managed by Actis, in an effort to add at least 5,000MW to Africa’s power generating capacity over the next 10 years.
The transaction, still subject to government and lender approval, will result in the ownership of Globeleq by Norfund and CDC at 30 percent and 70 percent respectively. Norfund paid $225 million to Actis Fund II for its stake in the business. CDC was already a major indirect investor in Glebeleq through its limited partnership in the Actis fund.
In a previous interview with Low Carbon Energy Investor, a sister publication of Infrastructure Investor, Heintz explained that most of the $800 million Actis plans to deploy in power generation from its $1.15 billion third energy fund would be invested in renewable energy. The firm has deployed more than $1.9 billion in 27 energy transactions since 2002.