AP Moller fund’s debut deal derailed by lack of power-supply agreement

The guarantee was crucial for the $375m valuation the Danish manager and the UK’s CDC were offering for Zambia’s Copperbelt Energy Corporation.

AP Moller Capital’s maiden deal from its $1 billion Africa Infrastructure Fund has fallen through after a guarantee on a power-supply agreement failed to materialise.

The Danish fund manager had been set to invest $80 million as part of a 3.7 billion kwacha ($375.6 million; €321.7 million) deal alongside UK development finance institution CDC, to buy Zambian utility Copperbelt Energy Corporation.

The transaction, announced in February, had its closing date extended twice since the initial agreement, but CDC and AP Moller Capital were unable to reach a settlement with national utility Zesco, with which CEC has a long-term power-supply agreement. CEC supplies about 50 percent of Zambia’s power.

The duo’s valuation of CEC was understood to be based on the certainty of the agreement continuing. Without it, the pair were unsure their investment plans were possible, given they had planned to bring a further 150MW of renewable generation to the Zambian network, in addition to the existing distribution network of around 1,000 kilometres supplying more than 700MW of power and a 40MW hydropower project.

Both CDC and AP Moller Capital stressed their commitment to the Zambian market despite the setback, with the former insisting it maintains an interest in CEC itself.

“All parties worked hard to get the deal over the line but, unfortunately, it was not possible given the time constraints,” a spokesman for CDC told Infrastructure Investor. “CDC continue to hold CEC in high regard and if the right opportunity arises, and subject to the capital market rules and regulations of Zambia, we would certainly consider a future offer.”

AP Moller will continue to search for other opportunities for its fund, which is expected to reach its $1 billion target imminently, a spokesman told us in March. The firm could not be reached for an update, but it reached a second close for the fund in February, following $215 million in commitments from Danish pension duo Danica Pension and Danske Invest and Sweden’s SEB Pension.

The fund was launched last August, obtaining $550 million from Danish pension funds PKA, PensionDanmark and Laegernes Pension and was backed with a further $100 million from PFA a month later. It targets investments across Africa within the transport, logistics and energy sectors.