Macquarie, Old Mutual in $500m African hydro tie-up

AIIM, a fund manager established by both firms, has formed a joint venture with French developer MECAMIDI to build up to 200MW of small-scale facilities.

Cape Town-based African Infrastructure Investment Managers (AIIM) has entered into a partnership with Hydroneo Afrique, a wholly-owned subsidiary of France’s MECAMIDI, to develop a pipeline of hydro power plants across Africa.

The two companies intend to create a 50/50 joint venture to develop, finance, build, own and operate up to 200 megawatts (MW) of small and medium-sized facilities in Cameroon, Cote d’Ivoire, Gabon, Ghana and Mozambique. Total investment is expected to reach $500 million.

“This partnership represents an attractive opportunity to support the development of a pan-African infrastructure platform. Africa has extensive untapped hydro power potential and small and medium hydro power plants would be a holistic solution to Africa’s growing energy-generation capacity gaps,” said Julie Swart, chief executive of AIIM, in a statement.

AIIM is itself a joint venture between the African subsidiary of Australia’s Macquarie Group and Old Mutual Investment Group, the asset management arm of the eponymous South African insurer. It is currently investing through African Infrastructure Investment Fund II (AIIF2), which reached a close on $500 million in 2011.

The firm declined to comment on future fundraising plans, but a spokesperson for the company told Infrastructure Investor that the fund was “approaching full commitment”.

The MECAMIDI partnership is the third such tie-up sealed by the firm on the continent, following similar ventures with London-headquartered Joule Africa and Cape Town-based African Clean Energy Development.

AIIF2 is also an investor in large-scale projects such as the 400MW Kpone IPP in Ghana and the 450MW Azura IPP in Nigeria. AIIM’s latest tie-up is nonetheless different in scope as it aims to help unlock Africa’s vast hydro potential through building run-of-river power plants, which it says have less of an environmental and social impact than large-scale facilities.

MECAMIDI claims to be in that exact sweet spot, with 4,000MW of installed capacity, generated via plants of up to 50MW each, built since its creation. Its track record includes a 153MW portfolio in Bulgaria and Kazakhstan as well as 41MW of hydro power projects in East Africa through a partnership with sugar and power business Omnicane.