Exxaro, China’s CNIC vie with AIIM for $2 bln African power firm Lekela – sources

Actis values Lekela at $1.9 billion.
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South African miner Exxaro and Chinese state fund CNIC are among potential buyers admitted to the final round of bidding for African renewable energy firm Lekela Power – a company worth around $2 billion, a number of sources familiar with the deal told Reuters.

African Infrastructure Investment Managers (AIIM), an arm of Old Mutual, has advanced to the final stages alongside Exxaro, two sources said. Another two sources said CNIC was in the final bidding round. All sources spoke on condition of anonymity.

Private equity firm Actis’ plans to sell its 60% stake in Lekela were first reported last year, but 40% shareholder Mainstream Power is also looking to cash out as well, three sources familiar with the decision said, with one adding it was being advised by Citi alongside Actis.

Actis, which founded Lekela with Mainstream in 2015, values the company at $1.9 billion, according to its website.

Lekela develops utility-scale renewable power projects in Africa. It has 1.3 GW of projects in Egypt, Ghana and South Africa and lays claim to building the first ever utility-scale wind farm in Senegal, according to its website.

AIIM, advised by Goldman Sachs GS.N, is currently seen as the frontrunner, two of the sources familiar with the deal said.

China Guangdong Nuclear Power and the country’s State Power Investment Corporation were also looking to bid, one of those people and one of the other sources said, but it was not clear whether they had proceeded.

Two of the sources also added that Shell had expressed interest in the assets, while Reuters previously reported British government-owned power firm Globeleq had considered bidding. It was not clear if either advanced in the process. Read full story

Mainstream Power, AIIM, Lekela, Exxaro, Citigroup and Shell declined to comment. Actis, Goldman Sachs, Globeleq and China Guangdong Nuclear Power did not immediately respond to requests for comment. It was not immediately possible to reach CNIC and the State Power Investment Corporation.

Plentiful wind, sun and hydropower potential mean Africa is seen as fertile ground to develop energy sources that emit no planet-warming carbon dioxide and could also help stabilise electricity systems plagued by routine blackouts.

Exxaro sells coal both at home in South Africa and abroad, and is a top supplier to South Africa’s state run power utility Eskom. It said last year it would stop investing in new thermal coal assets and is on a push to transition to cleaner business lines.

China has been investing heavily in Africa for years and is now the continent’s biggest trading partner, according to the International Institute for Sustainable Development.

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