Sustainable Capital Practice

The Lereko Metier REIPPP Fund (LMRF) bid into the 2015 REIPPP procurement rounds facilitating co-investment by DEG and FMO alongside LMSC. The strategy successfully delivered a consortium of three Mainstream led wind projects totalling 360MW situated in the Northern Cape.

The Metier Sustainable Capital Practice was instrumental in developing the 50MW Bokpoort CSP plant in the Northern Cape outside the town of Groblershoop. The Lereko Metier Solafrica Fund (LMSF) co-invests around R180 million in the Bokpoort CSP project alongside LMSC and was supported by DEG and FMO.

In addition, the recent closure of the Kathu CSP (100MW trough) project, being led by Engie was successful in the CSP specific procurement and achieved financial close in Q2 2016.

LMSC concluded its first investment into AE AMD, which had developed and invested in the Herbert and Greefspan solar photovoltaic plants that were successful in the first round of the REIPPP. This investment has successfully demonstrated our ability to partner with equity into successful developers capturing development fees and success fee payments as these projects close and progress towards operations. Recent discussions with secondary buyers of the completed projects also validate the exit pricing for renewables projects that are into their operations phase. As risks reduce sharply post-construction, secondary buyers are willing to accept lower returns for the longer term operations phase, offering earlier pioneering investors like the Sustainable Capital funds an enhanced return above that of the project as a whole.

Prior to the formation of its first fund, Metier partnered with Lereko and a management consortium in the buyout of Oricol Environmental Solutions, a specialist in turning waste into a resource, wherever possible recycling or re-processing waste to divert from third party landfill alternatives. Acquired from the international Veolia group, Oricol has been an outstanding example of the benefits of owner management and absolute dedication to the highest quality and ethical standards in an otherwise difficult industry.

Metier is at advanced stages of concluding transactions in micro-hydro and has experience and interest in biomass and regional transactions, including in Uganda, Mauritius, and prospects in several other countries in Sub Saharan Africa

Attractive opportunities in this asset class are being driven by sustainability and infrastructure requirements and a supportive policy environment in the South Africa and Sub-Saharan African region. Metier has experience in developing successful business models to capture such opportunities profitably and to mitigate the risks of doing so. This effort chaired by Anthony Hewat and closely integrated with the wider Metier team combines the industry expertise of principals Marc Immerman and Mike Goldblatt.

The combination in a single dedicated team of decades of private equity track record with hands-on investment and successful development experience is unique and aligned with the needs of both investors and resource-efficiency entrepreneurs across the Southern Africa region.

The Metier Sustainability Practice targets investments which deliver social and environmental benefits, as well as attractive returns on financial capital. This is deployed across both development capital transactions (as is often necessary for renewable energy) and later stage transactions with a clean/green positioning. Its contribution to and alignment with social sustainability is further evidenced by its management of the Kurisani Trust, which brings a broad-based youth development beneficiary set into BBBEE and/or local community ownership into the shareholding and governance of businesses and projects with which it partners.

• Metier raised R690 million for LMSC’s final closing then among the largest pools of dedicated capital for Southern African clean/green investment
• First hand development experience credited to the team of a utility scale CSP Project (Bokpoort 50MW plant) with 9.5 hrs thermal storage having achieved Commercial Operation in March 2016. The project, representing a total investment of R5.1 billion, is unique in that the quantum of storage (1300 MwH) offered relative to its nameplate capacity of 50MW is the largest globally. The project has garnered international praise and recognition with two international awards:
  • African Community Project of the year
  • Project finance international transaction of 2014
• The Metier Sustainable Capital team has garnered valued co-investor support from its premier investor base. FMO and DEG in particular have been instrumental in increasing the level of funds under management to a level of over R1.4 billion
• Diverse range of renewable infrastructure experience gained in each round of South Africa’s REIPPP programme as well as several other programmes and jurisdictions across Africa
• Strong relationships with leading global industry partners
• Well accepted industry presence with the principals delivering speeches and participation in panel discussions at multiple local and international conferences annually
• Conclusion of transactions in South Africa as well as within other countries in the region, with a first project outside South Africa approved for investment in Uganda, and a growing pipeline of opportunities in the region

MSCP benefits from and appreciates strong support from its investor base, which includes benchmark specialist private equity infrastructure investors both from South Africa and internationally. The Transnet Retirement Funds, International Finance Corporation, development finance institutions FMO and DEG and the Public Investment Corporation partner with a significant investment commitment by Metier and the team members of the practice.

The support and relationship is evidenced below by quotes from select investors: