Demand for Power Increases PE Investments in Energy Sector

Nigerian based Synergy Capital Managers announced the completion of its investment of an undisclosed amount in Viathan Engineering Limited. Viathan, a developer of captive and embedded power solutions (diesel generators and solar powered systems), is aiming at producing and distributing power solutions to meet the current demand from the underserved public and government sectors across Nigeria.

This investment is aimed at enabling Viathan re-structure its balance sheet and provides sufficient capital to scale up its distribution capabilities. Viathan already has a fully built distribution ring across most of Lagos to power key government infrastructure, and also serve commercial off takers. Over the next year, with the investment by Synergy, the company expects to set up a portfolio of power assets in strategic markets through acquisitions and developments. Progress on most of the new assets is advanced and the additional capital will enable the company to achieve their target capacity of 200 MW. Synergy’s investment in Viathan in based on;

1. Presence of an underserved government, combined with public and commercial off takers, which presents an opportunity for the private sector to provide basic necessities such as power;
2. The existing partnership with Green Power International, an operations and maintenance operator with deep experience and track record to deliver scalable and modular power solutions in emerging markets;
3. The opportunity to propel economic growth in Nigeria by building Viathan into a world-class provider of power solutions with sound operational expertise.

A theme across many African markets, including Kenya, is the under provision of basic services, such as power, housing and food by the governments. Synergy’s investment is another move by a private sector player to harness the opportunity where the public sector has failed. Power, alongside sectors such as housing, in Africa is an issue that needs to be addressed. With the current rate of development, population growth, and industry expansion, basic services provide the platform to drive economic growth. The most developed economies have achieved their development goals by having a reliable and sustainable energy supply. PE firms investing in power are well positioned to (i) achieve long-term and attractive returns, and (ii) make a meaningful impact to the economic growth of Africa.

Excerpt from the weekly Cytonn Report