AFRICA Investing in Energy

Shanduka has been expanding its involvement in the energy sector. Following a successful partnership with Aggreko, the global interim power solutions specialist, to provide power to the 2010 FIFA World Cup, Shanduka again teamed up with the company on a ground-breaking project to supply temporary power to the Mozambican and South African grids.

In June 2012, Shanduka and Aggreko launched a 107 MW power plant in Ressano Garcia, Mozambique. Built in just 20 weeks, the plant uses gas from Mozambique’s Temane gas field to provide an interim power supply to Eskom and its Mozambican counterpart, Electricidade de Moçambique (EDM).

This is thought to be the first project by a private company to supply an interim cross-border power solution to two utilities

in southern Africa, and underlines the potential benefits that can accrue to countries

sharing resources.

Both countries will get much needed additional power. The project also underlines

the importance of

Mozambique as an energy hub for the entire Southern African region.

In the same year, Shanduka launched the first project in its ambitious renewable energy programme. Together with its consortium partners, it began construction of a 73 MW wind power project near Victoria West in the Karoo. This is a joint venture with Gestamp Wind, a Spanish company that develops, constructs and operates wind farms in the world’s leading wind energy markets, and Sarge, a Cape Town-based renewable energy developer.

The project is one of those identified

by South Africa’s Department of Energy as part of the first round of its Independent Power Producer Procurement Programme (IPPPP). Around R1.5 billion will be invested in the project over the next two years. The project is expected to start generating power from July 2014.

While currently only a financial investor in energy, over time Shanduka will develop the competencies necessary to become more operationally involved in its energy investments.

According to Ngobeni, southern Africa is increasingly becoming an attractive place for investment in energy: “It has a growing role as a producer of power – particularly from gas and renewables – and, as the regional economy grows, as a consumer of power.”

SOUTH AFRICA

Expansion across Africa Shanduka is increasingly looking at

opportunities on the continent outside of South Africa. With great opportunities for growth in many African markets, investments on the continent outside South Africa now make up around 20% of the value of Shanduka’s portfolio.

In late 2012, Shanduka announced its largest investment outside South Africa to date, the acquisition of a minority stake in MTN Nigeria. The transaction, worth US$335 million, forms part of the group’s strategy to invest in key sectors in growing African markets. It is also an indication of

Shanduka’s confidence in Nigeria as an important investment destination.

MTN Nigeria is currently the largest mobile operator in Nigeria with 45.64 million active subscribers at the end of September 2012, and an estimated market share of approximately 48%. The company is an indirectly held subsidiary of MTN Group, which holds an effective 78.83% stake.

Shanduka’s investment in MTN Nigeria is a sign of the progress of a company that was formed a mere 10 years ago to advance the empowerment of black South Africans. Now, as a majority

black-owned, broad-based and black-managed company, it has put a significant amount of its own capital into one of the continent’s most important mobile phone markets.

Shanduka is also invested in Helios Towers Nigeria and Icon House, a property development

in Accra, Ghana.

Shanduka’s approach in other parts of Africa has been to identify partners in these markets that have local knowledge and experience. Shanduka continues to pursue opportunies in other parts of Africa, particularly in the energy, infrastructure and property sectors.

70 Finance Monthly CeO AwArdS 2013