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Deal Maker of the Year Awards 2013 WINNER - GBENGA HASSAN
DEAL: Mainstream Energy Solutions’s concession of the Kainji Hydroelectric Power Plant
NAME: Gbenga Hassan COMPANY: Argentil Capital Partners Limited TEL: +234 (1) 4603379 FAX: +234 (1) 4616221 EMAIL: g.hassan@argentilcp.com WEBSITE: www.argentilcp.com
Bio
Gbenga has extensive private equity and corporate finance experience in the international and West African markets, spanning over 17 years.
He has played a leading role in Àrgentil vis- à-vis the origination and execution of Power, Gas and Infrastructure deals valued in excess of US$5billion in Nigeria and West Africa.
He has been the lead executive on advisory and arrangement for the privatised hydro power plant in Nigeria with US$170m of acquisition funding raised to date for the client. Gbenga also lead the US$233m Entec Power Project, the US$135m Apapa SPM and the US$25.5m 12.15MW IPP that was commissioned in 2010.
He is currently advising on a number of infrastructure projects including the on-going privatisation of 10 gas fired power plants in Nigeria. He also co-manages Àrgentil’s principal investment activities which includes co- sponsoring a 160MW power plant in Sierra Leone for which a MoU was signed with the government in May 2013 with heads of terms for a 25 year Power Purchase Agreement.
He was previously with Aureos Capital where he originated and executed private equity transactions in Nigeria and West Africa and Standard Bank / Stanbic Nigeria as Corporate Finance Manager.
He worked at Syntegra, a Consultancy and Systems Integration business of British Telecom before moving to Standard Bank in London as Manager of Finance Projects.
Gbenga holds a Bachelor’s degree in Engineering and Business Management from the University of Greenwich and a Masters degree in Economics and Management from the University College, London. He is also a Chartered Certified Accountant in the UK (FCCA) and Nigeria (ACA).
DEAL OVERVIEW Q
Please summarise the transaction Our client,
Mainstream Energy Solutions Limited, participated in the bid process for the government-owned power generation companies under privatization in Nigeria and was declared preferred bidder for a 30 year concession to operate and maintain Kainji Hydroelectric Power Plc; one of six Generating Companies being sold.
Under Kainji Plc are Kainji Power Plant and Jebba Power Plants, which currently generate approximately 25% of total electricity supplied to the Nigerian national grid.
Q What was your role within the transaction
Àrgentil acted as Financial Advisers to MESL advising them on key stages of the transaction including preparation of the bid documents, financial modelling and valuation, transaction structuring, capital raising, identifying capital providers, negotiation of term sheets and financing documents. As well as continued advisory support and oversight of the end-to-end capital raising activities until financial close.
Q
What were the challenges or difficulties presented and how were they overcome?
Àrgentil has significant experience in deal structuring and capital raising for project finance transactions, particularly in the energy sector and we leveraged on this in assisting the client to achieve financial close. Some key challenges included negotiation of transaction documents to make them bankable against the background of a newly deregulated power sector with very limited private sector investment and the scale of privatising 17 assets at the same time. Having successfully raised project financing on another power transaction in 2008, we engaged with potential lenders very early on to understand their minimum bankability requirements and focused on these in negotiating the transaction documents. In addition the lenders got comfort from having a strong lead sponsor in MESL. We also actively engaged with the relevant counterparties to carry them along on the investors and lenders requirements.
Q
What other types of clients or transactions have you been involved with
Àrgentil is focused on delivering excellent service to our clients in our target sectors of Oil & Gas and Energy & Infrastructure. We have a team which has significant experience and also has strong relationships with local and international capital providers and other professionals which we leverage on towards achieving success for our clients.
In addition to the deals covering power and infrastructure outlined under the biography above, we have recently worked on other oil and gas deals including the Reverse Take Over (RTO) of a Canadian company by a Nigerian company; A client’s purchase of tank farms in Calabar, Nigeria; Farm-out of two (2) Oil blocs in Chad, among others.
Q
What are your thoughts and predictions for 2014 and beyond
At Àrgentil we expect financing activities in the power sector in 2014 to remain very busy as our clients look to raise financing to fund capital expenditure for the assets acquired under the Power Holding Company of Nigeria (“PHCN”) privatisation. We also expect to see potential changes in ownership with some of the PHCN assets, as now that the process has been completed, international strategic buyers and financial sponsors who sat on the sidelines will take a closer look at these assets.
In addition the privatisation of the 10 gas powered plants for which bids were submitted in November 2013 should be concluded in 2014. Activities in the upstream oil and gas sector will be dominated by the on-going divestment by some the International Oil Companies (“IOCs) of their onshore assets. The ongoing process to pass the Petroleum Industry Bill (PIB) will remain central as there are concerns on whether the PIB can be passed into law in 2014 prior to an election year. The implication from all these financing requirements for the Nigerian banks will be significant, as a large portion of the debt financing for these transactions is likely to come from the domestic market.
NIGERIA