AIIM targets NOA to overcome flood of load shedding inaction

The extent of South Africa’s ongoing electricity crisis was captured by Reserve Bank Governor, Lesetja Kganyago during his first press conference of the year, following the Bank’s decision to hike rates by another 25 basis points. Kganyago speaks with authority and breeds confidence, so when he said that South Africa’s prospects for growth were more uncertain than normal, in part due to extensive load shedding, pushing the bank to lower its GDP growth projections for the year to 0.3%, the market was paying attention.

However, the Governor hastened to add that a “material reduction in load shedding would significantly raise growth. There could also be higher investment in alternative energy sources as firms and households offset the impact of load shedding”.

As the energy industry continues to evolve, companies are looking for new ways to establish themselves as leaders in their field. One such company, NOA, is taking an innovative approach to scaling up its operations and establishing itself as a major player in the African energy market.

NOA has recently announced that it has entered into a partnership with African Infrastructure Investment Managers (AIIM), a leading investment management firm. Through this partnership, NOA will have access to new investment prospects in key African markets where AIIM already has a presence. This will allow NOA to expand its reach and become a regional energy solutions provider in areas of high energy demand across the continent.

AIIM agreed to provide initial equity funding of up to $90m, which will be used to deliver net zero energy solutions for Africa, and will be financed through a mix of equity provided by AIIM’s South African IDEAS Fund and the latest iteration of AIIM’s USD denominated pan-African investment fund, AIIF4.

NOA is a vertically integrated energy platform that provides net – zero oriented renewable energy solutions to customers in the commercial and industrial sectors of the economy. It has developed a comprehensive and innovative range of solutions for customers through the provision of large-scale wheeled energy generation utilising wind, solar and storage technologies. The investment will help strengthen AIIM’s position as one of the leading investors in South Africa’s renewable energy landscape, with projects representing over 1.9GW of solar and wind generation capacity.

NOA aims to develop, finance and operate a portfolio in excess of 1GW of renewable energy assets over time. The initial funding will be utilised to conclude the construction of existing projects and achieve financial close on projects amounting to almost 100MW. NOA will be launched by a team comprised of veterans of the South African renewable, commercial and industrial energy sectors, and is led by Karel Cornelissen, the former Chief Executive Officer of Energy Partners.

The transaction comes as the liberalisation of South Africa’s energy markets is accelerated by impending regulatory changes which permit self-generation without the need for a generation license, and the removal of size limits of such facilities, announced by President Cyril Ramaphosa in July 2022. These projects may now also be grid connected and sell to multiple customers through wheeling, the act of transporting electricity from a generator to a remotely located end-user through the use of an existing transmission and distribution system. Rapidly declining costs of renewable energy technology further enable NOA to provide its customers with renewable energy at competitive tariffs.

South Africa has a large and growing shortfall in energy availability. Between 30GW and 50GW of new capacity is likely to be required over the next 10 years if South Africa is to meet its nationally determined contributions under the Paris Climate Agreement, and to mitigate the current energy crisis.

Investment Director at AIIM, Ed Stumpf commented,

“South Africa is at a pivotal point in the evolution of its energy landscape, with the imminent retirement of ageing coal power stations, a significant energy sector infrastructure deficit, and increasing liberalisation of the market paving the way for an acceleration of investment in net-zero oriented businesses such as NOA.”

Karel Cornelissen, CEO of NOA, expressed his excitement about the acquisition, stating, “We are thrilled to be joining forces with AIIM. This partnership will allow us to accelerate our ambition to work with our clients on their journey to Net Zero, while also making a meaningful contribution to addressing South Africa’s current energy crisis.”

NOA’s innovative approach and strategic partnership with AIIM positions the company for growth and success in the competitive African energy market.

Michael Avery, is the editor of Catalyst

This article first appeared in Catalyst, DealMakers’ quarterly private equity publication.

DealMakers is SA’s M&A publication.
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