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The Capital Quest | Helios, AIIM and Inspire Evolution-backed Africa solar firms to merge

Private equity-backed renewable energy services provider Starsight Energy and South African-based solar firm SolarAfrica Energy said Thursday they would merge to become one of the continent’s leading solar players.

The merged entity will have a pan-African footprint and provide full-service renewable energy and energy efficiency services to the commercial and industrial sector, the companies said.

The merger, which is subject to regulatory approvals including anti-trust approvals, comes at a time when South African renewable energy regulations have provided tailwinds for the business.

The merged entity will comprise a portfolio of over 220 MW of operated and contracted generation capacity, and 40 MWh of operational battery storage, with an additional generation pipeline exceeding 1 GW. It will employ 340 people across multiple jurisdictions.

Alongside the merger, funds managed by infrastructure-focused private equity firm African Infrastructure Investment Managers (AIIM) have committed substantial further funding to the South African subsidiary of the merged entity, to progress the build-out of the contracted pipeline in the C&I wheeling market in the country.

Starsight Energy was founded in 2015 and is backed by sector-agnostic private equity firm Helios and AIIM, a member of Old Mutual Alternative Investments. It offers energy and cooling solutions – on- and off-grid – to the C&I sectors, with key operations in East and West Africa having over 656 sites in Nigeria, Kenya, and Ghana.

Founded in 2011, SolarAfrica has extensive experience in delivering energy solutions through power purchase agreements to businesses across Southern Africa. It has evolved from a specialist provider of rooftop solar photovoltaic systems to a full-service provider of capex-free, green energy solutions ranging from solar and battery storage options through to wheeling and electricity trading to the C&I market.

In January 2019, SolarAfrica had inked a joint venture with private equity firm Inspired Evolution for a ZAR100 million equity investment facility which enabled a fund size of up to ZAR500 million to finance solar PV solutions.

It is not yet clear if Inspired Evolution, which is raising a new fund, would continue or would be exiting its investment as part of the deal.

“The merger will enable efficiencies across the group, ranging from procurement to funding, and further allow for the rollout of our proprietary technology platform across the continent,” said David McDonald, SolarAfrica Energy co-founder and CEO.

“These efficiencies will assist the group in providing a unique and valuable offering, that takes customers on a green energy journey to solve their power struggles and enables a sustainable future for their businesses,” he said.

Olusola Lawson, Managing Director and co-Head at AIIM, said the merger is “a strong illustration” of value creation in the nascent African commercial and industrial renewable energy space.

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