Affirma Capital leads $145mn deal for Zambia power company CEC after threefold gain

Affirma Capital, formerly Standard Chartered Plc’s private equity arm, has closed a $145mn deal giving it a direct stake in a key supplier of power to major Zambian and Congolese mines for copper and cobalt.

The private equity firm now directly holds 34.6% of Copperbelt Energy Corp. (CEC), it said in a statement Monday (January 8). It is co-funding the transaction with Norway’s state-owned fund for developing countries (Norfund) and that county’s largest pension fund, Kommunal Landspensjonskasse Gjensidig Forsikringsselskap (KLP).

“We are excited to partner with Norfund and KLP on CEC, an asset which we are extremely bullish on.  We look forward to continuing the journey with existing shareholders, management and the Board in building a leading energy company in Africa,” said Ronald Tamale, Founding Partner and Head of sub-Saharan Africa at Affirma Capital.

Affirma decided to re-invest in CEC after having made a return of about three times their initial $74mn investment in the company in 2014, including dividends. The firm described the single-asset continuation deal in Africa as unprecedented.

“Hopefully a transaction of this nature will be testament that private equity firms can team up with like-minded investors from different spheres to be long-term owners of businesses in Africa,” Tamale said.

Affirma originally invested in CEC in March 2014 via a structured equity investment backing the company’s controlling shareholder. In March 2018, it converted its investment in the Lusaka-listed independent power transmission and distribution company into a shareholding.

CEC’s core business consists of distributing power to the majority of mines operating in Zambia’s Copperbelt Province and bordering Katanga Province in the Democratic Republic of Congo (DRC). 

It also transmits power for ZESCO Limited, the Zambian national utility, and is engaged in trading, buying and selling electricity from public and independent electricity generation companies in the Southern African Development Community (SADC) as part of the Southern African Power Pool (SAPP). 

CEC is investing heavily in renewable energy with a 34MW operating solar plant and another 60MW plant due to be commissioned in January 2024.

Affirma said that since its investment in CEC in 2014, the firm has led a number of initiatives to strengthen the business: 

In 2016, CEC was demerged from CEC Africa, its 100% owned subsidiary which was focussed on Nigeria, via a dividend in specie to CEC shareholders. This was followed by the sale of CEC’s stake in CEC Liquid, a 50/50 JV with Liquid Telecoms, to its JV partner. The business then focussed on deploying capital in its core business in Zambia  as well as building out the power trading business in neighbouring Katanga Province.