Blackstone stepping back from sub-Saharan energy sector

13 February 2019, Week 06, Issue 192

New York-based global investment giant Blackstone Group has reportedly scrapped a plan to invest US$2.5 billion across Africa through an infrastructure company called Black Rhino Group that focuses on the continent. Blackstone acquired control of Black Rhino in 2014 as its main vehicle for investing in African energy infrastructure, but agreed about a year ago to sell the unit, the Wall Street Journal reported on February 5. Citing a Blackstone spokeswoman, it said the unit would be sold back to its management team for an undisclosed amount, in a deal which has yet to close. The deal has not been reported previously.

Blackstone, the world’s largest private equity firm, had talked in 2014 of investing a total of US$5 billion in sub-Saharan energy projects by 2019. This would have been carried out through Black Rhino, and Blackstone also teamed up with Africa’s wealthiest man, Nigerian billionaire Aliko Dangote, on this. But instead, Blackstone stopped funding Black Rhino a year ago, according to a person close to the matter, who was cited by Bloomberg. And sources cited by the Wall Street Journal said Black Rhino had not found the large deals that Blackstone had wanted to finance.

Black Rhino had expressed interest in investments in Ethiopia’s power generation sector, though its plans there were subsequently shelved. It also agreed in 2017 to buy the 540-MW Qua Iboe power plant in Nigeria from ExxonMobil. However, Globeleq acquired the rights to develop and operate the gas-fired project in Nigeria from Blackstone in December 2017. And by the time the sale is complete, Blackstone will no longer have ownership of Black Rhino, the Bloomberg source said. 

Blackstone is not pulling back from the region altogether despite its decision to offload Black Rhino. It has launched a standalone company to invest heavily in renewable power assets in the Middle East and North Africa (MENA). Blackstone announced in October 2018 that the new business, called Zarou, will be run by CEO Sameh Shenouda, the former head of infrastructure equity investments at the UK’s CDC Group. Blackstone has founded similar vehicles to fund power and energy deals in Europe and Latin America. 

Not all infrastructure investors are pulling back from sub-Saharan Africa. CDC, which owns 70% of Globeleq, has said it may invest more than US$4.5 billion into the continent over the next four years as the UK government seeks to strengthen business ties with Africa post-Brexit.

 

Edited by

Richard Lockhart

Editor

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