Synergy Capital (Synergy) is pleased to announce the exit of its investment in Ridge Energy Limited Ghana, a mid stream oil & gas infrastructure business located in Tema, Ghana. The transaction, which, closed on Thursday, August 28, 2014, is a trade sale to a major oil and gas multinational firm entering into West Africa.
Ridge Energy was exited in just over two years post –investment at a multiple of over 3X and an IRR of 84%, validating the Manager’s investment thesis anchored on the principles outlined below:
- Backing businesses and sectors with strong fundamentals – our thesis on Ridge Energy was premised on strong medium-to-long term growth prospects of Ghana’s mid stream oil & gas sector and our belief that it would outperform the underlying economy. Moreover, the industry has dollarized revenues, mitigating the foreign exchange risk.
- Backing an experienced management team – the Managing Director of Ridge was a former CEO of the Ghanaian subsidiary of a major multinational oil and gas company who had strong experience and connections in the industry
- Active management approach – Synergy deployed an active management approach to managing the investment from conception to exit, including:
- Engaging a highly experienced local construction firm and equipment suppliers for the expansion initiatives of Ridge Energy
- Implementing strong project management oversight and partnering with management to build world class systems and processes
- Managing the exit process including valuation analysis and negotiation with the acquirer to obtain an attractive price for the business.
We are encouraged by the exit of the Ridge Energy investment and believe it further goes to validate our belief that “the best way to assure a profitable exit for an investment is to build a very good business”.
Source: Synergy Capital Managers.
