Àrgentil Capital Management Limited (“Àrgentil or ACML”) has successfully achieved a financial closing for First Modular Gas Systems Limited (“FMGSL”), a clean energy company founded by the firm alongside Dharmattan Gas Facilities Limited. This allows FMGSL to drawdown on equity and debt financing to develop its first gas processing plant in Anambra State, South Eastern Nigeria. The total project cost for this first plant is estimated to be US$16mn.
The new investment in FMGSL is from the Africa Infra Plus Fund (“AIPF”), a NGN40.5 billion Special Situation Infrastructure Equity Fund, with headroom to raise up to NGN200 billion under its current fundraise programme, and the first Naira based Infra fund that can invest in debt or equity in Nigerian Infrastructure projects. The Fund’s target sectors include: power, telecommunication, transportation and basic infrastructure in Nigeria (with opportunistic oversight of West African countries). The investors in AIPF I & II comprise of pension funds, asset managers, sovereign funds, and insurance companies. AIPF is managed by Africa Plus Partners Nigeria Limited, a SEC licensed infrastructure-focused private equity firm.
Àrgentil co-founded FMGSL to become a leading midstream energy company that develops and operates distributed gas processing facilities in multiple locations to be deployed in the near term towards a 50mmscf/d installed capacity. FMGSL’s phase 1 development will see it deploy two plants in South Eastern Nigeria to process up to 15mmscf/d of gas that would otherwise be flared. This will support the direct reduction of up to 237,140 tonnes in CO2 emissions per year, replace 129 million litres of diesel for power generation annually with compressed natural gas (CNG), and lead to a further annual reduction of 111,884 tonnes of CO2 emissions.
Other climate benefits include supporting the provision of up to ~56MW of low emission power generation capacity and replacing kerosene, firewood, charcoal and other dirty cooking fuels with liquefied petroleum gas (LPG) for additional reduction in CO2 emissions and related pollution. The Word Health Organisation estimates over 100,000 women and children die annually in Nigeria from polluting smoke from cooking. With FMGSL, Àrgentil expects to support Nigeria with its strategy to achieve zero gas flaring by 2030 per its Paris Agreement and support the country’s decade of gas ambitions.
FMGSL will support communities where it operates and has developed a Sustainable Development Model (SDM) as an integral part of the Memorandum of Agreements signed with its host communities. The investment will increase supply of domestic LPG into the market and support with creating employment for small and informal retailers of this products including women. Currently Nigeria imports about 70% of the LPG it consumes domestically. Through, this investment Àrgentil expects to achieve key Sustainable Development Goals including SDG 7 – affordable and clean energy, SDG 13 – climate action and SDG 8 - decent work and economic growth.
Àrgentil has been keen to ensure the participation of local institutions in FMGSL’s financing as is the case via AIPF. This investment provides pension funds and other institutional local currency investors exposure to well-structured infrastructure assets. FMGSL will shortly execute definitive documents with a leading provider of credit enhancement that will further help attract local currency financing from the Nigerian capital market via guaranteed debt instruments. This use of blended finance is expected to be a key part of FMGSL’s funding strategy as it expands.
About Àrgentil Capital Management Limited
ACML is a principal investing and private equity firm that invests in key growth sectors including Energy, Agribusiness, Consumer and Technology. It invests in SMEs via the Àrgentil Principal Investment Portfolio II (APIP II) and makes direct investments from its balance sheet to support entrepreneurs that seek to create businesses that can scale over time to execute growth strategies in the firm’s target sectors. Other recent investments targeting high growth sectors include Sygen Pharmaceuticals, Plentywaka and 54gene. Àrgentil is also expanding its investment focus via the US$95mn Àrgentil SME Investment Fund (ASIF) to cover key West Africa countries.
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