Cape Town, 14 May 2021: Reatile Group (Reatile), a leading black-owned investor in the energy landscape, and AIIM (on behalf of the IDEAS Fund), one of Africa’s largest infrastructure-focused private equity fund managers and a member of Old Mutual Alternative Investments have, through an acquisition vehicle beneficially owned by them as a Consortium (Reatile-AIIM Consortium), concluded a sale and purchase agreement whereby Sasol South Africa (Sasol) has agreed to sell a 30% interest in ROMPCO to the Reatile-AIIM Consortium.
The Reatile-AIIM Consortium will, subject to the fulfilment of a number of conditions precedent, acquire a 30% interest in ROMPCO for a consideration comprising, subject to certain adjustments, an initial amount of R4,145 billion and a deferred payment of up to R1 billion, payable if certain agreed milestones are achieved by 30 June 2024.
Sasol will retain a 20% shareholding in ROMPCO and will continue to operate and maintain the pipeline in terms of the pre-existing commercial agreement between another member of the Sasol group and ROMPCO. The other existing shareholders in ROMPCO are the South African Gas Development Company Limited (iGAS) and Companhia Moçambicana de Gasoduto S.A.R.L (CMG), which are both state-owned companies of South Africa and Mozambique, respectively.
Simphiwe Mehlomakulu, Chairman of Reatile, commented: “This is a landmark transaction that broadens participation in the South African energy sector and highlights Reatile’s leading role in it. We are excited by the economic potential of increased gas supply to the region and stand ready to support ROMPCO’s long-term expansion potential. We look forward to developing the South African energy sector in partnership with Sasol, iGas and CMG.”
ROMPCO owns and operates the 865km high-pressure gas pipeline connecting the Pande and Temane gas fields in Mozambique with South Africa. The ROMPCO pipeline supplies gas to five offtake points in Mozambique and is the primary supply channel for natural gas into South Africa.
The Industrial Gas Users Association of Southern Africa estimates a 50% supply deficit of natural gas in South Africa for industrial uses. Natural gas makes up 24% of global energy consumption, growing at a rate of approximately 5% per annum. In contrast, natural gas in South Africa is the smallest contributor to South Africa’s primary energy mix, constituting only 3%, having experienced zero growth over the last seven years.
Gas can be used in electricity generation with materially lower carbon emissions, toxic emissions and environmental impacts when compared to coal. New sources of gas supply transported through the ROMPCO pipeline could be key to relieving the pressure currently faced by Eskom, and replacing capacity lost through the decommissioning of ageing coal plants in and around Mpumalanga.
Vuyo Ntoi, Managing Director of AIIM, commented: “We are delighted to heed the President’s call for private sector investment into infrastructure, supplementing the pioneering role played by ROMPCO’s founding shareholders. Whilst the lion’s share of our investments are channelled into renewable energy, the switch from old to new is not always possible with just one step. Our ambition is to assist SA in meeting its obligations under the Paris Agreement, and we see gas as a key component in the process of transitioning across to clean energy. As a lower carbon-emitting fuel than coal, gas offers dispatchable power at a reasonable cost until energy storage systems are better optimised to fully utilise renewable energy, making it an important transition fuel.”
The proposed transaction paves the way for further capital raising and investment in the ROMPCO pipeline to facilitate the crucial expansion of imports. This will serve to unlock these opportunities for industrialisation and the furtherment of cleaner power generation.
The investment in ROMPCO also marks a significant milestone for Black Economic Empowerment, with the Reatile-AIIM Consortium having black ownership of more than 60%. The deal will also see Reatile grow its already substantial presence in the energy and petrochemical sectors, in line with the ambitions of the Department of Trade and Industry’s Black Industrialist Policy.
African Infrastructure Investment Managers (AIIM), a member of Old Mutual Alternative Investments (OMAI), is the most experienced infrastructure equity investment manager on the continent, with a proven track record across seven African infrastructure funds over the last 21 years. AIIM’s team of 40 investment professionals across the financial structuring, technical, asset management and ESG capabilities is based out of five offices across the continent (Cape Town, Johannesburg, Nairobi, Lagos and Abidjan). AIIM is committed to Africa’s long-term development and, since 2000, the AIIM team has jointly executed in excess of 63 transactions and 29 exits across 19 countries throughout sub-Saharan Africa. AIIM currently manages an aggregate AUM of USD2.0 billion in assets across the power, renewable energy, digital infrastructure, midstream energy and transport sectors in East, West and Southern Africa. AIIM is one of the largest private investors in the power sector with power portfolio extending across renewable energy and thermal power assets with a combined generation capacity of over 2,700 MW.
ABOUT THE REATILE GROUP
Reatile Group is a 100% black-owned and 30% black women-owned South African investment holding company focused on the energy, petrochemical and industrial sectors. It has a proven track record of successfully operating, maintaining/managing and growing a portfolio of energy investments alongside some of the largest energy companies in South Africa and the world. Reatile is a significant player in the piped natural gas industry in South Africa (downstream market) and has hands-on experience in operating and maintaining a 1,200 km gas reticulation pipeline in the Greater Johannesburg Metropolitan, servicing over 10,000 supply points.
Advisors to AIIM and Reatile
Cliffe Dekker Hofmeyr
Freshfields Bruckhaus Deringer LLP
For more information, please contact:
E: AIIM@gongcommunications.com T: +44 (0) 7794 988752