Abraaj Group, the US$9 billion private equity fund founded by Pakistan-born Arif Naqvi, plans to double its power project investments, with a focus on Africa.
The Dubai-based company said yesterday that it had acquired for an undisclosed amount Themis Advisory and its small team, which is led by two former African Development Bank executives, Tas Anvaripour and Marc Mandaba.
The acquisition brings with it Themis’ $500 million investment portfolio, which includes a thermal power project in Rwanda and a hydro plant in Ivory Coast.
Sev Vettivetpillai, partner in charge of “thematic” funds at Abraaj, said the company had already made about $1bn worth of energy investments spread across 10 projects, including a joint venture in October to build 1 gigawatt of solar power in partnership with the Aditya Birla Group in India.
The portfolio also includes investment in a 3GW plant that is the largest supplier of electricity to Karachi, Pakistan’s largest city.
“Historically, there is a lack of investment [in electricity in developing countries] and the gap is getting wider,” Mr Vettivetpillai said.
“In many instances, in developing countries and cities the assets don’t exist to invest in and you need the capability to build businesses from the ground up,” he said. “We want to be in a position to develop these projects from the earliest stage, hence we bought Themis.”
Ms Anvaripour has been a development banker for about 30 years and before Themis, which was founded two years ago, she was instrumental in setting up Africa50, the African Development Bank’s main power project financing initiative.
Abraaj Group typically invests in power projects during the construction phase and stays invested during the first couple of years of operation, before realising its investment through some kind of exit, such as an equity sale or flotation.
The acquisition of Themis gives the company expertise at an earlier stage, when contracts are being signed and financing is being raised, which is often a difficult process in Africa and other developing regions, Mr Vettivetpillai said.
The overall aim is to manage energy projects through all stages of the “asset life cycle” and harvest the “demographic dividend” that is expected to accrue from continued urbanisation in emerging growth markets, and from the implementation of regulatory reforms in the electricity sector, he said.
As well as sub-Saharan Africa, Abraaj’s energy investment will focus on North Africa, Indonesia and Philippines in South East Asia and Mexico in Latin America.