RMB invests alongside Seriti in acquisition of Windlab Africa Platform

 

Client challenge

Seriti Resources (Seriti) is a BBBEE energy business. While currently being focused on the production of coal (for both Eskom and export markets), with the intended closure of 8 – 12 GW of coal-fired power generation over the next 10 years, Seriti realised a need to future-proof the business.

Being mindful of specific ESG implications associated with their coal mining, Seriti has  developed a strategy to actively reduce carbon emissions across the business. The diversification away from just coal and the development of a renewable energy pillar is aligned with this strategy. It also sees them participate responsibly in the sector, understanding that their coal production is a massive contributor to economic growth (through delivery to Eskom, as well as job creation), which is why they wanted this latest acquisition to be complementary to their existing initiatives across the country.

RMB is a trusted partner to Masimong and Seriti, having concluded many transactions with them to date, as well as acting as strategic adviser on many of the transactions that they have concluded. RMB had been in discussions with Seriti from 2021 on partnership opportunities to develop renewable energy projects to lower their carbon footprint at their operations. Seriti requested that RMB play a key role in the transaction to work with them to build the green business.

This is a new sector for Seriti and as such Seriti sees value in having a market leading infrastructure equity partner alongside them to help guide them in the investment decision.

RMB's solution

The transaction involves Seriti Green purchasing Windlab Development South Africa and Windlab East Africa businesses from Windlab Australia. RMB has partnered Seriti Resources and management as shareholders in Seriti Green by taking a 14.5% equity stake in the Windlab business being acquired.

The plan is to build out a renewable energy business that can both develop sites, but also be a meaningful player in the private power sector in South Africa through its investments in local renewable projects that will help alleviate strain being placed on Eskom. Seriti’s ambitions are to responsibility roll-out a just-transition-strategy, which is very much aligned with this latest acquisition.

The transaction includes the purchasing of the The Windlab Africa portfolio of development being one operational wind asset and 23 Renewable Energy Development Projects at different stages of development in South Africa and Kenya. In addition to this, Windlab Africa has entered into a joint venture with Globeleq in Mozambique to develop the Manhica Wind Farm.

Client enablement

This transaction fits well into the just-energy-transition strategy that RMB has been actively working on with Masimong and Seriti and has the following benefits to the SA market at large:

• It will contribute to the South African energy supply deficit which is forecast to widen rapidly as coal fired power plants are decommissioned, where there is an expectance of a continuation unpredictable and soaring electricity tariff hikes, and more frequent bouts of load shedding
• It will also create jobs in the area, which is paramount considering the intended closure of 8 – 12 GW of coal-fired power generation over the next 10 years. This transaction will play a key social role to support the employees and the communities which, in time, will be impacted by the energy transition
• The projects will reduce carbon emissions across the business and in the Mpumalanga area
• After 12 years of participating in the REIPPP Programme, this transaction sees Seriti Green being well positioned to be one of a few large, black and locally owned developers that can compete with international developers and to in the short to medium term being able to compete with Independent Power Producers (IPPs) in South Africa

Client	Seriti Resources
Sector	Infrastructure and Renewables
Capabilities	Infrastructure Sector Solutions
RMB's role	Equity investor Funder to management Bridge facility provider
Country	SA Kenya Mozambique