Hundreds of millions of dollars to be used for expansion plans
Nigeria is being evaluated as next new market alongside MTN
Engie SA agreed to buy U.S. energy-technology start-up Fenix International to help fund the roll out of solar-power systems for Africans with no access to the electricity grid.
The French utility will provide capital and help raise debt to expand the electricity service into at least 10 African countries over the next five years, Fenix Chief Executive Officer Lyndsay Handler said in a phone interview. Courbevoie-based Engie decided on the all-cash acquisition after initially considering a smaller investment, she said, declining to provide the terms of the deal.
“In order to achieve our goals we need hundreds of millions of dollars in equity and debt, and Engie is committed to provide what is needed,” the CEO said. “This is not about a big acquisition, it’s about reaching the over 600 million Africans that lack access to electricity.”
Fenix is evaluating whether to enter Africa’s most populous country of Nigeria alongside wireless carrier MTN Group Ltd., an early investor. The Johannesburg-based phone company helps Fenix target consumers that use its mobile banking application, who tend to be on lower incomes. The takeover by Engie will not change the relationship with MTN, according to Handler.
The acquisition is the latest example of growing investor interest in off-grid solar power in Africa, after Enel Green Power SpA started to roll out Tesla Motors Inc.’s home-power kits in South Africa earlier this year. Fenix markets its system as a cheaper and cleaner alternative to the kerosene lamps, candles and wood fires used by millions of people living in fuel poverty on the continent.
Engie, a former French gas monopoly, has been on an aggressive acquisition run for the past decade, investing in renewable energy options while selling coal-fired plants and exploration assets to shield it from commodity-price swings. It plans to spend 1.5 billion euros ($1.8 billion) on technologies including grid-scale battery storage, micro-grids and solar powered kits for Africa.
“Africa is a key continent for us to invest in,” said Engie Africa Chief Executive Officer Bruno Bensasson by phone. “There is an opportunity to make decent returns and profit. The telecommunications sector is probably the best example of this.”