Infrastructure Debt, a division of Old Mutual Alternative Investments (“OMAI”), is proud to announce that it has partnered with Rand Merchant Bank (RMB), a division of FirstRand Bank Limited, and the ACED-IDEAS-Reatile Consortium to reach financial close and commence construction on the Msenge Emoyeni Wind Farm (“Msenge” or “Project”), the first utility- scale commercial and industrial wind farm in South Africa.

Msenge has entered into a Power Purchase Agreement (PPA) with Sasol for the supply of renewable energy to Sasol’s Sasolburg site via a wheeling arrangement. Sasol has committed to reducing its absolute greenhouse gas emissions from its South African operations by at least 30% by 2030 (off a 2017 baseline) and transitioning towards a more sustainable product portfolio. The power will aid in the first green hydrogen production at Sasolburg and progress Sasol’s ambition to lead the development of a green hydrogen economy in Southern Africa.

Msenge represents a consortium of co-sponsors and equity investors led by African Clean Energy Developments (“ACED”) and consisting of African Infrastructure Investment Managers (“AIIM”) and Reatile Renewables (Pty) Ltd (“Reatile”). ACED and AIIM are co-sponsors and the equity in Msenge is owned 62% by AIIM, through its flagship IDEAS Fund, and 38% by Reatile. RMB partnered with the consortium as the Mandated Lead Arranger for the Project. In collaboration with RMB, Infrastructure Debt acted in its capacity as a lender in the transaction and will co-fund the Senior Facilities in Msenge, which will be used to construct the wind farm.

Msenge has a contracted capacity of 69MW (installed capacity of 72MW) and is located near the town of Bedford, approximately 200km north of Gqeberha in the Eastern Cape. Msenge is the first utility-scale private wind farm in South Africa with its power wheeled across the national electricity grid.

Aside from needing to resolve the country’s power crisis, the South African government has prioritised the manufacturing of green hydrogen for strategic industrial usage. Infrastructure Debt is pleased to support Sasol, the ACED-IDEAS-Reatile Consortium, and Msenge in achieving these outcomes. Green hydrogen is a key component of a low-carbon energy sector that will enable the decarbonisation of critical sectors of South Africa’s economy, including transport, refining of metals and cement, heat generation, and back-up power supply.

According to Rolf Canto, Head of Infrastructure Debt, “The Msenge project follows the gradual deregulation of the local electricity sector and is an important step towards the use of cleaner energy sources by intensive energy users such as Sasol. The transaction involved many new features that needed to be addressed under tight timelines. The deep skills and high degree of specialisation within the Infrastructure Debt team enabled us to execute a complex transaction in record time.”

Gregory Issac, Infrastructure Debt’s lead transactor on Msenge, noted the significant impact that projects like Msenge have on our country, with each megawatt added to the grid reducing the risk of load-shedding in the future. He added, “The team has invested significant time and resource in unpacking and understanding the utility-scale private power sector and closing Msenge positions Infrastructure Debt as the leading institutional debt investor in the sector.”

OMAI Infrastructure Debt is an established South African institutional investor. Over the years, it has participated in several complex project finance debt transactions, including providing long-dated funding into power, renewable energy, public-private partnerships, and water infrastructure transactions. Its portfolio consists of investments in thirty-one infrastructure projects at various stages of construction and operations, with a specialised team exhibiting a significant record of coordinating and structuring various infrastructure transactions. Infrastructure Debt remains committed to partnering with companies, commercial banks, and development finance institutions to drive a sustainable energy transition in South Africa.