One of Africa’s largest infrastructure-focused private equity fund managers African Infrastructure Investment Managers (AIIM) has agreed to provide initial equity funding of up to R1.6-billion to support the establishment of a new renewable energy platform, NOA Group Holdings, to deliver net-zero energy solutions for Africa.

The transaction will be financed through a mix of equity provided by AIIM’s South African IDEAS Fund and the latest iteration of AIIM’s dollar-denominated pan-African investment fund AIIF4.

NOA is a vertically integrated energy platform that provides net-zero-oriented renewable energy solutions to customers in the commercial and industrial sectors of the economy. It has developed a range of solutions for customers through the provision of large-scale wheeled energy generation using wind, solar and storage technologies.

The investment strengthens AIIM’s position as an investor in South Africa’s renewable energy landscape with projects representing over 1.9 GW of solar and wind generation capacity. It also supports the imperative to deliver new renewable energy capacity to address energy sector deficits and accelerate the energy transition.

NOA aims to develop, finance and operate a portfolio of more than 1 GW of renewable energy assets over time. Initial funding will be used to conclude the construction of existing projects and achieve financial close on projects amounting to almost 100 MW.

NOA will be launched by a team comprised of veterans of the South African renewable, commercial and industrial energy sectors and is led by former Energy Partners CEO and current NOA CEO Karel Cornelissen.

The transaction comes as the liberalisation of South Africa’s energy markets is accelerated by impending regulatory changes, which permit distributed generation without the need for a generation licence and the removal of size limits of such facilities, as announced in July by President Cyril Ramaphosa.

These projects may now also be grid connected and sell to multiple customers through wheeling – the act of transporting electricity from a generator to a remotely located end-user through an existing transmission and distribution system. Rapidly declining costs of renewable energy technology further enable NOA to provide its customers with renewable energy at competitive tariffs.

South Africa has a large and growing shortfall in energy availability. Between 30 GW and 50 GW of new capacity is likely to be required over the next ten years if South Africa is to meet its nationally determined contributions under the Paris Climate Agreement and to mitigate the current energy crisis.

“South Africa is at a pivotal point in the evolution of its energy landscape with the imminent retirement of ageing coal power stations, a significant energy sector infrastructure deficit and increasing liberalisation of the market paving the way for an acceleration of investment in net-zero-oriented businesses such as NOA,” AIIM investment director Ed Stumpf said in a statement on November 23.

“We are excited by the amount of proprietary deal flow being generated by our next generation pan-African fund, AIIF4. The NOA commitment represents the fifth investment to date. AIIF4 is a thematic investor with a high-quality diversified pipeline across the digital infrastructure, energy transition and mobility and logistics sectors. We look forward to expanding the fund’s portfolio,” AIIM MD and cohead Olusola Lawson added.

AIIM will also seek to develop bolt-on investment prospects in other key African markets where it has portfolio investments and on-the-ground experience to ensure that NOA can establish itself as a regional energy solutions provider in key energy demand hubs across the continent.

“We are excited to conclude this transaction and create a long-lasting partnership with AIIM. The acquisition allows NOA to rapidly scale up on our ambitions to partner with our clients on their journey to Net Zero, while at the same time making a contribution to South Africa’s current energy crisis,” Cornelissen said.