Rand Merchant Bank (RMB) has provided transaction support to private equity firm Metier towards acquiring Mertech Marine.

Through its Sustainable Capital Fund II, Metier is focused on investing in sustainable and resource-efficient infrastructure in Africa.

Metier operates two parallel investment practices, the Capital Growth practice which concentrates on mid-cap entrepreneurial businesses requiring growth capital, and the Sustainable Capital practice.

The Sustainable Capital practice, which invested in Mertech Marine, focuses on investments that contribute to sustainable development in sub-Saharan Africa, including renewable energy, energy efficiency, water and waste management.

Mertech Marine is a South African company specialising in the recovery, recycling and repurposing of undersea cables.

The acquisition aligns with Metier’s focus on environmental sustainability and the circular economy, supporting the goal of investing in sectors that promote sustainability, which are crucial for driving environmental and social impact.

By acquiring an equity stake in Mertech Marine, Metier aims to enhance its portfolio with a company that not only contributes to reducing environmental waste but also creates economic value through the recycling and repurposing of materials.

Metier director and principal John Hannig says the investment in Mertech Marine is a demonstration of a global circular-economy champion based in Africa.

“RMB has worked closely with Metier through the investment process, assisting us to navigate the commodity risk and provide an optimal financing solution for the business,” he adds.

RMB played a pivotal role as debt financier for the acquisition, on the back of its long-standing relationship with Metier.

The complexities of the deal required the team to lean on their expertise to ensure an optimal funding structure that meets the operational requirements of Mertech Marine and, simultaneously, mitigate risks around the acquisition.

“This was not a leverage finance transaction in the traditional sense; we had to approach it in a similar way to a resource finance transaction owing to Mertech Marine’s business operating model. We also had to understand how the potential risk associated with the financing could be mitigated in line with commodity price movements,” says RMB leveraged finance head Anthony Sam.

Adding to the complexity, the transaction had to be executed across multiple jurisdictions, bearing in mind the inherent risk associated with commodity prices, as well as security of supply, given that Mertech Marine extracts the cables from international waters.

The acquisition also needed to be amenable to both Metier and Mertech Marine, which required a high level of flexibility to be built into the deal.

To date, Mertech Marine has recovered more than 105 000 km of decommissioned undersea telecommunication cables and has reclaimed large quantities of copper, which is a metal considered fundamental in the transition to a lower-carbon future.

RMB cites independent studies finding a net saving in greenhouse-gas emissions of about 2.5 t of CO_2-equivalent per tonne of cable recovered is possible, leading to total avoided emissions of about 50 000 t/y.

“RMB is committed to sustainable development in Africa, and supporting this acquisition aligns with our broader strategy to finance sustainable projects. Facilitating investments in companies such as Mertech Marine, which operates in the recycling and repurposing sector, enables RMB to promote job creation, environmental sustainability and economic growth in South Africa and the broader region.

“This partnership also sets the stage for future involvement in other sustainable and infrastructure-related projects, contributing to broader economic development goals in the region,” Sam concludes.