Axxela, other investors grab stakes in Eko Disco
- New investors to transform EKEDC into integrated power firm
Sopuruchi Onwuka
A number of deep pocket investors have acquired significant equity stakes in the Eko Electricity Distribution Company (EKEDC) Limited, clearing the path for the power marketing company to transform into an integrated energy firm.
The Oracle Today gathered from sources close to the deal that domestic gas distribution company, Axxela; operators of the Shiroro hydro electric power, North-South Power (NSP); and portfolio fund managers, the Stanbic Infrastructure Fund; form the consortium that staked new funds for equity in EKEDC.
The value of the deal is still sketchy as the detail of the equity acquisition is being worked out and regulatory approval is being perfected. Under the bidding criteria, the new investors are required to commit to the deal with some 10 percent payment of the acquisition value.
Despite the signature fee commitment, the composition of the board and management of the company remains intact until all acquisition conditions are met and finalized.
The acquisition process and full reorganization of the company’s board are supposed to be concluded early in the new year when completion of the conditions precedent and authorization by regulatory agencies are set to be finalized.
The profile of the companies that comprise the consortium shows that EKEDC is underway to becoming an integrated electric power company with a guarantee of internal electricity generation and distribution infrastructure synergies.
Whereas the cost of acquisition is estimated to be in hundreds of million dollars, expected new investments in infrastructure development and expansion could propel massive growth in the company as the industry enjoys greater market liberalization and regulatory decentralization under the amended Electric Power Sector Reform Act (EPSRA).
The Oracle Today reports that internal value chain synergies is not new in the industry where both Ikeja Electric (IE) Limited and Egbin Power Limited have common parent Sahara Energy group which plays across the full web of the petroleum and power sectors of the economy.
With greater efficiencies and accountability structures already established by the Nigerian Electricity Regulatory Commission (NERC) ahead of decentralization of regulations in the sector, commercial efficiency will largely depend on synergies and internal cross-subsidization among consortium members which play across the full value chain.
With Axxela guaranteeing gas supply for potential embedded genration, NSP supplementing with green power generation and Stanbic providing cheap funding, the commercial outlook of the company projects stronger business viability with the new investors.
