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04-Nov-2009
Emerging Capital Partners (ECP), an international private equity firm focused on investing across the African continent, announced today the acquisition of a majority stake in Finagestion, a holding company that operates several major water and power production and distribution concessions in Cote d'Ivoire and Senegal.
Finagestion's core interests in Cote d'Ivoire include Société de Distribution d'Eau de Côte d'Ivoire (SODECI), a water production and distribution company; Compagnie Ivorienne d'Electricité (CIE), a power transmission and distribution company; and Compagnie Ivorienne de Production d'Electricité (CIPREL), a power generation company. In Senegal, the firm holds a controlling interest in a water production and distribution company Sénégalaise des Eaux (SDE). The group's consolidated annual turnover exceeds $500 million servicing one million water subscribers and one million electricity clients. Water production amounts to 300 million cubic meters per year and annual electricity production stands at more than 3,400 GWh.
Formerly majority owned by the Bouygues group, Finagestion provides these operating subsidiaries with management and technical oversight and will continue to do so with the strong support of the local management teams. The transaction successfully realizes Bouygues' objectives to restructure Finagestion's capital base to encourage greater participation of local stakeholders through the introduction of a leading financial partner.
Throughout sub-Saharan Africa, more than 600 million inhabitants lack access to electricity. Moreover, the region remains off-track in the Millennium Development Goal to provide acceptable levels of potable water to its population. According to Vincent Le Guennou, Executive Vice President of ECP and former CIE manager, "ECP would like to render Finagestion an efficient solution provider for the water and power sectors in Sub-Saharan African by capitalizing on the existing technical and managerial capacity within the operating companies. This initiative is supported by the desire of African governments to find innovative models of cooperation with the private sector."
The Finagestion transaction reflects ECP's desire to lead a project defined and built on collaboration with the local management teams of CIE, SODECI and CIPREL. The local employees as well as other regional investors will be allocated a meaningful equity stake in the group. Bouygues will remain a minority investor in Finagestion.
Finagestion will assist the executives of SODECI, CIE, SDE and CIPREL in pursuing a unified corporate strategy. These goals will encompass continual improvements in quality of service and client satisfaction, increases in electricity production, more effective initiatives against fraud and the pursuit of sustainable development.
Other ECP key objectives include: a) reestablishing the operating units as centers of excellence for the recruitment and training of young talent. As such, the firm sees significant value in facilitating knowledge transfers as well as the effective implementation of the latest technologies, b) consolidating the social advances realized by the Company for the benefit of its employees pursuant to a uniquely African model and c) exporting the successful management models developed by these companies to other countries in Africa.
ECP's CEO, Thomas Gibian, noted that "ECP aims to develop Finagestion as a true leader in the water and power sectors in West Africa by leveraging our financial expertise as well as our ability to mobilize resources."
The Finagestion investment was made through ECP's Africa Fund II PCC, a $523 million vehicle, encompassing a diverse investor base, 50% of which is subscribed by bilateral and multilateral development institutions such as the African Development Bank, European Investment Bank, and Proparco. ECP Africa Fund II was founded in 2005 and has engaged in a number of investments across the continent in sectors such as the telecom (Cellcom in Liberia and Guinea, MTN-Cote d'Ivoire), natural resources (MDL in Senegal, Salt Investment in Djibouti) and financial services (Bank of Africa, Ecobank, GAM in Algeria).