PSG charging up on renewable energy
Renewable power company Energy Partners has received an injection of cash to support its long-term ambitions
PSG Alpha, the nursery for promising investments uncovered by PSG Group, appears to be enthusiastically backing the growth prospects of independent power producer Energy Partners (EP).
A recent investment presentation showed PSG Alpha, which holds a 52.5% stake in EP, invested a further R150m in the power company last August.
That means PSG Alpha has invested almost R340m in the company over the past three years — a development that will bolster contentions that EP could be one of PSG’s next big growth legs.
The increased investment coincides with EP showing strong growth in assets under management and in its revenue line.
The presentation showed that EP’s sum of divisional revenue — the value of external projects (with a one-off revenue gain) and on-balance-sheet business (with annuity flows) — has grown by a compound annual growth rate of 82% over the past five years.
EP finished its 2018 financial year with revenue of R561m, and predicted this would grow to R790m in the 2019 financial year.
The presentation outlined some bold long-term ambitions for EP. Based on an implied electricity generation and electricity conversion market of more than R2 trillion, PSG Alpha believes a 1% market share would mean EP holding R20bn in assets.
There have been persistent rumours that PSG — which prefers to have its larger investments separately listed — will take EP to the JSE in the next 18 months.
However, PSG Alpha CEO Nico de Waal tells the FM that EP is unlikely to seek a listing on the JSE in the short term.
He stresses that EP’s on-balance-sheet projects endured periods of delayed profitability before the annuity flows rolled in.
"Before we list, we’d like to build a portfolio of assets of between R300m and R500m to have a strong stream of recurring income coming through," De Waal says.