Lions Head mobilises $12.1m for clean energy in South Africa

Lions Head Global Partners, Power Africa, the US Agency for International Development (USAID), Flyt Property Investment, and Anuva Investments have announced a $12.1 million investment in South Africa’s power sector. This marks the first financial close for Decentral Energy Managers, a South African renewable energy-focused independent power producer (IPP).

Decentral’s business model targets retail, tourism, residential, and commercial and industrial (C&I) customers, supplying power to medium-sized businesses that have been severely impacted by the country’s energy shortfalls. The company currently develops, owns, and operates over 10 MW of solar photovoltaic assets in the C&I sector, with an additional 500 MW of active development assets nationwide. This is likely the first acquisition of renewable C&I projects by an institutional asset manager in South Africa.

For the past 15 years, South Africa has grappled with an energy crisis characterised by widespread blackouts, aging infrastructure, and challenges within Eskom, the state-owned energy company. Renewable energy is crucial for enhancing the nation’s energy security, but eroded investor confidence and weak macroeconomic conditions have hampered transaction activity. The Just Energy Transaction Partnership, an international commitment supporting South Africa’s transition away from coal, has pledged $8.5 billion over the next three to five years through a mix of financial instruments, with renewable energy expected to account for a significant portion of the partnership.

The liquidity generated by this investment will fund further greenfield C&I transactions, primarily in the small- and mid-scale sectors. This will enable Decentral to reach scale and boost renewable energy generation capacity to 45-50 MW across 30-40 C&I offtakers in South Africa. Decentral’s wheeling strategy (selling to third-party buyers via the grid) could help ease the electricity provision burden on Eskom.

The $12.1m investment comprises equity from Flyt Property Investment and Anuva Investments, a property development company and a real estate and renewable energy investment firm respectively. The fundraise was facilitated by transaction advisory services from Lion’s Head Global Partners, an investment bank and asset manager, with support from USAID through the INVEST initiative. The investment aligns with the US government’s Power Africa initiative, which aims to increase energy access and end energy poverty in sub-Saharan Africa.