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Emerging Capital Partners invests in West African utilities firm

Emerging Capital Partners, a private equity firm focused on investing across the African continent, has made an investment in Finagestion, a holding company that operates water and power p

Emerging Capital Partners, a private equity firm focused on investing across the African continent, has made an investment in Finagestion, a holding company that operates water and power production and distribution contracts in Cote d’Ivoire and Senegal.

The EUR23m investment provides significant corporate governance rights, including board representation and, Emerging Capital says, will enable it to steer Finagestion toward organic growth opportunities and acquisitions throughout West Africa.

Sub-Saharan Africa currently has one of the world’s lowest rates of access to drinking water and electricity. Most countries have water distribution well below 50 per cent in urban areas, and nearly 75 per cent of the population lives without electricity. This presents a major market opportunity for companies such as Finagestion that can provide these services economically and effectively.

‘Because Africa is lagging the rest of the world in terms of utility infrastructure and services, Emerging Capital Partners sees a significant opportunity for Finagestion to expand its operation responsibly,’ says the firm’s chief operating officer Hurley Doddy.

‘In addition, the governments of West Africa are in favour of outside investment and private development of this sector in order to deliver power and water services to their vastly underserved populations.’

Finagestion employs more than 6,200 people and provides clean drinking water to 13 million Africans, power to 10 million, and wastewater facilities to 1.6 million. Its core interests in Cote d’Ivoire are Société de Distribution d’Eau de Côte d’Ivoire, a water production and distribution company, Compagnie Ivorienne d’Electricité, a power transmission and distribution company, and Compagnie Ivorienne de Production d’Electricité, a power generation company, while in Senegal, the firm has a controlling interest in water production and distribution company Sénégalaise des Eaux. Finagestion provides these operating subsidiaries with management and technical oversight.

‘ECP expects to leverage Finagestion’s operating and management strengths to help the company become one of the most prominent players in the West African utility sector,’ says Emerging Capital Partners executive vice-president Vincent le Guennou. ‘With its sound track record and profitability, the company is in a prime position to assess opportunities for new contracts and expansion in neighbouring countries.’

Finagestion is a wholly-owned subsidiary of the French conglomerate Bouygues and was formed when Bouygues took over the African activities of French water services group Saur (Société d’aménagement urbain et rural), which had been established in the 1950s.

Emerging Capital Partners’ previous investments in the African utilities sector include a USD40m investment in Veolia Water Maroc, which provides electricity, water and waste water services in Morocco.

The Finagestion investment was made through the USD523m ECP Africa Fund II and provides an opportunity for the fund to further diversify its portfolio in terms of industry and geography. Africa Fund II was established in December 2005 to capitalise on investment opportunities throughout Africa in sectors such as telecommunications, natural resources, financial services, agribusiness, transportation, power and water.

Emerging Capital Partners has an eight-year track record of pan-African investing and has raised more than USD1.5bn billion to invest in companies across the continent, targeting consistently above-market returns that are uncorrelated to the US and other global economies.

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