West Power Sells Stake in Eko DisCo for $350 Million
Lagos, Nigeria –
West Power Holdings Ltd., a subsidiary of Singapore-based West African Power Company (WAPCo), has announced the sale of its majority stake in Eko Electricity Distribution Company (Eko DisCo) to a consortium of investors for $350 million.
Background:
West Power acquired a 51% stake in Eko DisCo in 2013 as part of the privatization of Nigeria’s electricity distribution sector. The company invested heavily in the distribution network and operations, improving power supply and customer service.
Transaction Details:
The consortium of investors includes the Lagos State Government, the African Development Bank (AfDB), the Nigerian Bulk Electricity Trading Plc (NBET), and the indigenous private equity firm, Tenova Capital. The deal was brokered by Citigroup and Rand Merchant Bank. Under the terms of the sale, West Power will transfer its entire 51% stake in Eko DisCo to the consortium. The transaction is subject to regulatory approvals.
Rationale for Sale:
West Power’s decision to sell its stake in Eko DisCo is part of its strategy to exit the Nigerian power sector. The company has been facing challenges due to the regulatory framework, foreign exchange volatility, and rising operating costs. The sale will allow West Power to focus on its core operations in renewable energy and distribution in West Africa.
Benefits of the Transaction:
The transaction is expected to benefit Eko DisCo as it brings in new investors with experience and financial capabilities. The consortium’s involvement is seen as a positive step towards improving the company’s operations and financial performance. The Lagos State Government’s participation in the consortium is expected to enhance collaboration and support for Eko DisCo’s development.
Future Outlook:
Following the completion of the transaction, the consortium is expected to embark on a comprehensive review of Eko DisCo’s operations and develop a long-term investment plan. The goal is to improve power supply, reduce losses, and enhance customer satisfaction. The sale of West Power’s stake in Eko DisCo marks a significant milestone in Nigeria’s electricity privatization program. It is a testament to the resilience and growth potential of the sector, despite the challenges it faces.
Nigerian utility firm, West Power, has sold its 51% stake in Eko Electricity Distribution Company (Eko DisCo) to a consortium of investors led by New Hampshire Capital for $350 million.
The sale, which was announced on March 14, 2023, is part of West Power’s ongoing strategy to divest from non-core assets and focus on its core businesses of power generation and distribution. Eko DisCo is one of Nigeria’s largest electricity distribution companies, with a customer base of over 2 million people in Lagos State. The company has been facing financial challenges in recent years, and the sale to the new consortium is expected to provide much-needed investment to improve its operations and service delivery. The consortium of investors that acquired Eko DisCo includes New Hampshire Capital, a private equity firm focused on infrastructure investments in developing countries, and Tenova, a leading provider of energy and infrastructure solutions.
The sale is subject to regulatory approvals, which are expected to be obtained within the next few months.
Once the sale is complete, the new consortium will take over the management and operations of Eko DisCo.
The sale of Eko DisCo is a significant development in the Nigerian electricity sector, as it marks the first time that a major distribution company has been acquired by a private sector investor.