PARTNERSHIPS, THE DRIVING FORCE BEHIND FUNDAMENTAL INFRASTRUCTURE DEVELOPMENT

by | May 17, 2021 | Writing | 0 comments

Infrastructure development is the bedrock of all modern, functioning economies, playing a critical role in economic growth with a 5-25% per annum return on investment (ROI) as an economic multiplier. 

However, with this fact well respected and understood, the exemplary financial and skills investment required to realise implementation insists that going it alone, in many cases, delivers a less than perfect result. 

Compounding this enormous challenge is the ongoing impact of COVID on the South African economy. Simply put, traditional financing resources are no longer enough for infrastructure financing. Solutions to the current turbulent market challenges impacting infrastructure will increasingly have to come from innovative financing solutions and private sector innovators. 

A sterling working example of this can be found in the recent partnership between the all-female team at MahlakoFinancial Services and Thuso Incubation Partners, in their role as independent, majority black-owned asset manager and development focused fund managers, making for a formidable union.

Mahlako’s track record within the energy sector, fund management and private equity arena, transaction, and advisory space, sourcing and executing transactions with a pronounced economic multiplier effect, speaks volumes and asserts its diverse skill set. 

In seeking to facilitate meaningful black economic participation and support of development initiatives in the asset management industry, and to allocate more capital to especially women-owned asset managers, Thuso is happy to have a partner with the shared value of inclusivity in the asset management industry. 

“Mahlako is pleased with this partnership because we believe that growth takes energy,” Mahlako Principle, Makole Mupita endorses. “To transform our world to become a more prosperous, sustainable, and inclusive one which will take not only the energy infrastructure but also the energy of individuals who are dedicated to it. The energy and calibre of associates the like of Thuso Partners.

“Without aligned partnerships such as this one, getting to the required R1.5 billion at final closing, which we will invest in projects and businesses in the energy sector and energy value chain focusing on renewable energy, gas, and energy services, will not be possible,” she adds. “We value Thuso’s partnering in helping Mahlako grow to be even more impactful is invaluable.”

Playing to their collective strengths

Mahlako is an alternative investment management firm focused on socio-economic developmental assets that deliver sustainable impact and a superior risk-adjusted return profile over the longer term. 

Recently, Mahlako invested in a 10MW Solar PV Plant with Amazon Web Services as an offtake. The project aligns with the South African Government’s intent to open the electricity grid, allowing independent generators of electricity and consumers to enter into bilateral agreements to optimise the cost and sustainability of energy, which has previously been difficult to achieve. 

The generation license received from the National Energy Regulator of South Africa

(NERSA) is one of the first granted as part of the recent allocation made for distributed electricity generation to plug the short-term capacity gap. This Wheeling Use of System Agreement is the first of its kind and the largest solar PV wheeling arrangement in South Africa to date and where Mahlako will own 45% of the project.

Taking control

“This is where we see South Africa moving forward – where innovation is not only reliant on Government programmes,” Thuso Partners’ CEO, Olwethu Cata says. “Solutions to the current tempestuous market challenges impacting infrastructure will increasingly have to come from innovative financing solutions developed, where we will see Government working collaboratively with the private sector and different financial resources.”

The Mahlako investment team, with its more than 40 years of collective experience, has managed over four-billion-rands in funds. It’s also invested in Round 1 and Round 2 projects in the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), being part of the only asset in the REIPPPP that has successfully concluded a refinance transaction.

Mahlako’s track record within the energy sector, fund management and private equity arena, transaction, and advisory space, sourcing and executing transactions with a pronounced economic multiplier effect, speaks volumes and asserts its diverse skill set. 

And so, to the future. The intention is to deploy capital and employ it well, where Mahlako creates worthwhile affiliation through the creation of more long-term projects, for the collective benefit of Thuso and Mahloko’s investors. Yes, no mean feat, but one this dynamic partnership will power through. 

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