Backs $285m Gas Deal
By Natalie Naidoo
Johannesburg, Gauteng –
Standard Bank has made headlines by financing a groundbreaking energy deal in Nigeria, stepping in to support BlueCore Gas InfraCo’s monumental $285-million acquisition of Glover Gas & Power. This acquisition brings Axxela—a leading natural gas distributor in West Africa—under BlueCore’s wing, significantly enhancing infrastructure and promoting a cleaner energy transition in the region.
Major Financing Paves Way for Energy Growth
With a valuation of approximately R4.7 billion, this transaction marks a pivotal moment for Nigeria’s energy landscape, where a consistent gas supply is vital for the operational continuity of factories, power plants, and various businesses.
Standard Bank has taken a bold step as the lead financier, providing a blend of debt and equity financing to ensure BlueCore’s acquisition goes through. This structured arrangement not only secures the buyout but also underscores the bank’s capabilities in dealing with complex, cross-border financial transactions.
BlueCore Gas InfraCo itself is a newly formed alliance that comprises Afrigaz Energie LLP, a subsidiary of the Stanbic IBTC Infrastructure Growth Fund, along with partners Levene Energy Development Limited, emPERSAND Limited, and energy& LLP. Together, they aim to fast-track gas and power initiatives across Nigeria and broader West Africa. The collective expertise of these partners in power generation, distribution, and green energy positions Axxela for exponential growth.
With this acquisition, BlueCore gains full control over Glover Gas & Power B.V., which proudly holds 100% of Axxela Limited. Axxela’s journey began as a trailblazer in natural gas distribution in the early 2000s, and it has since evolved into a stalwart in the industry, delivering up to 100 million standard cubic feet of gas daily to more than 200 clients via an expansive network of over 400 kilometers of pipelines. The company’s subsidiaries, such as Gaslink Nigeria Limited, Transit Gas Nigeria Limited, and Central Horizon Gas Company Limited, handle various aspects from distribution to midstream infrastructure and integrated power solutions.
This acquisition is crucial for Nigeria’s everyday consumers, promising more stable energy sources for industries that create jobs and fuel the economy. As power cuts remain a persistent issue and businesses heavily rely on costly generators, Axxela’s transition to natural gas—being a cleaner and more affordable alternative—can significantly reduce pollution and operational costs.
Overcoming Challenges in a Complex Deal
Securing this deal was fraught with challenges. It involved navigating multiple legal landscapes, currency swaps, and regulatory approval from countries including Nigeria and the Netherlands, where Glover is based. Standard Bank assumed a vital role in orchestrating this intricate transaction, facilitating fund flow through adept negotiation and expert guidance.
The team, led by deal experts such as Kagiso Rantloane, worked collaboratively with advisors to successfully complete the operation, showcasing South African banks’ growing prominence in financing significant African projects. As energy needs in West Africa escalate, initiatives like this are essential in bridging funding shortfalls for infrastructure developments.
With Nigeria’s commitment to employing gas as a transitional fuel towards renewable energy sources, stakeholders in BlueCore envision tremendous potential. The outlook includes expanding Axxela’s infrastructure, increasing its customer base, and even exploring renewable technologies like solar-gas hybrid systems.
Natural gas provides a cleaner alternative compared to coal and diesel, thereby reducing carbon emissions while maintaining energy supply. Factories producing everything from cement to food stand to gain from reliable gas, as it promises fewer operational disruptions, lower costs, and enhanced competitiveness. In neighboring Benin, Axxela’s established presence could further facilitate cross-border trade and job creation.
Voices from the Deal Highlight Bright Future
Excitement abounded among those involved in the deal. A representative from the selling side remarked, “We are proud of what Axxela has achieved under our ownership. Together with the management team, we have built a resilient platform well-positioned for long-term growth. BlueCore is the right partner to support the Company’s ambitions, and we remain confident Axxela will continue to play a critical role in advancing energy infrastructure in its core Nigerian market and beyond.”
A director from BlueCore expressed delight in concluding the acquisition, stating, “Axxela is a high-quality asset with strong fundamentals and a talented management team. We look forward to working closely with the Company to enhance its operational footprint, support ongoing growth, and contribute to the broader energy transition across the region.”
The Group CEO of Axxela added, “This marks an important milestone in our company’s journey. The success of the transaction is a strong validation of the value and impact that the shareholders found in the Axxela business. Under the previous partnership, we have strengthened our operational foundation and achieved significant growth. As we move forward with BlueCore, we are excited about the opportunities ahead. Their reach and industry expertise will help us deepen our impact and expand our capabilities.”
These statements emphasize that the deal transcends financial transactions; it signifies the enhancement of West Africa’s energy infrastructure.
Broader Impacts on African Energy and Banking
For Standard Bank, this deal represents a significant achievement, bolstering its reputation in funding major African projects. As the largest bank by assets in South Africa, it has successfully orchestrated multi-billion-dollar agreements across various sectors, including mining, telecommunications, and now energy. This latest venture aligns with a global shift towards gas and renewables, critical as Africa’s energy demand is forecasted to double by 2050, potentially unlocking trillions in investments to combat poverty and create jobs.
Nonetheless, challenges remain in the Nigerian gas sector, including vulnerabilities like pipeline sabotage, aging infrastructure, and inconsistent policies that hinder investment. BlueCore’s team aims to confront these hurdles by blending local insights with global expertise to foster trust and secure safe expansion.
For the average citizen, this initiative can translate to reduced energy costs, increased factory operations, and cleaner urban air in places like Lagos and Abuja. As West Africa sets its sights on energy independence, Standard Bank’s bold investment signifies a confident leap towards realizing the region’s vast potential.
With Axxela now under new ownership, the pathway is clear for sustainable growth that benefits not only businesses but also communities and the environment.
