South Africa’s government pension fund takes 40% of major Western Cape solar project

The Government Employees Pension Fund (GEPF) of South Africa is taking a 40% stake in what is expected to become one of the world’s largest concentrated solar (CSP) power plants.

GEPF is backing the 44MWp (megawatt peak) Touwsrivier project in the Western Cape developed by French technology firm Soitec, as a long-term investor. It follows a decision by the Department of Energy in South Africa to approve a change in the financing structure of the project. Financial terms weren’t disclosed.

“In practice, Soitec has joined forces with Public Investment Corporation (PIC), which represents the Government Employees Pension Fund (GEPF), through an equity financing structure,” Soitec said. “GEPF will ultimately, post the regulated holding period, hold a 40% stake in the project.” Soitec will retain a minority stake.

PIC, which has assets under management of more than R1.4trn (€96bn), is South Africa’s public asset management firm and runs the assets of the GEPF.

PIC’s Chief Investment Officer Daniel Matjila said: “This investment will contribute to the country’s much needed alternative energy needs thus contributing towards easing the current electricity pressures the country is experiencing as well ensure good returns for our client, the GEPF.” The project was inaugurated in November 2012 with the signing of a power purchase agreement (PPA).This was followed in April last year by the issuance of a R1bn bond. The plant is expected to come on stream fully in the second quarter of fiscal 2015. Black-owned Mergence Investment Managers said in 2013 that it had invested R50m in the project.

The deal comes despite leadership uncertainty at both the GEPF and PIC, with the former’s Principal Executive Officer John Oliphant currently suspended and PIC Chief Executive Officer Elias Masilela recently announcing his resignation.

Meanwhile, the Institute of Directors in Southern Africa (IoDSA), which oversees the King Report on Governance, has recommended that the most recent version (“King III”) be updated. The basic approach would remain but be enhanced for smaller entities and non-profits. IoDSA CEO Ansie Ramalho said: “The enhancement will aim to make South Africa’s authoritative guide on corporate governance more accessible to all types of entities and sectors.”

She went on to say: “It’s also clear that we need to assist users to better align the principles in King III with the changing international thinking on responsible investing, and with the Code for Responsible Investing in South Africa (CRISA).” The timetable for the revision is not yet confirmed but will be completed by early-2016 at the earliest.