Pow­er­ing the con­ti­nent

Finweek English Edition - - INSIDE - war­ren­dick7@gmail.com

There are a num­ber of South African com­pa­nies build­ing sub­stan­tial businesses on the con­ti­nent at the mo­ment, and one of these is Con­sol­i­dated In­fra­struc­ture Group, which has been ac­tive in 21 African coun­tries al­ready. The com­pany, through its sub­sidiary Con­sol­i­dated Power Projects (Conco), is one of the largest builders of sub­sta­tions and trans­mis­sion lines on the con­ti­nent, which en­com­passes the full spec­trum of de­sign, pro­cure­ment and project man­age­ment re­quired to in­stall these sys­tems. Es­sen­tially to move bulk quan­ti­ties of elec­tric­ity from the point of gen­er­a­tion to the point of con­sump­tion, you need to ‘switch up’ the volt­age in or­der to trans­port it over vast dis­tances. When the elec­tric­ity reaches its point of con­sump­tion, the volt­age needs to be ‘turned down’. The hard­ware (trans­mis­sion lines, sub­sta­tions) and soft­ware re­quired to do this is what Conco sup­plies. But the i nvolve­ment of Conco stops at the level of the sub­sta­tion – dis­tri­bu­tion to the end con­sumer is han­dled by mu­nic­i­pal­i­ties or power util­i­ties them­selves. A cost break­down shows that de­sign and tech­ni­cal ex­per­tise make up 25%30% of the cost of a power sta­tion, 30% is con­struc­tion (which Conco out­sources), and the bal­ance is for the pro­cure­ment of equip­ment, for which Conco is sup­plier ag­nos­tic. Thirty-eight per­cent of Conco’s rev­enues now come from out­side South Africa.

The in­tel­lec­tual property that the com­pany has de­vel­oped over the years, build­ing and com­mis­sion­ing sub­sta­tions, has al­lowed it to cre­ate a sep­a­rate busi­ness unit, called Pro­tec­tion and Au­to­ma­tion, which will com­mer­cialise the so-called op­er­at­ing sys­tem of a sub­sta­tion. This will al­low users – among other things – to dras­ti­cally re­duce the time it takes to com­mis­sion a sub­sta­tion. There are also other op­por­tu­ni­ties Conco is pur­su­ing in the re­new­able en­ergy space as projects in SA (via REIPPP) be­gin to come on stream and must be plugged into the Eskom grid.

The in­clu­sion of the An­gola En­vi­ron­men­tal Ser­vices (AES) di­vi­sion for the first time added to the im­pres­sive in­terim re­sults to the end of Fe­bru­ary, which saw rev­enue (R1.3bn) and EBITDA (R169m) climb 36% over the pre­vi­ous pe­riod. AES ap­pears to have high bar­ri­ers to en­try in ser­vic­ing the waste man­age­ment needs of oil rigs off the coast of An­gola where it is the only one of its kind op­er­at­ing in the port of Luanda. The di­vi­sion has plans to ex­pand both in Luanda, and fur­ther up the coast at Soyo.

With plenty of de­mand for the group’s ser­vices, there is much work that re­quires fund­ing. The com­pany went back to the mar­ket in June and raised R324m by way of a gen­eral is­sue of shares for cash, to com­ple­ment its ex­ist­ing medium-term note pro­gramme. This was money that share­hold­ers, who have en­joyed a 527% in­crease in the com­pany’s share price over the last five years, were no doubt happy to hand over.

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