ENGIE Pursues M&A Path into Africa
Through an ambitious programme of mergers and acquisitions (M&A), the global energy group ENGIE is seeking to increase its penetration of the African market and become a leader in the provision of energy services on the continent. Its recent purchase of West African energy companies Afric Power and Tieri is the latest in a series of moves designed to accelerate the group’s growth in Africa.
Afric Power and Tieri specialize in the supply of electrotechnical products and services. Their core activity is the assembly and installation of electrical cabinets, automated control mechanisms and electrical systems. They also provide related maintenance and warranty coverage. The companies have marked themselves out by offering equipment mounted in the region, thereby ensuring it is competitive and adapted to local markets, while also creating jobs locally.
Established in Côte d’Ivoire, Burkina Faso, Mali and Niger, these two young companies have rapidly built up a broad customer base covering the agri-food and mining industries, large service companies and data centres, not only in West Africa but also in Central Africa.
ENGIE’s acquisition of Afric Power and Tieri, announced in January 2018, continues the multinational’s policy of buying or allying itself with local, established businesses. Already a leading player in power production on the continent, including thermal power and renewable energy, ENGIE sees this approach as an effective way to develop a broad range of energy services for communities, companies and households.
It is a policy ENGIE has been pursuing vigorously since 2016, when it set up a business unit to spearhead its expansion in Africa. This led, in 2017, to an alliance with Ugandan Fenix International in the off-grid solar energy market; the acquisition of Thermaire Investments and Ampair in South Africa, specialists in heating, ventilation and air conditioning (HVAC) services; a contract to construct and operate a wind farm in Egypt; and the acquisition of SPIE’s Moroccan operations covering electrical works, HVAC, telecommunication systems and multi-technical maintenance.
Local takeovers and alliances help to lever growth by dispensing with the need to build new structures and clienteles, and by helping to ensure local acceptance and recognition. They also harness local know-how and market experience, enabling the acquirer to quickly become a player in the market – an important consideration for ENGIE as it seeks to position itself as a key provider of integrated energy services in the region.
Mergers and acquisitions call for legal know-how and an awareness of local market and regulatory conditions. With experience in numerous sectors and countries in francophone sub-Saharan Africa, John W Ffooks & Co is ideally placed to advise on M&A transactions in the region.
Sources
- ENGIE, “About ENGIE in Africa”, http://www.engie-africa.com/en/about/
- ENGIE, News, “Acquisition of Afric Power and Tieri gives ENGIE strong local presence to accelerate its expansion in energy services in West and Central Africa” (15 January 2018), http://www.engie-africa.com/en/acquisition-afric-power-tieri-expansion-energy-services-africa/
- ENGIE, Press release, “ENGIE 2017 Results: a successful strategic repositioning poised for growth” (8 March 2018), https://www.engie.com/en/journalists/press-releases/2017-results/
- Marcopolis, “Communication Technology and Electric Engineering in Côte d'Ivoire”, interview with Thierry Court, Director of Afric Power, CEO of Tieri and French Trade Advisor in Côte d'Ivoire (11 December 2014), http://www.marcopolis.net/communication-technology-and-electric-engineering-in-cote-d-ivoire.htm
- Jeune Afrique, “Énergies : acquisitions tous azimuts pour Engieˮ (6 February 2018), http://www.jeuneafrique.com/mag/522246/economie/energies-acquisitions-azimuts-engie/