Abraaj targets $850m for energy fund, hires team

The emerging-markets private equity firm plans to invest 80% of the strategy into renewables, has set up a 12-strong energy infrastructure arm and will add three more executives in this area.
Abraaj targets $850m for energy fund, hires team

Private equity firm Abraaj aims to raise $850 million for a new energy infrastructure strategy, has acquired a 12-strong team to enable it to develop projects in this sector, and will add three more executives in the near future.  

The Dubai-based emerging-markets group already has funds earmarked for specific distribution and transmission deals, said Sev Vettivetpillai, partner and global head of Abraaj's thematic fund business. This will not be a blind pool, he told AsianInvestor, as investors will know what the underlying assets are. It is believed to be Abraaj's first dedicated energy strategy.

Some 80% of the capital will be invested over the next three to four years in renewable energy, including solar power in Indonesia and the Philippines, natural gas in Egypt, wind farms in Pakistan and geothermal generation in Mexico. In October 2015, Abraaj announced a partnership with Mumbai-based Aditya Birla Group to build a gigawatt-scale solar project in India.

The company already has seven energy-sector acquisition specialists and has invested around $1 billion in the sector of its $9.5 billion in total AUM. The firm acquired the Themis Energy team of 12 professionals to serve as its project development arm to originate, develop and manage projects from concept stage to operations. 

At least half of the new strategy's initial investments will go into Africa, as that is where Themis’s main expertise lies, but the development team will also help the acquisition team on projects elsewhere.

Tas Anvaripour, formerly chair of Themis, joins Abraaj as a partner in the energy infrastructure team. Marc Mandaba will remain head of Themis, after founding the business in 2013 and serving previously as private infrastructure investment officer at the African Development Bank. His team, which will be based in Dubai, has project development experience across Africa, the Middle East and Latin America.

Abraaj is also in the process of making another very senior hire to the acquisition team and will shortly add two more to the development team, who will have a combination of project finance, engineering and advisory expertise.

The new resources will expand the firm's scope to include a dedicated focus on energy project development, noted Vettivetpillai.

“The biggest problem we face in many growth markets is a lack of quality developers who can put together well structured and negotiated transactions,” he told AsianInvestor. “So if we want to build a continuum of energy assets for 20 years, we have to be involved on the development side to create deals of the right quality – as opposed to having to renegotiate badly structured projects.”

Given negative sentiment on the energy sector – largely down to the oil price collapse since 2014 – it is a buyer’s market for such deals, said Vettivetpillai. The main risk is the impact of currency rates, he noted, and negotiating electricity-supply contracts in dollars is one way to mitigate that.   

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