GHANA — Vantage Capital, Africa’s largest independent mezzanine fund, announced that it had successfully exited its $18.5 million mezzanine investment in Genser Energy, a management-owned, independent power producer.
Luc Albinski, Vantage’s co-Managing Partner, commented: “Vantage has realised an excellent return on its investment in Genser.”
“The company has quickly scaled up to address the energy shortages in the country, and Vantage provided support to help bring about this vision.”
Mezzanine capital is any subordinated debt or preferred equity instrument that represents a claim on a company’s assets which is senior only to that of the common shares.
Mezzanine financing can be structured either as debt (typically an unsecured and subordinated note) or preferred stock.
They are often a more expensive financing source for a company because they are unsecured, subordinated (or junior) obligation in a company’s capital structure such that in the event of default, the mezzanine financing is only repaid after all senior obligations have been satisfied.
Johnny Jones, a Partner at Vantage, stated: “The Genser investment is a good example of the productive use of mezzanine to assist companies in achieving their growth objectives when banks have limited appetite to lend, without requiring significant equity dilution by the owners.”
Genser provides distributed power generation solutions in Ghana to multinational industrial and mining companies including Gold Fields Ghana Limited, Kinross Gold Corporation, and more recently, Perseus Mining Limited and Golden Star Resources.
Vantage’s exit was financed by a consortium of South African banks including Standard Bank, Nedbank and the Development Bank of Southern Africa which, alongside the Barak Fund and Africa 50, have committed over $365 million of facilities to the company for debt refinancing and further expansion.
The additional debt now being provided by the incoming South African banks will enable Genser to further expand the total capacity of its existing plants from 100 MW to 190 MW.
Genser also intends to build an additional 190km of natural gas pipeline to connect the rest of its power plants, and once completed Genser will have increased the onshore natural gas pipeline infrastructure in Ghana by nearly 160%.
“This year we have exited Timrite, a mining supplies business, Austell, a pharmaceutical company, and now we have achieved a third significant exit with Genser. In aggregate we have returned $318 million to investors across 11 exits,” Warren van der Merwe, Vantage’s co-Managing Partner concluded.