Transgrid Enerco Limited, a consortium comprising Stanbic IBTC Infrastructure Growth Fund (SIIF), the North-South Power Company Limited (NSP), and Axxela Limited, has acquired a 60% majority equity stake in the Eko Electricity Distribution Company (Eko Disco), Nigeria’s second-largest electricity distribution company.
Nairametrics reported earlier this month that West Power and Gas Ltd (WPG), the parent company of Eko Disco, was close to selling its entire stake in the electricity company after the Transgrid Enerco consortium paid a commitment fee.
The consortium won the bid to acquire the majority stake in Eko Disco after a competitive process that began earlier in 2024.
It was gathered that the three companies in the consortium signed the share purchase agreement (SPA) on Tuesday, January 21, 2025, and the transaction will be completed in April 2025.
The deal, which is reportedly worth over $200 million, will see WPG relinquish its ownership of the electricity distribution company to the Transgrid Enerco consortium.
The North-South Power Company Limited (NSP) is a power-generating company that owns the Shiroro Dam.
The acquisition will allow it to have direct control of EkoDisco’s operations and finances.
In a statement by The Chairman of WPG, Charles Momoh, he said: “Transgrid Enerco will, upon obtaining the relevant regulatory approvals, capitalize on the positive changes occurring within the fast-evolving Nigerian electricity market to reposition Eko Disco to access new sources of capital.”
Meanwhile, for Axxela, the acquisition is expected to help the gas company expand into the distribution end of the market, giving it direct access to cash flow sources.
- Gas companies are at the end of the value chain and rely heavily on power-generating companies for payments.
- Axxela claims it has developed a natural gas distribution network infrastructure that stretches over 360 kilometers.
- The company also has investments in power generation companies including the Akute and Alausa independent power plants respectively.
- The company also has an existing relationship with Eko and Ikeja DisCo with embedded power projects with a capacity of 100 MW and 40 MW in both DisCos respectively.
For the Stanbic Infrastructure Fund, the deal offers a unique opportunity to invest in the country’s power sector.
- SIF, established in June 2021 as a ₦100 billion Shelf Programme, is Nigeria’s largest dedicated private equity fund for infrastructure.
- The fund is registered under the Rules for Infrastructure Funds issued by the Securities and Exchange Commission.
- Part of the fund’s objectives includes targeting strong cash flow prospects to meet periodic distribution requirements for investors.