AIIM bets on solar power growth with further investment in Bboxx

African Infrastructure Investment Managers (AIIM) plans to invest more money into clean-energy utility platform Bboxx to fund the company’s growth, AIIM Chief Investment Officer: Pan Africa Romain Py tells The Africa Report.

Private-equity firm AIIM’s stake in Bboxx, which operates in countries including Democratic Republic of Congo (DRC), Rwanda and Kenya, won’t increase from its current level of around 30%, Py adds. He didn’t give an amount for the new investment.

Bboxx manufactures, distributes and finances decentralised solar powered systems. It says it has provided more than one million people with electricity, which it uses as a starting point to deliver further services.

  • In July, the company agreed a partnership with France’s CANAL+ to offer television content in Africa, with roll-out starting in the DRC and Togo.

The investment in Bbox is held in AIIF3, AIIM’s third pan-African fund, which focuses mainly on power, transportation and energy infrastructure in sub-Saharan Africa.

  • The fund’s holdings include 20% of the Uquo Integrated Gas Project in Nigeria, a 37% stake in Nigerian solar power project Starsight and 49% of Zina Solaire in Burkina Faso.
  • AIIM, which is owned by Old Mutual Alternative Investments, refuses to put money into coal or nuclear power on sustainability grounds, and has also declined to invest in two hydropower projects because of the population displacement involved, Py explains.

Data on the impact of Covid-19 is a spin-off from providing solar power. Bboxx collects payments from more than 250,000 pay-as-you-go solar customers per month. It has been using the data which this generates to assess the impact of Covid-19 in four of its markets: Rwanda, Kenya, Togo and DRC.

  • The research shows that up to 20% of Bboxx customers have seen their energy spending “significantly affected” by the pandemic – defined as a drop in utilisation of at least 20% compared with the three months before the crisis.
  • Among customers in Rwanda and Kenya, 31% said their financial situation had become “much worse” during the pandemic.
  • In Rwanda, the number of customers saying their Bboxx payments are a burden increased to 17%, versus 4% in 2019.
  • Rwandan customers are the hardest hit so far as the country’s lockdown was the earliest and strictest of the markets surveyed, Bbox says.

Finding the Exit

Py, based in Cape Town, points to fast-moving consumer goods as an area that has been heavily affected by the Covid-19 pandemic. But the impact on power infrastructure has been “marginal”. AIIM’s investments in distributed power and digital infrastructure have outperformed, he says, and the firm since April has continued to commit new capital.

  • AIIM has people on the ground in Mali and Côte d’Ivoire who are still researching possible investments. While the process has now become more difficult, the firm is still able to make final investment decisions, he says.
  • Transactions are now taking longer, and exit-price expectations have changed compared with six months ago, Py adds.
  • While it wasn’t possible to make any exits from investments from April to July, Py expects this to improve. The firm may make one exit this year, subject to market conditions, he explains.
  • “Good assets will still attract buyers.” The performance of AIIM’s funds “has been resilient and will continue to be,” he concludes.