TEMASEK HOLDINGS INVESTS $188M IN NIGERIAN ENERGY GROUP

Temasek pumps $188m in Nigerian energy group

BY YASMINE YAHYA FINANCE CORRESPONDENT, Straits Times

TEMASEK Holdings has invested US$150 million (S$187.8 million) in Nigerian firm Seven Energy as part of its expansion in emerging markets.

Temasek made the investment alongside the International Finance Corporation (IFC), the private sector arm of the World Bank Group, which committed US$75 million. The IFC’s African, Latin American and Caribbean Fund committed US$30 million more.

The funds will be used to help Seven Energy develop its growing portfolio of assets in Nigeria.

Seven Energy is focusing on the development of upstream reserves and resources and gas infrastructure to provide gas to the Nigerian market for power generation and industrial consumption.

In the energy industry, “upstream” commonly refers to the exploration and production of oil and gas, including search and drilling activities.

This is believed to be Temasek’s first major deal in Nigeria, although not in Africa.

In November, the investment firm, through its unit Pavilion Energy, spent US$1.29 billion on a 20 per cent interest in three Tanzania gas blocks from Ophir Energy.

The oil and gas exploration firm is based and listed in London but focuses on Africa.

Temasek has also been making forays into other emerging markets. It made its maiden investment in Cambodia in September last year through its unit Fullerton Financial Holdings, tying up with two partners to open Cambodia Post Bank.

Seven Energy said it aims to capture the growing demand for gas and power in Nigeria, as the country’s industrial base grows and the liberalisation of the power sector spurs further investment.

The relative lack of investment in gas development for the domestic economy has resulted in Nigerian industries and power generation relying heavily on imported diesel and fuel oil, which are significantly more expensive than locally sourced natural gas, it added.

But with significant capacity built into its processing and distribution infrastructure, Seven Energy said it is well-positioned to provide long-term gas supply for power generation and lower-cost fuel to Nigerian industries.

The firm is in active discussions with a number of current, planned and potential energy buyers, it said.

The investments, totalling US$255 million, will be made in two tranches, the timing of which is subject to the satisfaction of certain conditions in the investment agreements, Temasek said.

The investors are buying into Seven Energy’s irredeemable convertible loan notes, which are akin to equity capital.

These new investors would account for about 26 per cent of Seven Energy’s equity capital.