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“
To be the best, you need to partner with the Best.”
Sunil Ramkillawan, CEO at Thebe Energy Resources
“
To be the best, you need to partner with the Best.”
Sunil Ramkillawan, CEO at Thebe Energy Resources
Thebe Renewables and RMB’s partnership
Thebe continues to partner with RMB to achieve their investment goals in the South African renewable energy sector.
About Thebe
The Thebe Investment Corporation (Thebe) was formed in 1992. Today it is a well-known, leading black investment house that has created value for many stakeholders over its 28 year life. It currently invests into two strategic pillars, Energy and Services, and retains the community-based focus on which it was founded.
The partnership
The RMB and Thebe relationship started in 2010. At this point Thebe was funded mostly by DFI’s (e.g. the Netherlands FMO) and wasn’t covered or banked by the South African banks. From our first conversations, it became clear that they needed a financial partner that could do more than just provide capital.
They needed a partner who could give financial but also strategic and even personal advice, who could be patient yet firm at the right time, provide them with ideas and opportunities for growth, and who could believe and most importantly invest in their long-term vision. This is the foundation that the relationship is built on. It started with a R550m funding facility that we provided jointly with Titan to Thebe in 2010. This was the first seed that was planted into what would become a great tree.
“
It's a strong partnership built on values. The relationship with RMB is through it's people.”
Sizwe Welcome Mncwango, CEO at Thebe Investment Corporation (PTY) LTD
The first energy project – a long-term view
By 2012, Thebe had done well to invest in three Round 1 and three Round 3 Renewable Energy projects, under the Renewable Energy Independent Power Producer Procurement Programme (‘REIPPPP’), with funding mostly provided by a development institution. However, the funding was very restrictive and inhibited any short-term ability for Thebe to grow. Thebe effectively had a good investment but no access to its fruits, particularly in the short term.
In a first of its kind for banks in South Africa, RMB provided long-term, shareholder-funding for Renewable Energy projects, with a term of 20 years, a capital holiday of 12 years, a flexible repayment regime to allow for fluctuations in performance of the underlying assets, and a pricing structure that made the RMB funding cheaper if the projects underperformed. It is a true example of both patience and alignment, the critical ingredients for a partnership. Simplistically, RMB and Thebe’s fortunes were intertwined. This funding structure allowed Thebe to realize an additional R300m over the last 7 years, compared to the funding available from the development institution! Thebe used these proceeds to invest in several other businesses where RMB acted as a funder in those investments. This saw the Thebe portfolio grow to R5.7bn through new investments in the Services sector.
Creating value
This is where it would end for most banks, but for RMB this is where the partnership really started. We wanted to grow this investment with Thebe.
Through our wide reach and network, over the period of investment RMB originated and sourced an additional six projects for the portfolio and were able to help Thebe grow the renewable energy portfolio from R1.4bn at inception to today’s portfolio of 12 plants and a value of R3.7bn, making it the largest 100% black owned company in the REIPPPP environment.
We also assisted in the negotiation of acquisitions, advised on bidding for new projects, provided the funding, and assisted with the execution of these investments. Further we provided ongoing advice as to how to manage their investments and, particularly, their relationships with their key project partners.
Optimising Investment of Capital
With a deep understanding and alignment with the ultimate aims of the investment, we could assist Thebe in finding the right time to crystallise some profit and release capital. The aim was to assist Thebe in freeing up some capital to invest in other endeavours, as well as position their portfolio to grow further in the renewable energy sector – which is poised for continued substantial growth in SA.
With a large RMB network and deep understanding of the Infrastructure sector, we were able to source a new partner for Thebe who injected R2.8bn and provided Thebe with a partial cash realization. This large cash injection will be used for growth opportunities, as well as expanding their presence in the renewable energy space. This has met Thebe’s current and ongoing needs for cash.
“
I call them the best in class in what they do.”
Sizwe Welcome Mncwango, CEO at Thebe Investment Corporation (PTY) LTD
