Stanlib is eager to help build power grid

Asset management firm Stanlib is open to funding Eskom’s ambitious plan to build 14,000km of transmission lines over the next decade to allow for the injection of more sources of generation into the grid.

The company, with about R600bn assets under management, on Thursday launched its Khanyisa Energy Transition Fund, which is meant to mobilise capital — initially to finance SA’s energy transition needs and later those of the rest of the continent.

Johan Marnewick, head of credit alternatives and portfolio manager, said one of the projects Stanlib will consider funding is the state-owned power producer’s transmission lines.

“We need regulations. We can’t just go and participate in public assets. We are superdelighted to sit down with Eskom and some of the ministries in energy to look at ways of allowing the private sector to co-fund the transmission infrastructure,” Marnewick told Business Day.

He referred to the Renewable Energy Independent Power Producer Programme as a precedent for how publicprivate partnerships can work and be financed. However, he

acknowledged that funding transmission lines would be different from funding the harvesting of wind and solar.

Funding transmission lines “needs a bit of fine-tuning and development. We are really happy to sit down and be part of that and look at how we can bring private funds to bear and capitalise this critical piece of infrastructure for our country. It makes us really excited about the prospect.

“Obviously we haven’t seen it [a funding model] and we don’t know what the true risk and return proposition is. It needs to pass all that due diligence muster and look right for our investors. But that is what we will work on with our partners in the public sector to try to get off the ground.”

Eskom has the huge task of building 14,000km of new transmission lines by 2032. In the past decade, it added only 4,400km of new transmission lines. The cost of the planned transmission lines is estimated to be north of R300bn.

The government is in the process of establishing the national transmission company as part of efforts to restructure Eskom into separate divisions for generation, transmission and distribution.

The National Energy Regulator of SA issued the National Transmission Company SA (NTCSA) with a licence to operate the transmission system. NTCSA has applied for a trading licence and an import/export licence, which the regulator is considering.

Stanlib is looking at ramping up its investments in electric vehicles (EVs), particularly supporting infrastructure. The Standard Bank-owned asset manager in August invested in renewable energy group Solareff and subsidiary GridCars.

Since its establishment in 2009, GridCars has become one of SA’s biggest providers of EV charging service equipment, charging station infrastructure and management systems.

The Stanlib Khanyisa Energy Transition Fund has seed capital of R3bn from Standard Bank and its Liberty subsidiary.

Marnewick said the plan is to grow Khanyisa into a $1bn fund over time and expand its activities to the rest of Africa.

“The fund invests in credit assets, which offer predictable cash flows within lower-risk parameters to meet the return objectives of investors.

“These energy transition assets are often not available on listed, more traditional markets and provide access to real economy business opportunities that have diversification benefits for investment portfolios,” he said.

The fund is targeting retirement funds, life insurance companies, fixed-income asset managers and development finance institutions to mobilise capital.

Stanlib’s credit alternative team manages R52bn in assets and has originated transactions worth more than R110bn to date.

The asset manager has appointed Kholofelo Molewa as the lead portfolio manager for the fund.

Molewa manages the developmental and infrastructure strategies within the credit alternatives investment team.

The fund will target energy transition investments in gas as a transition fuel, critical minerals and green hydrogen infrastructure, and support the move to hybrid vehicles and EVs.

“We believe there is a significant appetite for assets such as this that are carefully selected and monitored by experienced managers with a long track record,” Molewa said.

“Extracting value from this complex asset class requires a high degree of technical expertise, a rigorous investment process and a focused approach to downside risk management — all of which form the bedrock upon which our asset portfolios are being managed.”