Denham invests £95m in South African power

Energy-focused private equity firm Denham Capital has invested £95m of equity in BioTherm Energy, a developer of renewable energy generation projects in South Africa.

BioTherm’s projects earn carbon credits as they reduce greenhouse gases. These credits can be sold back to power-intensive European companies under the European carbon-trading scheme.

Denham believes South Africa offers an overwhelming opportunity for carbon credit generation due to years of inefficient power production in the country.

As a matter of course in other countries, a power plant would capture its waste energy in heat and gases and re-use it. However, in South Africa this infrastructure does not exist, providing significant opportunity to BioTherm Energy to harness waste energy from industrial processes and sell it back to Eskom, the South African public utility, or other parties.

Denham completed this deal from its fifth fund, which closed on US$2bn in May. Louis van Pletsen, head of Denham’s London office, is optimistic about renewable energy opportunities in this market.

“This is a fantastic time for those with firepower. The public market dislocation is also pulling down private market valuations,” van Pletsen said.