STANLIB has agreed to buy more of three South African solar plants from Scatec in a deal with an enterprise value of $108 million. The plants total 190 MW, which makes the price look like about $0.57 million per MW. That figure is wrong by a factor of three. STANLIB is not buying the plants, only a third of them, and half the payment is not cash.
Key takeaways
- STANLIB agreed on 2 August 2024 to acquire additional stakes in Scatec's 190 MW South African solar portfolio of Kalkbult, Dreunberg and Linde, at an enterprise value of $108 million.
- The $108 million enterprise value of the STANLIB and Scatec deal comprises $53 million of equity consideration and $55 million of net interest-bearing debt attributable to the sold share of the plants at the end of Q2 2024.
- Enerdatics understands the equity transacted in the STANLIB deal to be 32.4 percent of the portfolio, which implies an enterprise value of about $1.7 million per MW on a 100 percent basis.
- After the deal, STANLIB's stake rises from 25 to 58 percent in the 75 MW Kalkbult plant and from 10.45 to 42.45 percent in the 75 MW Dreunberg and 40 MW Linde plants, while Scatec's falls to 13 and 12 percent.
- All three plants sell power to Eskom under 20-year PPAs, with a weighted average remaining contracted life of about 10 years, and Scatec will keep providing operations and maintenance.
Why is $0.57 million per MW the wrong number?
Because it divides the price of a minority stake by the capacity of the whole portfolio. Spreading $108 million across all 190 MW treats STANLIB as if it were buying every panel. It is buying about a third of them.
Enerdatics' estimate of 32.4 percent comes from the change in Scatec's holdings. Scatec drops 33 percentage points in the 75 MW Kalkbult plant and 32 points in Linde and Dreunberg, which between them total 115 MW. Weighting those reductions by capacity gives the share of the portfolio that changes hands. Grossing the $108 million up to 100 percent on that basis gives about $1.75 million per MW, close to the $1.7 million per MW multiple in Leap's deal record.
That is the figure to compare with other operating solar sales. The headline number, read on its own, understates the price by about two thirds.
What is STANLIB actually paying in cash?
About half of the enterprise value. Enterprise value measures what a business is worth to all its funders, so it adds the debt a buyer takes on to the cash it pays for the shares. Here $55 million is the net interest-bearing debt attributable to the stake being sold, measured at the end of Q2 2024. STANLIB takes on its share of the plants' existing borrowing rather than paying that amount to Scatec.
The cash cheque to Scatec is the $53 million of equity consideration. On a 100 percent basis that is roughly $0.86 million of equity per MW, against $1.75 million of enterprise value per MW. The difference is the project debt still sitting in the plants, a decade after they were built and financed.
The timing is split as well. The deal was structured in two phases, the first expected to close in the second half of 2024 and the second in the first half of 2025. Leap records that the first phase closed by 30 September 2024, after which Scatec held an economic interest of about 31 percent in Kalkbult and 28 percent in Linde and Dreunberg, on its way to the final 13 and 12 percent.
What are the plants worth to a long-term holder?
They are worth the cash flows left under their contracts. Kalkbult and Dreunberg were procured under the Renewable Energy Independent Power Producer Procurement Programme, or REIPPPP, South Africa's auction scheme for privately owned generation selling to the state utility Eskom. Kalkbult reached commercial operation in March 2014 under Round 1 and Dreunberg in December 2014 under Round 2. Linde, the smallest of the three, began operating in July 2014.
Each plant has a 20-year PPA with Eskom. With a weighted average operating age of about 9.9 years, the portfolio has about 10 years of contracted revenue left. That is a defined, shrinking runway. A buyer at this stage is paying for a predictable decade of revenue, not for open-ended growth.
The plants are also proven performers. Kalkbult generates about 135 GWh a year, Dreunberg about 156 GWh and Linde about 86 GWh, so the portfolio produces roughly 377 GWh annually. Scatec stays on as operations and maintenance contractor, so the plants stay with an operator that knows them.
Enerdatics records 11 solar M&A transactions in South Africa announced since the start of 2023. Only three carry a disclosed value, and the STANLIB and Scatec deal is the only one of those involving utility-scale plants. The other two are a $0.7 million stake in MBHE Group and a $0.46 million rooftop solar and storage project. STANLIB also appears in the earlier record: in February 2023 it acquired a 60 percent stake in the 258 MW Upington solar park from Scatec and Norfund, with no value disclosed.
What does the deal signal for South African solar?
It signals that the first generation of REIPPPP solar is moving from developers to long-term holders. Scatec is recycling capital into new renewable investments, while staying committed to South Africa through its residual stakes and the operating contract. STANLIB is consolidating positions it already held.
The relationship is a repeat one. STANLIB has now bought from Scatec twice in 18 months, first at Upington and now in the Kalkbult, Dreunberg and Linde portfolio. This time STANLIB was already a shareholder in all three plants, which suggests that South African operating solar can change hands between investors who already know the assets and their contracts.
It also signals what a mid-life REIPPPP asset is worth with half its contract left. At about $1.7 million per MW on Leap's measure, operating plants with a decade of Eskom revenue are not cheap. Investors weighing larger platform deals, such as A.P. Moller Capital's agreement for Mainstream's South African platform, are paying for pipelines. Deals like this one price the contracted output itself.
Frequently asked questions
How much is STANLIB paying Scatec for the South African solar stakes? The enterprise value is $108 million, made up of $53 million of equity consideration and $55 million of net interest-bearing debt attributable to the stakes sold. Enerdatics understands the equity transacted to be 32.4 percent of the 190 MW portfolio.
Which solar plants are included in the STANLIB and Scatec deal? The deal covers the 75 MW Kalkbult plant in the Northern Cape, the 75 MW Dreunberg plant in the Eastern Cape and the 40 MW Linde plant in the Karoo. All three sell power to Eskom under 20-year PPAs.
What stake will Scatec keep in the plants? After both phases close, Scatec will hold 13 percent of Kalkbult and 12 percent of Linde and Dreunberg. It will also continue to provide operations and maintenance services.
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