E Squared Investments (E Squared) has facilitated investment backing to Allan Gray Fellow (a graduate of the Allan Gray Orbis Foundation), Ms. Adhila Mayet to purchase minority ownership in the Pele Energy Group. Mayet, an engineer by profession, has grown at Pele and is now Head of Project Development.
There is a growing energy crisis in South Africa which is highlighted by generation capacity constraints that have recently taken us back to Stage 6 load shedding. The energy crisis, coupled with the urgent need for reducing carbon emissions and the lack of participation by the majority of South Africans in the economy, sets the context for Pele’s business, a company striving to fuel future economies, through knowledge and power including the build-out of a full engineering capacity and add to the sustainability of the 100% South African owned Independent Power Producer.
The investment will unlock certain value for Pele’s existing shareholders, but a substantial portion of the investment will be used for strategic initiatives that will deliver impact for the subsidiary, Pele Green Energy. This buy-in transaction is the first of its kind for impact investor E Squared as it looks to back experienced AG Fellows in industry to acquire equity ownership in progressive and impactful firms. The transaction also represents E Squared’s ability to fund complex opportunities that are long-term, traditionally capital-intensive, and beyond its usual early-stage investment offering.
Pele Energy Group was founded with the intention to drive large-scale structural change. Today it contributes to change by increasing energy supply, by developing, building, investing in and operating renewable energy generation facilities, and increasing economic participation. Pele also ensures that it develops the communities around which it establishes its power plants and that they benefit from the economic activity generated through energy assets.
Pele Green Energy is a division of South Africa’s leading independent power producer (IPP) committed to providing renewable energy to serve Africa’s energy needs.
Powering our people
Worldwide renewable sector employment reached 12.7 million people in 2021, reflecting an increase of 700,00 new jobs in 12 months, according to data from an International Renewable Energy Agency (IRENA) and UN International Labour Organization report (Renewable Energy and Jobs: Annual Review 2022).
The report also states that renewable energy is the fastest-growing energy source in the United States and with recent policy shifts towards green energy locally, South Africa is also set to grow rapidly and is projected to be able to provide an additional 250,000 jobs or more over 25 years, according to the Global Wind Energy Council (GWEC), providing jobs in electrical Africa’s role is still limited, but that there are growing job opportunities in decentralised renewables engineering, farming, architecture, project management, environmental affairs and the legal profession to name a few.
At COP26 several countries committed to a drastic reduction in world carbon emissions and further committed $8.5 billion in financing to address the problem in South Africa through the Just Energy Transition Partnership (JETP), putting fairness at the heart of transition to clean energy for emerging economies.
Described as “South Africa’s R100-billion-plus renewables industry” by Mining Weekly, this sector is set to support thriving local economies through skilled job creation whilst also addressing critical environmental concerns like the reduction of carbon emissions and delivering clean, affordable and secure energy.
“The funding available from E Squared will allow us to create additional generation infrastructure and support expansion in order to support our country in moving away from carbon-intensive energy generation and into a green energy transition. In alignment with Pele’s objectives, E Squared understands that an investment into a sustainable business does not translate only in financial returns, but one of lasting social impact. I’m glad to have a partner to journey with as we work towards our goals,” says Adhila Mayet, Head of Project Development at Pele Green Energy.
Clean energy will create more than just job opportunities in South Africa
The target set by the South African government to deploy 11.8 GW of large-scale renewable energy capacity by 2030 is driving market interest for many investors like impact investor E Squared.
E Squared is committed to their late Founder, Dr. Allan Gray’s vision of poverty alleviation and the creation of meaningful earning opportunities for South Africans, with a mission to empower responsible entrepreneurs to become the catalysts for economic development, transformation and social upliftment in South Africa.
E Squared Ventures (E2V), through which this investment was made, is an offering that was created to provide a funding and support vehicle for entrepreneurial Allan Gray Fellows, like Pele’s Adhila Mayet, that are creating unique entrepreneurial ventures with the capacity to scale and create long-term positive impact.
Through this investment, E Squared hopes to help create further awareness of the opportunities and benefits of non-traditional funding into new energy infrastructure and IPPs like Pele Green.
Energy for green recovery and highlight the need for more investment into young, early-stage entrepreneurs as a means for overall economic recovery.
“There is no doubt that IPPs can help realise the full spectrum of socio-economic benefits of such an energy transition, but they can’t easily do it without targeted support. To meet aggressive net-zero targets by 2050, renewable energy capacity will need to rapidly expand, and we aim to make a meaningful contribution to the solution for our emerging economy by empowering renewable energy ventures like PGE,” says E Squared Chief Investment Officer, Gladwyn Leeuw. “Pele Energy Group joins a growing E2V portfolio consisting of 13 other Allan Gray Fellow-led ventures and it’s at this stage that the provision of non-financial support to fledgling entrepreneurs is most critical,” he adds.
E Squared is working to better understand how it can support female entrepreneurs in South Africa, and, provide access to funding for female-led ventures. In 2022, 62% of E Squared’s total investment into early-stage start-ups was in support of black female entrepreneurs and this recent investment into Pele Energy Group suggests dedication to continuing this trend. While it’s difficult to get an accurate number, Ventureburn suggests that a staggeringly low 4.5% of VC funding in South Africa went to female-founded tech startups between January 2018 and August 2019 and less than 5% globally, according to Quartz.
