Copperbelt Energy Corporation PLC (“CEC or “The Company”) is a key power supplier for the mining regions of the Copperbelt Province in Zambia and the Katanga Province in the Democratic Republic of Congo. Its diversified operations include thermal and solar power generation and power transmission.

CEC also purchases power from ZESCO Limited, the national utility, and from the Southern African Power Pool (“SAPP”) to transmit to its clients, which are predominately in the mining sector.

These capabilities position CEC as a cornerstone of Zambia’s economic framework, particularly given its pivotal role in supporting mining operations, contributing significantly to the country’s GDP. The Company is listed on the Lusaka Securities Exchange (“LuSE”)

From 2014 to 2023, CEC generated about USD600 million in cash, paid USD285 million in dividends, and reduced debt by about USD120 million while investing in upgrading its infrastructure, which included two solar plants, an interconnector into the DRC and an expansion of infrastructure to reach new customers.

Pangaea Securities Limited (“Pangaea”) facilitated the successful exit of funds managed by Affirma Capital (“Affirma”), which owned stakes in CEC using a continuation vehicle structure in Africa’s first transaction of this nature. Affirma co-funded the exit with Norway’s state-owned fund for developing countries, Norfund, and Norway’s largest pension fund Kommunal Landspensjonskasse.

Affirma initially invested USD74 million in CEC in 2014 via a structured equity investment backing CEC’s controlling shareholder.

In 2018, it converted its investment in the LuSE-listed company into a direct shareholding, a transaction for which Pangaea helmed the role of sponsoring broker. Since its initial investment, Affirma Capital has spearheaded numerous strategic initiatives aimed at fortifying CEC.

These efforts include substantial capital deployment into renewable projects, instating an adept local management team, and implementing top-tier governance systems.

The Transaction

The sale of a 34.64% stake in CEC was valued at USD145 million. CEC was valued at USD375 million at deal closure in December 2023 and is currently worth USD820 million. The transaction represents a milestone achievement on the Lusaka Securities Exchange (LuSE).

Continuation Vehicle Structure

Liquidity is one of the most important factors in investments. Attracting credible buyers posed significant challenges due to CEC’s high value and strategic importance.

A continuation vehicle structure, increasingly used in global private equity deals, is one wherein General Partners (“GPs”) transfer assets from a fund that is at the end of its term into a new fund and/or facilitate exit for their Limited Partners (“LPs”).

It allows the GPs to retain and re-invest in quality assets with high and long-term growth potential, such as CEC, while providing a choice to LPs to cash out, take an equivalent ownership in the new fund or do both.

A continuation vehicle allows new LPs to get immediate and concentrated exposure to assets with a tapered J-curve, i.e. a trendline with an initial outlay followed by substantial gains over time.

Timing and extensive knowledge of the landscape, along with the human resources to perform due diligence reviews, are necessary to take advantage of these vehicles and ensure a strong alignment of interests between GPs and LPs.

The Role of Pangaea

Under challenging market conditions, Pangaea played a pivotal role in structuring, advising, and executing the transaction, which has since cemented CEC’s status as the largest company on the LuSE. The transaction was successfully concluded in December 2023.

Acting under an exclusive mandate as the Transaction Advisor and Broker, Pangaea leveraged its expertise in Zambia’s capital markets to navigate the transaction’s complexities. This landmark deal not only redefined Zambia’s investment landscape but also introduced Africa’s first continuation vehicle, handling the continent’s biggest yet single-asset continuation deal, ensuring a smooth transition for exiting and incoming stakeholders.

It provided a pathway to maintain operational stability for CEC while ensuring compliance with the LuSE’s trading and settlement requirements. By balancing the needs of all parties, Pangaea effectively de-risked the transaction, paving the way for a seamless transition and enhanced shareholder value.

Pangaea’s operational expertise was instrumental in executing the trade within LuSE’s dematerialised trading framework.

Pangaea adhered to the T+3 settlement cycle, ensuring all trades were completed efficiently and within the stipulated regulatory guidelines. Coordination with key regulatory bodies, including the Securities and Exchange Commission of Zambia (SEC), further underscored Pangaea’s commitment to compliance and transparency.

The valuation trajectory of CEC highlighted the strategic importance of the transaction. From USD375 million at closing, the company’s value more than doubled within a year to USD820 million, reflecting its robust performance and market appeal. Additionally, the increased trading volume of CEC shares on the LuSE established the company as one of the bourse’s most attractive assets, drawing heightened interest from domestic and international investors.

Through its comprehensive approach to investor engagement, innovative structuring, and execution, Pangaea Securities set a new benchmark for capital market transactions in Africa. The CEC stake sale demonstrated the firm’s capabilities and highlighted Zambia’s growing prominence in the investment arena.

Pangaea Securities received multiple accolades for their advisory services, summarised as:

• The “Single Deal Financial Advisor of the Year” award at the 12th Annual Private Equity Africa (“PEA”) Awards in 2024 which underscored the significance of this transaction.
• Frontier Advisor in the Decade Awards category, acknowledging their significant contributions and consistent performance over the past ten years at the PEA 2024 event
• ‘The Local Advisor: Corporate Services award’ at the PEA 2024 event for having secured the various regulatory approvals for a transaction of this nature
• GBAF Best Investment Bank 2024
• GBAF Decade of Excellence 2024

The 34.64% equity sale in CEC is a testament to Zambia’s evolving capital markets and the resilience of its energy sector.

By leveraging innovative financial structures and strategic advisory services, Pangaea Securities demonstrated its expertise in navigating complex transactions, setting a precedent for future high-value deals on the LuSE.

This transaction not only strengthened CEC’s market standing but also positioned Zambia as a hub for impactful foreign direct investment.

About Affirma Capital

Affirma Capital is an independent emerging market-focused private equity firm established in 2019 through the spin-off of Standard Chartered Private Equity from Standard Chartered Bank.

With a 20-year track record of successful investments in over 100 companies across Asia, Africa, and the Middle East, Affirma Capital currently has over USD3 billion in assets under management.

About Pangaea Securities

Pangaea Securities is a full-service investment bank and securities brokerage based in Lusaka, Zambia with a satellite office in Johannesburg, South Africa. With over two decades of advising on landmark transactions in Southern Africa, Pangaea Securities strives to advance financial sector development in the region.