AP Moller Capital said it has completed the acquisition of a 29% stake in the largest LPG storage terminal in East Africa.
The company has acquired the stake in Kenya-based KEG Holdings (KEG). The financial terms of the deal were not disclosed.
KEG owns and operates the largest LPG import terminal in sub-Saharan Africa as well as the largest LPG downstream distribution business in Kenya.
The company, through its marine terminal and storage facility, is said to offer the lowest cost route for LPG import into Kenya, the largest market in East Africa, according to AP Moller Capital.
Its import terminal services are provided under a 30-year license.
“KEG’s downstream distribution business has demonstrated the ability to scale from market entry to market leadership in Kenya in under four years. This can be replicated to drive regional expansion in Rwanda and Uganda,” said AP Moller capital.
In addition to the business case, the Copenhagen-based investment company was also keen to talk up the positive social impact of the deal.
“Today, approximately 80% of households in East Africa rely on solid cooking fuels such as wood and charcoal, which contribute to deforestation and cause indoor air pollution with adverse health consequences,” said AP Moller Capital.
“This investment supports the transition away from the use of solid fuels and towards the use of LPG, a cleaner and more efficient method of cooking in East Africa.”
The use of LPG for cooking in Kenya has grown by 20% per annum since 2016 and is expected to reduce deforestation with 100m trees preserved as consumers replace firewood with LPG.
“For every household converted from using charcoal to LPG, approximately 1 tonne of C02 emissions are saved per annum,” said AP Moller Capital.
“It is estimated that KEG’s businesses will avoid more than 5m tonnes of CO2 emissions during our hold period.
“The increased usage of LPG for cooking will improve air quality which is expected to benefit more than three million people,” it added.
AP Moller Capital was founded in 2017 to manage stand-alone alternative investment funds focusing on infrastructure in growth markets.
It describes itself as a fund management company focusing on investments that combine attractive risk-adjusted returns with a positive social impact.
In November 2020 it acquired a 49% stake in Moroccan terminals company Mass Cereales al Maghreb, for an undisclosed fee.
In January that same year, it invested in ARISE Ports & Logistics, which comprises of two operational assets in Gabon, Owendo Mineral Port, and New Owendo International Port, as well as the Port of San Pedro, which is an advanced greenfield port in Ivory Coast.
