After success in the European and American industries, a major Asian company dealing in engineering decided to break into the African market.
After success in the European and American industries, a major Asian company dealing in engineering, procurement and construction decided to break into the African market, with the intent to build and operate gas-powered power plants. They contacted Challenge Advisory looking for assistance entering Africa’s thriving electric power market.
The electric power market is growing at a rate of 7% per annum, and infiltrating this market would allow the client to greatly boost its worldwide power output. Challenge Advisory’s new market team, in tandem with the strategy team, organised market research which would allow them to recognise the most attractive section of the electric power market for the client to set up its first project.
Challenge Advisory then recruited the financial team, who used their knowledge of the African market to build a shortlist of organisations to finance this first power plant. They also introduced the client to various ministers in African countries in order to find the most stable country, politically and economically, for the client to operate in. The financial team then worked with the risk team to find the surest financer for the client.
Once a suitable finance company was identified, Challenge worked with the client to procure a financing deal that suited both parties. Subsequently, an agreement was reached to build a combined-cycle gas-fired power plant with a capacity of 340,000 kW, with a cost of almost $830 million USD. Construction is underway, and the projected year of completion is 2017.
The power plant constructed has allowed the Asian engineering giant a starting point from which to build a market share. Liaising with Challenge Advisory provided the client with a wealth of contacts in the African continent, which will them to expand their brand in order to consolidate their presence in the African market.
In order to offset the capital expended in the power plant construction, the client is continuing to work with Challenge’s clients to introduce some short and medium term projects.