Fieldstone Newsletter - First Quarter 2018

Dear Clients and Friends of Fieldstone,

What to write about as we dive head first into 2018? This question has hung over me as I try to balance between the very positive outward signals (increased equity values, “risk on” investment view, high projected growth in many markets) and some underlying concerns in the broader political environment. I do not know if the “best of times, worst of times” applies, but it must certainly be the strangest of times. Fortunately, we are engaged in a sector where savvy participants deal in a socially vital product with a long-term view.

Of course, 2018 comes by its oddity honestly – its predecessor, 2017 was a truly unpredictable year. Fieldstone performed well by doing what it has done over the last 25 years – closing large transactions in energy and infrastructure for its clients. That is not a surprise. What is a surprise is that the year’s driver came not from Africa and the emerging markets, but from Europe.  Year-end closings of the 634 MW Markbygden wind project in Sweden for our client Svevind (PFI European Wind Deal of the Year 2017) and the EWE energy tech auction and sale in Germany (household distributed battery technology) were important to our clients and in the respective markets. Both transactions were executed with our [European new energy] partner, 4initia. These transactions complemented SepFluor's Nokeng Fluorspar mining project in South Africa that closed in the first half of the year (also tipped as likely deal of the year in its field).

Markbygden Site in Northern Sweden (Image supplied by Svevind)
Markbygden Site in Northern Sweden (Image supplied by Svevind)
Rosalind Smith-Maxwell and Thembeka Mamba (EWE Deal Team)
Rosalind Smith-Maxwell and Thembeka Mamba (EWE Deal Team)

I suppose we should no longer be surprised by this result. As I have mentioned in recent newsletters, Fieldstone has taken up the challenge to position itself as a truly global specialist in line with its corporate heritage. We have centralised the brand identity and structure of the company to offer seamless international service in which personnel and learnings from all markets are shared. This is in keeping with our guiding premise:  local knowledge delivered at the highest international standard.

2017’s apparent pivot to developed markets in no way signals less emphasis on the emerging markets where we feel we bring special value based on long experience. Our dedication to emerging markets is evidenced by the Latin America practice which grew exponentially in 2017 and will develop further in 2018 with the advent of FLAIR or Fieldstone Latin America Investment Resources. FLAIR will be following the footsteps of FAIR, which had its second closing in December related to a solar project in Namibia. FAIR continues to be courted to take part in renewable projects that require developmental and advisory assistance to move to close. Getting financeable deals to market is the challenge all over Africa and the ultimate success benefits the consumers, private investors and the involved development finance institutions.

In general, the prognosis for Africa is clearly better now than 12 months ago. Southern Africa has undergone a series of hopeful political developments in Zimbabwe, South Africa, Angola and Mozambique. Great challenges remain, ranging from South Africa where Eskom needs to serious financial issues to Zimbabwe which must solve its national currency issues. However, the idea that these issues are now at the top of the agenda is something that should cheer all market participants in the region. No problem is ever addressed by conscious denial.

Nigeria too has now officially bounced back off its lows and one hears talk of “going long Naira” (these words were seldom heard over the last few years). A higher oil price is a helpful context but the gradual evolution of reform is also a force here. Ghana is committed in its aspiration to bring a structured answer to its government owned generation assets, a process in which Fieldstone is proud to assist as advisor. Kenya has emerged from a long and tortured election process in 2017 with the Government now engaged in advanced PPP programs backed by multilaterals. A successful process can illustrate the seriousness of purpose and transparency that the electorate seems set on. The spread of PPP initiatives may be a general theme in Africa this year with launches also on tap in Ghana and Uganda.

Finally, the ongoing progress in Cote d’ Ivoire and Senegal in engaging the private sector are noteworthy as the region gains momentum. West Africa now includes three of the six fastest growing economies on the Continent.  Fieldstone believes this region is particularly ripe for further market opening, hence our commitment to on the ground presence in Dakar and Abidjan.

Taslimy Gassama,  Fieldstone Director in Dakar,  who is leading our business in Francophone West Africa.
Taslimy Gassama, Fieldstone Director in Dakar, who is leading our business in Francophone West Africa.

Fieldstone is involved in each of these markets and in Latin America, where auction processes for renewable assets are in motion in several countries, and Europe, where the concentration of renewable portfolios and energy tech themes now hold our attention.

In November, I visited Asia in order to meet with our current and long standing clients and other parties which share interest in the markets where we are active. Some of these relationships date back to the early years of Fieldstone and span several transactions.  I was reminded of the fundamental difference in our approach with those of other institutions (balance sheet and otherwise) that lead investors into new or distant markets. Fieldstone has always approached each engagement as a dialogue where it is equally important to understand the market and particular project or transaction as it is to comprehend the context and aspirations of the investor. It is this notion of focused individualised service which I trust will continue to define Fieldstone’s offering even as we expand as a global presence.

Best Regards

Jason Harlan
Chief Executive Officer
Fieldstone and Fieldstone Africa