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IPSA looks at southern Africa as new era dawns

Sales of turbines will allow company to move forward with its pipeline of opportunities says chief executive.
IPSA looks at southern Africa as new era dawns

It promises to be third time lucky for South African power firm IPSA Group (LON:IPSA) after it agreed a deal to sell two turbines to stablemate and fellow AIM power generator Rurelec (LON:RUR).

Given that Rurelec is run by former IPSA chief Peter Earl, there is confidence that, unlike the two prior deals, which fell through, there will be a successful conclusion this time with the turbines shipping to Latin America.

The debt burdened group’s problems are now drawing to a long awaited close, assuming the Rurelec deal does indeed complete as planned.

And while IPSA and its investors have seen several new dawns in recent years, it is now hoped that the company can finally move on and pursue new ventures. 

Chief executive Phil Metcalf reckons IPSA will now have a few avenues opening up to raise money to take the company forward.

This is likely including raising capital and bringing in partners for new projects. Talks over a potential partnership are currently in progress, he revealed.

Under the shadow of the debt and turbine issues, IPSA’s Newcastle power plant has been overlooked by the market. But, Metcalf explains that the Newcastle plant is currently ‘running well’ and it is generating cash.

“It is a plant that has a lot of potential, and the market will see that in due course.”

It appears that investors can now start looking forward to a much busier future, with creditors paid off and some new funding arrangements being put in place.

IPSA’s plans involve new projects and enhancements to its Newcastle plant, positioning the group strongly to participate in what is being described as a resurgent IPP industry in South Africa, where there is appetite for more gas-fired power stations.

Metcalf also highlights there are also opportunities for the future in neighbouring Botswana and Mozambique, in particular.

“There will be a lot more activity in terms of business development.”

A number opportunities have been waiting in the pipeline for some time now, though Metcalf says one in particular is now at an advanced stage.

He expects IPSA shares will strengthen as the group moves forward in the months ahead.

“It is a recovery play, after a long period of static performance. Things are now looking up, not just for IPSA but also the IPP sector in South Africa which is much more buoyant now, with a supportive regulatory framework.

“I think there is a lot of opportunity in the sector and hopefully we can start to create some value now.“

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IPSA Group Timeline

September 30 2015
September 24 2015

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