In March 2023, Nimble Special Opportunities (NSO) and Community Investment Holding (CIH) acquired the Conlog Group, recognising the significant potential of this innovative business in a growing sector. Established in 1965, South African-based Conlog Group (Conlog) is a leader in metering infrastructure solutions for utilities, municipalities, and property management companies in Africa and globally.
Conlog designs, manufactures, and distributes smart electricity and water metering devices, solutions and payment management services to almost one hundred utility clients across Africa, South America, and the Middle East. The Group has a long history of innovation and holds over 200 patents and trademarks. Conlog’s electricity meters are typically installed in residential and commercial properties as well as businesses in the light industrial sectors and renewable sectors. Conlog recently launched its water meter, a state-of-the-art Water Demand Management Device for residential and light commercial applications.
In South Africa, Conlog has established itself as the prominent player in the electricity sector, giving Eskom and municipalities the ability to measure electricity consumption and consumer behaviour, as well as reducing the risk of non-payment by ensuring that electricity is paid for up front.
An attractive acquisition in a distressed group
Conlog was formerly part of JSE-listed Consolidated Infrastructure Group (CIG), which entered business rescue in April 2021 due to several of CIG’s subsidiaries underperforming and placing the entire group under significant financial pressure. A decision was made by the business rescue practitioners to dispose of CIG’s underlying assets, including Conlog.
“Through our due diligence process we determined that Conlog was cash generative, however it was clear that its balance sheet had been geared to fund the CIG Group. Through CIG’s withdrawal of cash from Conlog, the company found itself with reduced capital for expansion and reinvestment, which, in turn, constrained its potential for growth” said Sally Hellings, Investment Executive at NSO. “We believe that our investment will enable Conlog to realise its growth potential and allow it to expand its service offering throughout the Sub-Saharan region and beyond.”
Conlog is the first investment from NSO’s second fund, which provides customised and flexible structured debt and capital solutions to businesses across sub-Saharan Africa.
Paving the way for a brighter future
Globally the market opportunity for smart meters is significant, with growth expected to be driven by the move to increase the effectiveness of electrical networks, and, as a result, smart grids, which include smart electricity meters, are being deployed.
In South Africa, municipalities are facing increased financial pressure and there is an urgent focus on recovering municipal debt. Smart and prepaid meters provide the ability to charge for electricity upfront, which reduces the risk of potential losses to municipal income, help to eliminate fraud and electricity theft and decrease operational costs as no meter reading is required.
With its new shareholders, Conlog’s B-BBEE rating has improved from Level 4 to Level 1. When tendering for municipal contracts, Level 1 BBBEE-rated suppliers receive various scorecard benefits, including preferential procurement recognition and enhanced enterprise development.
“Both NSO and CIH have an extensive network that we can tap to help Conlog achieve its growth potential, which we believe has only been held back by a lack of financial resources. With the company now having achieved Level 1 B-BBEE status, it is better placed to secure further municipal contracts and to extend its product offering across South Africa,” concludes Sally Hellings.
