Political risk assessment for a global energy firm transitioning to renewables in Africa
As a result over focus on climate and environmental issues, a global energy and mining firm requested assistance with executing a major investment strategy into renewables across Africa and a number of other continents.
Our consultants were engaged to carry out political risk due diligence on two potential investment targets in North Africa and West Africa, both of which had exposures to local communities and state level political volatility. the team utilised a wide range of sources ranging from databases to satellite imagery to help understand the status of each of the investment targets and their exposure to political risk at the state level and on the ground. We reviewed documentation around the projects themselves, investigated individuals involved in each investment target, assessed each targets policies and procedures to deal with political risk, and analysed open source intelligence and satellite imagery to determine the status of relationships with local communities nearby to the renewables sites.
Once this work was completed, we identified a wide range of political risk scenarios that might affect the client should the transactions go ahead for each scenario we assess the likelihood and impact of the potential risk and developed a four risk reduction plan and road map that the client could present to the board. We also subsequently dealt with a number of queries passed to us from the client senior executives which we are able to respond to extremely quickly as part of our reactive intelligence request process.
Outcomes
- A far greater level of granularity in understanding the current status of both of the investment targets in jurisdictions which are well known to be difficult to access.
- A clear view on the associated risk scenarios for entering into the transaction in relation to the investment targets.
- A clear road map for risk reduction post transaction which would give the board comfort that if the transaction did go ahead risk could be appropriately managed.
- A group of specialist advisers focused on political and security risks which could integrate extremely well with the rest of the deal team including by being given access to the virtual data room.
- An initial assessment of investment target policies and procedures associated to political risk and a first analysis of their effectiveness and breadth.
- Comprehensive sanctions and adverse media checks against personalities involved in the investment targets in Europe and Africa.
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