Rolls-Royce eyes Africa as new energy market with deals push

Rolls-Royce Holdings Plc is betting on expanding in Africa to grow the power-systems division after its main business building and maintaining wide-body jet engines was derailed by the coronavirus.

The continent’s abundant natural resources, fast-growing economies and increasing urbanization make it a promising market for the unit, Rolls-Royce Strategic Marketing Director Ben Story said in an interview on Thursday.

“We’ve got our eyes open, looking out for opportunities,” he said by phone. “M&A is certainly part of that.”

The bid to grow in Africa comes as Rolls-Royce seeks to pivot away from a focus on aircraft engines, with Chief Executive Officer Warren East saying the company wants revenues to be more evenly split between all of its business segments. The company currently has a presence on the continent through subsidiary MTU, as well as relationships with airlines such as Egypt Air and a deal to power South African trains.

Rolls-Royce would favor “small, bolt-on” deals, Story said, such as its purchases of power companies Qinous and Kinolt. Those acquisitions cost a combined 100 million pounds ($137 million).

Rolls-Royce employs 150 people across Africa, mostly in power systems, and sees an opportunity to develop hydrogen power and small nuclear reactors. The company made just 246 million pounds in sales from the continent in 2019, according to its annual report, compared with 4.7 billion pounds in the U.S. and 5.3 billion pounds in Europe.