Stuart Matthews talks to Steven Meyrick, managing director of Altaaqa Global, about his company’s billion dollar ambition to grab a slice of the rental power market
Steven Meyrick has a clear and simple goal. He wants to build Altaaqa Global into a billion dollar enterprise before 2020.
As the business has only just had, officially, it’s first birthday, this may sound ambitious, but as the company’s managing director, Meyrick has reason to be optimistic. For starters the operation’s main game is to play in the lucrative and growing rental power market.
It’s a busy sector, with research company Markets and Markets estimating the global value of the rental power market will reach around $17 billion by the end of 2017 alone. This same estimate points at a compound annual growth rate of 17% over the same period, thanks mainly to economic development in emerging nations, where power demands will outpace permanent installed capacity.
“Business is good,” says Meyrick, describing the first year in operation of this Caterpillar-driven independent power producer (IPP). The business is one of five such Caterpillar IPPs around the world. Two are US based, one in Europe, one in Asia-Pacific region and Altaaqa Global in the Middle East and Africa.
“Each has unique advantages and local knowledge of their home territories, but all are licensed to operate in any territories around the world. Strong collaboration exists between the Caterpillar IPP family and standardization of equipment and common goals result in powerful synergies,” he says.
The businesses have come about, Altaaqa Global included, because Caterpillar wanted to take on the power rental market, which previously had not been a focus for the company. It has done so by taking its dealership model and creating the five new dealerships to operate around the globe – instead of in assigned territories – in the IPP market.
“Each one has a global license to operate anywhere in the world and in other dealer territories,” explains Meyrick. “So our brief is to go into power projects from 20-200 megawatts and from three months to three years in duration. But, in any territory, Altaaqa Global is leveraging the extensive global Caterpillar dealer network.”
But Caterpillar is only one half of the Altaaqa Global story. The other comes from that well-known Saudi industrial giant, the Zahid Group of Companies. Back in 2004, Zahid formed Altaaqa Alternative Solutions – known as Altaaqa KSA – a rental equipment company operating within Saudi Arabia, which, according to Meyrick, became the largest Caterpillar power generation fleet owner in the world.
This success prompted Caterpillar to come knocking last year, when it was looking for a company well positioned to take up one of the five global IPP dealerships. This led to the creation of Altaaqa Global, which, last year, was selected by Caterpillar to be a global service provider pursuing large-scale power projects around the world.
“Altaaqa Global has a fleet growth objective that mirrors the success achieved by our sister company Altaaqa Alternative Solutions,” says Meyrick.
“It was created in 2004 to enable the Zahid Group to successfully penetrate the rapidly growing power projects industry and to eventually achieve market leadership. Just like Caterpillar, the Zahid Group will only enter a business to ultimately lead it.
“Altaaqa KSA’s phenomenal growth resulted in a one gigawatt fleet, which signifies that it is not only the leader in Saudi Arabia, but essentially made it the largest temporary IPP in the world to be using Caterpillar power modules. Altaaqa Global was created to achieve this same growth of Altaaqa KSA on an international stage.
“Following a successful launch of our company and encouraged by the global industry fundamentals, we firmly believe we can accelerate our base growth trajectory, realising, indeed exceeding, the highly ambitious objectives we set at the outset.”
The business has had a good start. It got extensive publicity mileage out of the successful completion of a tight time frame project in Yemen, where there were just 23 days between taking generators from the company’s base in Jebel Ali, Dubai, to delivering electricity in Aden. Another swift project, this time in Oman, saw the company set up to deliver 24 megawatts in just 96 hours.
Speed of response can be a decisive factor in the rental power industry. It is driven by emergency needs and hard deadlines, but uses equipment that is often hard to get hold of and requires substantial lead times to acquire.
“It’s often not a price issue. It’s have you got [the equipment] and how quickly can you deploy it,” explains Meyrick. “The very best equipment that we could get is expensive, but we chose very well. In Yemen for instance, the transformation that we have has overcome the client’s voltage frequency fluctuations.”
The operation currently works out of Jebel Ali, a location selected purely for its logistic advantages. However, there is more on the drawing board. In Dubai World Central the company will build the Altaaqa Global IPP Center of Excellence, a dedicated IPP facility and the first of its kind for Caterpillar. Completion of this LEED certified facility is expected by September 2014.
“The 40,000m2 plot will include a state of the art facility, specially designed by Caterpillar and purpose made for ultra-efficient handling, storing, repairing, and logistical movement of our fleet of highly specialised equipment,” said Meyrick.
“It will be capable of refurbishing in excess of 200 power modules annually in its first phase. Since the construction is modular, it is designed to enable easy and seamless expansion, in line with future business growth.”
The facility will also bring together the technology to allow the company to remotely monitor the health of its products and the whereabouts of its people in the field.
“We have a very good team,” says Meyrick. “They are specialised people because we have to come up with very complex electrical solutions; each project is unique.”
As well as using its own team for the specialist engineering, day-to-day operations, are normally contracted out, which is where locals can be involved with projects.
“Part of giving back is in the local employment and training,” says Meyrick. “We’ll train people and give them a set of skills they didn’t have before.”
This approach will be essential as the operation looks to expand its reach. But Meyrick is clear that while he wants the business to grow quickly, it will be prudent too.
“We wanted to feel the temperature in our backyard,” he says. “We always intended to get a couple of projects in the Middle East and then move into Africa. We’ve now opened a branch office in Kenya and will open one on Johannesburg and Bangalore before the end of the year.”
The pace of development shows the business is serious about its billion dollar goal. The history of the companies behind Altaaqa Global suggest it is a realistic one.
Long Haul
Look around AltaaqaGlobal.com and you’ll see a well put together corporate website, but hidden away in one of its corners is an interesting and unusual option.
Like many companies operating in the Middle East, its team is drawn from all over the world and this is an advantage the company looks to make use of. Go to the contacts listings and you’ll find people who can speak to you about your temporary power needs in anything from Arabic to Urdu, but there’s also Welsh.
This is one sign of Steven Meyrick’s origins that has made it into his latest role. He started out working for a UK Caterpillar dealer for around 10 years, in what he described as ‘mostly product support’.
“Then I joined the overseas team and went to Iraq in the ‘70s, then, in ‘78 to Iran,” says Meyrick. “I decided I quite liked the Middle East and joined Zahid in 1979.”
There he formed a product support unit and rose to a senior management position. Having been with this dealer for 33 years, he’s proved he’s in the region for the long haul.
“We’re a conservative company,” he says. “Zahid has grown tremendously, it does so through prudent investment and careful decision making. Zahid is not in this business to be an also ran.
“One of the conditions of establishing Altaaqa Global was not to just be an IPP, we want to be the biggest one.
“2014 is going to be very serious, but we’re confident we will exceed what we’ve set out to do. And we will do all of this with great passion, commitment and perseverance.”