The South African stock exchange, the JSE, has successfully listed its first black empowered clean energy group, AEP Energy Africa (AEP), as a SPAC (special purpose acquisition company).
The energy group will introduce investors to the full spectrum of clean energy, beyond renewables only, with Liquefied Natural Gas (LNG) at the core of its future operations, the company said in a statement adding that this is a first for South Africa.
“Management raised R52 million ($3.9 million) in the pre-listing offer and secured significant irrevocable undertakings from investors including the Public Investment Corporation (PIC) to subscribe for additional shares post listing,” the firm said in a statement.
Natural gas as a key fuel source
The energy group will acquire, redevelop and operate a portfolio of assets in power generation, battery energy storage, power distribution and fuel logistics, driven in large part by LNG.
“Our strategy is to acquire mainly controlling stakes in target operations as opposed to minority investment stakes, because our business model is an operating power group rather than a financial investor in the energy sector,” says CEO Edwin Kikonyogo.
AEP’s initial acquisition targets are all already cash generating and negotiations to acquire several assets are underway.
The group explained: “The proceeds of the pre-listing capital raise will be applied towards this to ensure that a value-add, compliant Viable Acquisition is completed in the required two-year timeframe.”
Kikonyogo highlighted: “Our recent interactions with the investor community have also highlighted the need for educating the market as to the tangible benefits of using natural gas and its derivative, LNG, as a fuel source.”
He further noted that LNG is an abundant resource in Africa that can be harnessed and transported using proven fuel logistics infrastructure. Read more…
“LNG is also so versatile that it can be used to complement renewable energy generation in a hybrid solution, as well as support existing power generation systems and renewables-driven systems such as those using wind and solar generation, for instance.”
The energy group further noted that the limited to no access to grid energy on the continent, proves opportune for new investment and innovation.
Kikonyogo said: “Listing on the JSE opens the opportunities to raise awareness of our alternative clean energy solutions, and provides access to a broader pool of capital to fund growth.”
Management holds a 47% stake in the listed company.
Special purpose acquisition company
The energy group explained the formalities of a SPAC: “As a SPAC, AEP’s pre-listing capital raised will be held in an escrow account until a Viable Asset has been successfully acquired, which must be within two years of the listing date.
“On acquisition of a Viable Asset meeting all JSE requirements and approved by shareholders, AEP will evolve from its SPAC status into an integrated clean energy group, and procure a move to the JSE’s Main Board.”