AEP listing provides access to pool of capital
BLACK empowered Pan African clean energy group, African Energy Partners (AEP), debuted on the JSE’s alternative exchange (AltX) on Friday.
The company, which in April had announced its intention to list this month, said it was the first in South Africa to expose investors to the full spectrum of clean energy, beyond renewables only, with Liquefied Natural Gas (LNG) at the core of its future operations.
AEP debuted on the exchange as a special purpose acquisition company (Spac) on Friday. A Spac is a publicly traded buyout company that raises collective investment funds in the form of blind pool money, through an initial public offering, for the purpose of completing an acquisition of an existing private company, sometimes in a specified target industry.
The company’s management raised R52 million in the pre-listing offer and secured significant irrevocable undertakings from investors, including the Public Investment Corporation, to subscribe for additional shares post listing.
The AEP board has been active prior to the listing and two months ago said they would embark on a capital-raising spree and are targeting to raise between R400m and R500m to help fund its first acquisition.
AEP chief executive Edwin Kikonyogo said: “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.”
It said it would target energy-intensive corporates and utilities with energy solutions that were affordable, reliable, safer, and clean.
Leveraging management’s expertise and track record in energy project development, the group would 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.
AEP’s initial acquisition targets are already cash generating and negotiations to acquire several assets are under way. 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 time frame.
Explaining reasons behind the listing, 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.” He added that the publicly regulated environment is a strong driver of good governance to the benefit of all stakeholders.
Currently management holds a 47 percent stake in the listed company.
“Our personal investment reflects our confidence in AEP’s business model and prospects, and ensures an incentive in taking AEP along a positive growth trajectory,” he added.
There was was no trading in AEP’s shares on Friday.
An AEP spokesperson said it was not unusual for there to be no trading in a Spac, because there was limited liquidity in the shares, with investors remaining invested until the Spac made a viable acquisition.
Chris Sturgess, director, Commodities and Key Clients at the JSE, and AEP chief executive Edwin Kikonyogo.