Spac attack
Infrastructure-focused investor Gaia Infrastructure Capital has become the latest entity to announce the listing of a special purpose acquisition company (Spac) on the JSE.
Listing in November and led by John Oliphant, the former principal executive officer of the Government Employees Pension Fund, the company plans to raise at least R500m.
The JSE introduced Spacs — cash shells that float to raise capital for investments in established companies — in April 2014. A Spac has 24 months in which to make a viable acquisition in which it has a controlling stake, or be delisted from the JSE. It must then return the cash it raised to investors.
Spacs seem to be growing in popularity, with three listed on the JSE so far. In October, Capital Appreciation raised R1bn in an IPO, while Sacoven has a primary listing on the London Alternative Investment Market and a secondary listing on the JSE.
Oliphant says that Gaia wants to feed into government’s plan to create more black industrialists, and would be quick to invest in companies that thave good infrastructure.
“As a team we have set internal targets to acquire viable assets within 12 months. We don’t want to sit with a lot of cash,” he says.
In its prelisting documents, Gaia says it has identified a R2,8bn pipeline of deals in the solar, wind and transportation sectors.
Oliphant thinks infrastructure assets on the JSE have the potential to grow into a sector with its own index.
Patrycja Kula-Verster, business development manager for capital markets at the JSE, says that Spacs can help provide a capital injection for unlisted companies, and help to expand their operations.
JSE rules require all the cash raised by a Spac to be held in an escrow trust account. A Spac must get shareholder approval for its transaction, and if it wants to increase its working capital.