GAIA Infrastructure Capital, with its focus on infrastructure and renewable energy projects, is set to be listed on the main board of the JSE in mid-November as a special-purpose acquisition company to provide investors with direct access to large-scale energy, transport and water-related infrastructure investments.
The target is to raise a minimum of R500 million in capital, with potential anchor investors contributing up to 75% of this amount, with 5% of all capital raised to go towards management. The listing price is expected to be R10 per share with a target dividend yield of inflation plus 2,5% on NAV.
The investment opportunity will be spread across utility-scale renewable energy (solar, wind and hydro power plants), transport infrastructure (roads, railways and port infrastructure), as well as water and sanitation projects (piped water networks and water utility infrastructure).
GAIA will target protected minority investments in Southern African operational assets with a minimum return of inflation plus 6%.
Making the announcement, CEO John Oliphant said the reason for the listing is to enhance the profile of the infrastructure asset class.
“We want to give institutional and retail investors access to an attractive alternative asset class,” Oliphant says. “It will create an avenue that is usually accessed only through illiquid private equity investment and furthermore facilitate price discovery for infrastructure assets.”
CAIA management team’s extensive track record in the infrastructure sector includes a R530 million investment transaction in the fully operational Dorper Wind Farm near Molteno in the Eastern Cape as well as a R792 million investment in three solar photovoltaic projects situated in the Free State and Northern Cape.
The management team currently has several investment opportunities under investigation that would be presented to the listed entity, ranging from R120 million to R800 m in size.
Oliphant said a number of these opportunities are expected to be concluded over the next 12 months.
He said: “The regulatory outlook for renewable energy remains stable and bodes well for other infrastructure sectors. We will remain active in the secondary renewable energy investment market, which currently has a potential secondary equity market worth of R40 billion.”
Regarding infrastructure investment as an asset class, Oliphant said the country faces massive investment requirements, estimated to be about R3 trillion over the next 15 years. The state is prioritising infrastructure development and investment into energy, transport and water sectors.
“The state cannot fund all the required investment,” he pointed out. “There is little participation by institutional investors in infrastructure as banks cannot be long-term holders of assets. Institutions also only have sell-side expertise in infrastructure.
“We believe that through GAIA Infrastructure Capital and the listing of the company, we can make a major contribution to the country’s needs. We are pioneering partnerships with government to fund infrastructure roll-out.”
PSG Capital acts as corporate advisors and sole book runner to the listing
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