Gaia Renewables 1, listed on the Cape Town Stock Exchange (CTSE), has announced the acquisition of stakes in three renewable energy plants.
The deal, initially funded with debt and equity, will see the fund gaining a 10% holding in each of the Linde and Kalkbult solar photovoltaic plants in the Northern Cape, as well as a 21% stake in the Jeffreys Bay Wind Farm in the Eastern Cape.
The seller is the IDEAS Renewable Energy Fund which is managed by African Infrastructure Investment Managers (AIIM).
“The value of the transaction is in excess of R700 million,” says Dr Hendrik Snyman, chief investment officer (CIO) of Gaia Fund Managers.
“The fund will issue a batch of preference shares to existing shareholders with additional issuances to follow over the next 12 months to repay some of initial debt taken on to fund the purchase as well as fund additional transactions.”
Gaia Renewables 1 already owns a 16% stake in the Tsitsikamma Community Wind Farm in the Eastern Cape.
The three new renewable assets were constructed during the government’s first and second round of allocations in the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) in a bid to relieve the country of its reliance on aged coal-fired power plants.
“Given the uncertainty around the REIPPPP funders and investors required these projects to be bulletproof and as a consequence they employed the very best technology along with a very conservative design and contracting approach,” Snyman says. “They’re the Rolls Royce of renewable energy investments.”
In addition, Snyman points to the vibrancy of a secondary market for renewable energy shares in South Africa, says: “This deal shows that there is a strong secondary market for infrastructure projects.”
“Private investment in infrastructure remains one of the best ways for investors to achieve long term inflation linked returns with reduced risk,” Snyman concludes.
The transaction is subject to customary regulatory approvals and closing conditions.