AEP Energy Africa lists on AltX
Johannesburg, 30 June 2017: Today AEP Energy Africa (JSE:AEY), listed as a Special Purpose Acquisition Company (SPAC) on the JSE’s AltX board. AEP Energy Africa will focus on identifying and acquiring assets linked to the creation of clean energy infrastructure and products to take advantage of investor demand for energy assets in South Africa, and generally on the greater African continent.
Zeona Jacobs, Director: Marketing and Corporate Affairs at the JSE, says SPACs allows the public to access investment opportunities which have traditionally been available only to institutional investors and private equity investors. “These investors benefit from the liquidity and transparency associated with investing in a company listed on one of the best regulated exchanges in the world.”
Jacobs explains that the JSE’s listing requirements also contain regulatory safeguards that help to protect all parties during the investment process. “The SPAC’s capital is held in a separate trust until acquisitions are made. If viable assets are not acquired, the capital is to be returned to investors. The JSE provides SPACs with 24 months within which to acquire assets.”
Edwin Kikonyogo, CEO of AEP Energy Africa, says the company’s vision is to significantly improve the quality of African lives by increasing access to and use of clean energy on the continent. “Our strategy is to acquire mainly controlling stakes in target operations as opposed to minority investment stakes. Our business model is that of an operating energy group rather than a financial investor in the energy sector. AEP’s acquisition targets are all already cash generating or less than 12 months from being so.”
He says AEP’s recent interactions with the investor community have also highlighted the need for educating the market as to the tangible benefits of using liquid natural gas (LNG) as a fuel source. “LNG is a replenishing, abundant resource in Africa that can be easily harnessed and transported using existing fuel logistics infrastructure. LNG is also so versatile that it can be used in hybrid solutions with existing power systems to deliver clean efficiency and cost savings, as well as with renewables such as wind and solar.
African Energy Partners is 6th SPAC to list on the JSE since the exchange changed its listing requirements to allow for their listing in 2013. JSE listed SPACs have a total market capitalisation of nearly R3 billion.
Left to Right: Edwin Kikonyogo, CEO AEP Energy Africa LTD and Nicky Newton-King , CEO, the Johannesburg Stock Exchange and AEP Energy Africa LTD board Left to Right: Edwin Kikonyogo, CEO AEP Energy Africa LTD and board beating the drum opening the market Left to Right: Edwin Kikonyogo, CEO AEP Energy Africa LTD and Chris Sturgess, Director, Commodities & Key Client Management, the Johannesburg Stock Exchange handing over the trophy
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What is a SPAC?
A SPAC is a publicly traded cash shell that has a specific mandate to acquire or merge with other companies or assets. The listing of a SPAC is often described as reverse IPO. In a traditional initial public offering (IPO) companies first build up their business to a certain size and then offers the public the opportunity to buy a stake in this business. When a SPAC is listed it only holds cash and no other assets. Instead it seeks to acquire additional capital through listing with the intention to buy assets – usually in the form of existing businesses. To list on the JSE’s Main Board, a company must have a minimum of R500 million raised, while the capital raising requirement for the AltX is R50 million.