Hulisani Limited, which listed on the JSE as a Special Purpose Acquisition Company (SPAC) on the 7 April 2016, has recently completed its Viable Acquisition, thereby converting its listing to an Investment Entity.
Allen & Overy (A&O), an international law firm providing legal services for global business and industry advised Hulisani on this acquisition, which closed on the 22nd of March 2017.
Allen & Overy also advised Hulisani on the initial SPAC listing.
Hulisani Limited, a BBBEE level 1 company, was listed on the Main Board of the JSE as a special purpose acquisition company (SPAC) to cater for investor demand for energy assets specifically in South Africa, and generally in greater Sub-Saharan Africa.
The company’s strategy is to source, evaluate and invest financially into various attractive energy opportunities across the African continent. Nearly 11 months later, it has successfully completed the acquisition of its first Viable Asset.
“Due to the energy constraints we have on the continent, and the opportunities we see to deploy capital into energy projects, we believe that the energy sector is more appealing than other sectors to investors. We think that it is likely to continue attracting significant investor interest, with the growth of an emerging middle class. Thus, we are delighted that the process has been smooth to date and that Hulisani has achieved its set targets. We thank A&O for the outstanding professional guidance the company has received throughout this period and we are looking forward to engaging with them in further acquisitions that Hulisani is currently evaluating,” says Marubini Raphulu, Hulisani Chief Investment Officer.
While relatively new to South African investors, SPAC listings are proving to be an attractive proposition for issuers. They can raise capital quickly in identified sectors, and then acquire their target investments. The first acquisition needs to comply with the listings requirements of the board the SPAC is listed on (either Main Board or AltX) and the success of the listing is influenced by factors including the experience and track record of the management of the SPAC.
Donna Nemer, Director of Capital Markets at the JSE says “SPACS provide investment companies an additional platform to raise immediate capital with which to acquire assets, while investors benefit from the liquidity and transparency associated with investing in a listed company.”
Nemer continues to say that SPACS can also provide a new avenue for companies seeking to expand into Africa to raise capital.
“Listed companies in Africa represent only a small portion of the great investment opportunities the continent has to offer. A SPAC listing can allow companies to raise capital to access these opportunities and contribute the further development and growth of the continent and can also give investors on the JSE a new means of gaining exposure to African businesses.”
Although 37% of the trade in the equity market activity is conducted by foreign investors, the returns in emerging markets such as South Africa are still attractive to investors getting very little return in their own markets. The energy sector is of great interest to investors, as it is an area of such growth in Africa and offers stable, predictable cash flow, which is attractive to investors.