Gaia lists specialist REIT investing in renewable energy
Gaia Fund Managers announced the listing of the initial tranche of preference shares of the Gaia Renewables REIT on the Cape Town Stock Exchange (CTSE) on 31 August 2023.
South Africa’s first specialist real estate investment trust (REIT) investing in bespoke renewable energy and energy efficiency solutions in support of clients’ energy resilience, allows investors to benefit directly from solving South Africa’s 10,000MW electricity generation deficit.
Gaia will list R151.5 million (c. $8.1 million) worth of its A-class preference shares with an aim to increase the issuance to R500 million (c. $26.6 million) over the next three months. The preference shares are open to qualified investors. Meanwhile, the demand for customised private energy solutions is strong and growing.
Renier de Wit, managing director of Gaia, says, “We are seeing a healthy appetite from several sectors in need of solutions, including mining, commercial agriculture, fast-moving consumer goods, healthcare and manufacturing.”
The establishment of the Gaia Renewables REIT follows the government’s removal of the historical 1MW cap on power generation by private companies and individuals. The government’s response came amid an increased frequency of rolling power blackouts, which have plunged households and businesses into darkness for up to 10 hours daily.
Gaia identified a unique opportunity to provide South African businesses – effectively owned by third-party investors – with sustainable energy solutions. Investors benefit from predictable, inflation-linked cashflows over the medium to long term.
“We believe in the future of South Africa,” adds De Wit. “We also believe businesses should have access to sustainable electricity and confidence in the security of their energy supply and its cost.”
At the same time, the opportunity Gaia identified can deliver real returns. “We have institutional investors in the country with a mandate to generate inflation-linked returns,” says De Wit. “This REIT provides the perfect answer to deliver on that mandate.”
Gaia Renewables REIT is partnering with Blue Energy Africa, a developer of bespoke onsite and integrated clean energy solutions for clients. Blue Energy Africa has a well developed pipeline of projects that aims to serve a selective portion of creditworthy consumers within the total commercial-scale renewable energy market, estimated to be worth over R200 billion (c. $10.6 million).
Gaia has raised and deployed more than R4.5 billion (c. $239.6 million) since 2012, which includes investments in 12 utility-scale renewable energy plants in South Africa.
Whereas large utility-scale projects can take up to two years to construct before providing a cash return to investors, the bespoke energy solutions are built within a few months.
Investors are likely to receive their first distributions within 12 months from the investment date.
Valeo Capital is acting as Gaia’s bookrunner for the capital raise.
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