A special-purpose acquisition company is a collective investment structure that enables firms to list on the JSE for the purpose of raising capital so that they can acquire assets


In June this year, alternative energy company Renergen became SA’s very first special-purpose acquisition company (SPAC). With no operations of its own and comprising only cash, a SPAC is able to list on the Main Board on the condition that the company buys operating assets within two years.

Last April, the JSE amended its listing requirements to allow for the listing of SPACs. The exchange is particularly pleased that Renergen was the first SPAC to list on the AltX board, given its strong focus on alternative and renewable energy projects.

Renergen raised around R74 million in primary capital prior to listing. It plans to invest in alternative and renewable energy projects of up to R500 million or more, such as natural gas and hydroelectricity. It will use debt and top-up equity from shareholders when needed to deliver competitive returns.

‘There is a lot of interest in the structure,’ says Donna Oosthuyse, the JSE’s Director of Capital Markets. ‘SPACs are the kind of innovation we need to develop our capital markets, particularly in productive sectors of our economy.’

Renergen CEO Stefano Marani says the company’s target projects would ensure shareholders receive optimal benefit for the investment risk.

Typically, SPACs are led by management with previous experience in mergers and acquisitions. Often, they also have an operational background and may have been former business executives, or come from investment banks or private equity firms.

‘Investors buy into the management team and its ability to identify good assets, which will produce good returns. It also gives the management team the opportunity for efficient decision-making when they do get an asset,’ says Oosthuyse.

The JSE has put several measures in place to protect investors. The directors of a SPAC must have a direct interest in the company themselves, while an acquisition may only be made with the approval of a majority of shareholders. Capital is held in trust until acquisitions are made. If viable assets are not acquired, the capital is to be returned to investors.

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‘By increasing access to reliable, clean energy, we can accelerate economic growth in sub-Saharan Africa’


The benefits of listing a SPAC can be extremely worthwhile. Apart from raising investment capital, it increases visibility as well as potential deal flows. The JSE’s listing requirements state that a SPAC must raise a minimum of R50 million to list on the AltX board, and R500 million to list on the Main Board.

Oosthuyse says that she was very impressed that Renergen had already raised R74 million in primary capital.

According to Marani, the listing is an exciting opportunity in a burgeoning sector. ‘We believe that the world is on the verge of unprecedented growth in the production and use of alternative energy sources,’ he says.

‘By increasing access to reliable, clean energy, we can accelerate economic growth in sub-Saharan Africa, where potential energy resources are more than sufficient to meet the region’s overall needs.

‘Renergen aims to address the shortage of alternative energy required to deliver this growth.’

Albeit a new feature for the SA market, SPACs have been in operation since the 1990s. They peaked in the US in 2007, before slowing during the 2008 economic downturn. While they’ve become popular in several other countries, the US still dominates the SPAC market.

By Kim Cloete
Image: Andreas Eiselen/HSMimages