The Special Purpose Acquisition Companies which listed on the JSE in 2017/18 have begun to establish themselves as trading entities. We take a look at their performance over the past 12 months and look at the newsflow from these businesses.
|Company||Sector||Market Capitalisation||30 Day Average Daily volume||Price to Earnings multiple||Dividend Yield||12-month share price performance|
|Capital Appreciation||Information Technology||R1.1bn||177 690||7.7||5.9%||-6.58%|
|GAIA Infrastructure||Energy / Infrastructure||R358m||9817||10.7||10.2%||+8.33%|
|Hulisani||Energy / Infrastructure||R350m||11701||-4||0%||-30%|
|Renergen||Alternative Energy||R850m||27 426||-23||0%||-13%|
The SPAC businesses are of interest to investors wanting to access relatively young investment companies in fields which were not well represented on the JSE. The idea behind the SPACs was to allow entrepreneurs to raise and deploy capital (Find a viable asset) in a stipulated amount of time.
The SPACs have continued to underwhelm, with liquidity being a particular challenge.
Since our previous review in October 2018, the following interesting developments have taken place:
The PIC representative on the Capital Appreciation board – Ms. Mathukana Mokoka – announced her resignation on 5 April. A new representative from the PIC will be put forward.
No newsflow reported.
Newsflow out of Hulisani has been limited and shareholders await the release of the annual results which are expected to be due out before the end of May 2019.
The company has had a busy start to 2019 including:
- The Overseas Private Investment Corporation (‘OPIC’), the U.S. Government’s development finance institution, has approved a US$40 million loan facility in favour of its subsidiary Tetra4 (Pty) Limited Virginia gas field project.
- Tetra4 released its reserve estimates for both Methane and Helium with 12% increase in Methane reported and 16.1% increase in Helium reserves
- The company announced it would be seeking a listing on the ASX (Australia) and has put out a prospectus to this end
- Chairperson John Oliphant and CFO Dion Mhlaba made minor share purchases in February to the tune of R120 000. The shares were purchased between R9 and R9.84
- Purchased a 51% stake in Medicare Private Hospital and it’s associated property company. MPH is an acute 110 bed independent private hospital conveniently located in Rustenberg, North West Province. MPH was officially established in 2009 and began as a 36 bed sub-acute hospital and has subsequently grown incrementally, with the founders having successfully applied to the Department of Health for an increase in beds over the years resulting in MPH becoming an established acute facility in the North West Province.
- Purchased 100% of the Bell Street Hospital from Netcare. Bell is a 31 bed private psychiatric hospital situated in Krugersdorp, Johannesburg. An additional 20 bed licence is to be transferred from the Netcare Krugersdorp Hospital, to enable the facility to provide a total of 51 beds.
As with many of the small and medium-sized businesses on the JSE, a lack of liquidity and a weak domestic economy continue to detract from the share price performances of these businesses.
The developments at Renergen and the steady acquisition of operating assets by RH Bophelo are encouraging and could be drivers of the respective share prices in the coming years.
GAIA and Hulisani both offer interesting access points to investors seeking to participate in the renewable and alternative energy sectors in South Africa. However, the sector focus remains on the strategic direction of Eskom in the near-term.