Gaia Renewables 1, a South African fund specialising in renewable energy assets, has completed an $11mn deal to acquire stakes in two photovoltaic solar plants in the Northern Cape province. The transaction, concluded after lender approval and clearance from the Competition Commission in April, includes the sale of shares in one of the country’s first independent solar power producers.
Two assets from the REIPPPP programme
The deal involves the purchase of 10% stakes in the Linde and Kalkbult solar plants, both commissioned during the first round of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). The seller is the IDEAS Renewable Energy Fund, managed by African Infrastructure Investment Managers (AIIM), a pan-African infrastructure investment manager.
The transaction was structured through a combination of debt and equity financing. To support the acquisition, Gaia Fund Managers plans to issue a series of preference shares to existing shareholders, with further issuances expected over the next twelve months to finance additional deals.
Growing portfolio in wind and solar
With this acquisition, Gaia Renewables 1 strengthens its position in South Africa’s renewable energy sector. The fund already holds a 16% stake in the Tsitsikamma Community Wind Farm, located in the Eastern Cape province. Since its inception, Gaia Fund Managers has concluded 16 renewable energy transactions on behalf of institutional investors.
The Linde and Kalkbult plants were developed to reduce the country’s dependence on ageing infrastructure, particularly coal-fired power stations. The Northern Cape now attracts a significant portion of solar capacity investment in the country due to its high irradiation levels.
Financial structure and outlook
According to published documents, the transaction relies on an initial issuance of preference shares, a commonly used financing mechanism in the sector to optimise returns and limit operational risks. No details were disclosed regarding the expected yield or investment horizon.
“The swift approval by regulatory authorities highlights market appetite for operational, well-structured assets with stable contractual revenues,” said a representative of Gaia Fund Managers, quoted by Bizcommunity.com on July 18.
