Renergen Limited is a Special Purpose Acquisition Company (SPAC) which aims to invest in the renewable and alternative energy sectors of South Africa and sub-Saharan Africa.

Renergen shares are listed on the AltX of the Johannesburg Stock Exchange (JSE). Within a few months from first listing, the company already agreed to buy natural gas explorer Tetra4, which owns the 187 000 hectare Natural Gas field near Welkom, which has proven reserves of 25 billion cubic feet of natural gas and helium. The purchase was settled via the issue of 70 million Renergen shares and a cash payment of R5 million, totaling a deal value of R650 million.

Tetra4 holds the only onshore petroleum production right in South Africa and exploration assets have now been developed to production status. In May 2016, Tetra4 signed an agreement with Megabus to supply compressed natural gas to buses in the Free State.

Renergen shares are today for sale on the JSE, with a market cap of just over R1 billion.

Renergen has quickly attracted the attention of JSE investors, having already made an important and pioneering investment in Tetra4. The decision to buy into the company gives Renergen the advantage of being one of the first movers in the local natural gas sector, with significant upside forecast for Renergen shareholders as the resource is developed further. The deal should significantly drive Renergen’s performance, and also includes the acquisition of hydroelectric project Mega Power Renewables in Côte d’Ivoire. This project is at the feasibility studies stage.

The natural gas field near Welkom enjoys helium concentrations of up to 4% by volume of gas released, compared to an average of 1%. Tetra4 is filling a niche for helium to be supplied to numerous specialised and industrial markets. A plant currently being developed on the site will separate helium from natural gas through a high-extraction technology system which purifies, liquefies and stores the helium, making it quickly ready for distribution.

Overall, Renergen’s growth strategy revolves around capitalising on the current under supply of alternative and renewable energy in sub-Saharan Africa, and take advantage of investor demand for stocks in this sector. The group aims to buy viable businesses with a vertical integration in the supply chain.

Renergen is a highly promising company which has made acquisitions far quicker than the JSE listing requirements for SPACs. The company has entered into a cutting-edge field and has managed to buy a high-quality, unique asset in Tetra4.
Renergen’s early financial data, covering the 14 month period ending February 2016, indicates that the company has significant capital on hand, and Tetra4 is already churning profits that are likely to increase as production ramps up. Renergen share price jumped after the release of its first financial results, with investors keen to trade the share. Renergen share price has since dropped off slightly on the live online JSE stocks chart, but this should give investors the opportunity to buy them at a bargain price.

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