Chariot
(Thanks to Malcy's Blog Mar 18, 2024 )
Chariot has announced that following detailed discussions with the Board, management, and advisors, it is undertaking a strategic review of Chariot’s Transitional Power division. Transitional Power focuses on providing sustainable power and water solutions in Africa, which includes renewable energy generation projects and electricity trading.
Since 2020, Chariot has built a transitional energy group spanning natural gas, renewables, and green hydrogen. As these divisions have grown, they have increasingly attracted different pools of capital and Transitional Power, which is now focused on the South African energy market, requires funding in the near and medium term to fulfil its potential. Management has been progressing debt and equity financing options at the subsidiary level and has received indications of potential interest from South Africa focused investors to fund the Transitional Power business. Whilst there is no certainty that a funding package will be concluded, management has elected to undertake this review to explore the options available to the Company, which may involve a full or partial sale or demerger of the Transitional Power business or the division remaining part of the Chariot group, with the aim of the strategic review to maximise value for Chariot’s shareholders.
Chariot’s Green Hydrogen division will remain part of the Group and management continues to progress financing options at the subsidiary level.
Whilst there is no guarantee that this strategic review will result in a transaction, management will continue to consider all options and the Company will provide further updates as required.
Adonis Pouroulis, CEO of Chariot:
“I am very proud of our work across our Transitional Power division and wider business over the past three years. In light of the impending funding requirements needed to deliver projects from the portfolio, we believe that launching this strategic review is in the best interests of all stakeholders as we look to realise value from this division whilst enabling it to continue its ongoing growth and development.
This review comes at a time of renewed focus on our near-term natural gas development assets in Morocco with the medium-term ambition of returning capital to shareholders from gas revenues.”
This strategic review of the Transitional Power division is a very smart move indeed by Chariot. As the board explores the potential opportunities such as all or part sale or demerger of this business, they are looking to secure funding to ensure its ongoing growth and development, prevent dilution at the parent listed level, and also importantly renew the Company’s focus on its natural gas development portfolio in Morocco.
Indeed the debt and equity options that are being looked at in the power market operations in South Africa, which itself requires funding in both the near and medium term to fulfil its potential, have been ongoing. But whilst the management has been both progressing internal options and assessing potential funding from third party investors at the subsidiary level they have started to look at different options.
With the way that the Transitional Power Business has grown and showed significant potential into the bargain, financing requirements have naturally developed and are increasingly attracting different sources of capital, with notable mention of interest received from South Africa focused investors. With this in mind, it makes sense to look to explore the options around accessing this funding so, I like this strategic review and it should be a massive positive for the company across the board. It spreads the capital risk but allows significant return from the very substantial portfolio in the gas development business and enables the ongoing growth of the transitional power assets.
