Gaia’s Prudence Lebina says IPP renewable energy projects will unleash a wave of opportunities. Photo: Supplied
JOHANNESBURG - The signing of 27 independent power producer (IPP) renewable energy projects will unleash a wave of opportunities for listed infrastructure investment holding company Gaia Infrastructure Capital, chief executive Prudence Lebina said yesterday.

Lebina told Business Report that the company's strategy was to invest in operational or near-term infrastructure assets offering an investment return of Consumer Price Index plus 6percent.

“We are looking for opportunities whereby developers or other investors are looking to exit,” she said. “We only invest in low-risk investments where the assets are de-risked. Our definition of near-operational means six months to operational.”

Gaia, which listed on the JSE in 2015, has minority interests in two IPP projects - a 25.2percent stake in Dorper Wind Farm in Molteno, Eastern Cape, and 20percent in Noblesfontein Wind Farm, which is situated between the towns of Three Sisters and Victoria West in the Northern Cape. The projects were part of Round One Renewable Energy Independent Power Producer Procurement Programme (Reipppp). Gaia paid R501million and R188m for Dorper and Noblesfontein, respectively.

Lebina said the signing of the IPP agreements would enhance policy certainty and would herald growth opportunities for Gaia because the company’s future growth would come from the IPP projects.

She said the company’s investment policy was that targeted assets should be low-risk and cash generative. “Essentially we are selling yield. We buy the cash flows and pass them back to shareholders. We are selling stability and predictability,” she said.

In May last year the company paid its maiden dividend of 63.5cents per share. The company has said that its intention was to pay its shareholders inflation-linked dividends every six months. Lebina said that with its risk-averse strategy the company was suited to pension funds.

She said the company had an approximately R3billion investment pipeline across energy, transport and water and sanitation. Gaia was currently raising capital for the investment capital. “We need to go to the equity capital market to be able to execute this pipeline.

"We are engaging with your traditional asset managers. Our largest shareholder is the PIC (Public Investment Corporation). It holds 42percent of the stock. We have been on a roadshow since last year, selling the value proposition of Gaia.”

Lebina said the company was considering wind, road, solar and water opportunities. She said if the company had the money, it would conclude a number of the deals.

“A lot of these opportunities are subject to us raising money. If we had capital, we would close those deals, subject to regulatory approvals.”