Stifel has reaffirmed its ‘buy’ recommendation for Chariot Ltd (AIM:CHAR, OTC:OIGLF) following the establishment of a $100 million guarantee finance facility for its 49%-owned subsidiary, Etana.
Chariot announced the funding to support renewable power generation projects targeting commercial and industrial users across South Africa's national grid.
Initial estimates suggest the facility could enable up to $500 million in renewable projects, equating to approximately 500MW of new wind and solar capacity.
Stifel analysts called it an “initial validation" of Etana’s business model.
They said: “Chariot has been active in the financing of the Etana business at the subsidiary level over the past year and this initial guarantee is the first stage in validating the business model, in our view.
“We see this funding being used to accelerate future renewable energy developments in South Africa, driving the shift away from a coal-powered grid,” analysts added.
Stifel has a 6p-per-share price target on Chariot stock, representing a significant upside to the current share price of less than 2p.