Chariot Ltd (AIM:CHAR, OTC:OIGLF) earlier this week joined the Proactive studio to catch investors up with its significant and recently announced progress in its renewable energy business.
The firm secured $175 million in financing for Etana Energy, its electricity trading joint venture in South Africa. The financing, provided by Norfund, Standard Bank, BII, and GuarantCo, ensures that Etana is fully funded and financially stable.
The financing makes Etana "bankable and creditworthy," enabling large-scale renewable projects to proceed. The funding package could unlock up to $500 million in new renewable projects across South Africa.
Alongside this financing, Chariot has reached financial close on a 75-megawatt solar project in the Northern Cape.
Here, we take a closer look at the interview with Chariot CFO Julian Maurice-Williams.
Proactive: I'm joined by Chariot CFO Julian Maurice-Williams. Julian, very good to speak with you today.
Chariot has two announcements out today. Could you give us an overview of them, please?
Julian Maurice-Williams: Absolutely, Stephen, and great to be here. It's a big news day for Chariot today. Two announcements from our renewable division.
Firstly, we have closed the financing on Etana, our electricity trading joint venture in South Africa.
The total financing has now reached $175 million, all at the subsidiary level, not the parent listed level. This means that Etana is now fully funded.
Secondly, we have secured a material amount of renewable generation in South Africa. We've signed a power purchase agreement for a 75-megawatt solar project.
The electricity from this project will be traded through our Etana joint venture.
These are two big steps forward for our renewable division towards generating first revenues.
Proactive: Julian, before we delve into those announcements, could you tell us a little more about your electricity trading business, Etana Energy?
JMW: Absolutely, Stephen. South Africa is one of the largest energy markets in Africa, but in recent years, there has been a significant undersupply of electricity, leading to power cuts and load-shedding.
The government is rapidly deregulating the electricity market to encourage commercial solutions to help bridge this gap.
Chariot and Etana can be part of that solution.
That’s why we applied for an electricity trading license in South Africa—one of the first to be awarded.
This allows us to buy electricity, put it onto the grid, transmit it, and sell it elsewhere.
We are focused on a many-to-many business model—buying from multiple large renewable generators and selling to large industrial and commercial customers.
Our aim is to provide more power, greener power, and cheaper power.
We have already signed up 20 high-energy users to buy our electricity. In effect, we are creating a scalable utility business with excellent returns, which fits perfectly within Chariot’s strategy.
Proactive: Can you provide an overview of the financing announcement, Julian?
JMW: Of course. First, we are receiving up to $20 million in cash equity investment, predominantly from Norfund, which is backed by the Norwegian government. In return, they will receive a 20% economic interest in Etana.
Separately, Standard Bank, the largest bank in Africa, is providing a $55 million guarantee financing facility. In exchange, they will take a 10% economic interest in Etana.
Chariot will retain a 34% stake in Etana, and at a look-through valuation, that stake is now significantly higher than our current market capitalization.
That valuation excludes our other business segments, including gas and other power assets.
The $20 million cash investment will support Etana’s growth and provide working capital up to first revenues. The $55 million facility from Standard Bank adds to the $100 million facility provided last year by BII (British International Investment) and GuarantCo.
The total $155 million guarantee financing will strengthen Etana’s balance sheet, making it bankable and creditworthy. This, in turn, allows large renewable projects to secure financing and proceed with development.
We believe this financing could unlock up to $500 million worth of new renewable projects in South Africa.
Proactive: Could you provide more detail on the solar project, Julian?
JMW: The project is located in the Northern Cape, South Africa. It’s a 75-megawatt solar project that will be constructed and operated by Mulilo, a well-known renewable energy company.
Construction is set to begin in Q2 this year, and the project has now reached financial close.
Beyond this project, we are working on securing additional large-scale renewable projects that will sell power to Etana.
We anticipate reaching financial close on these in the coming months.
Chariot also plans to take equity positions in these future renewable projects.
We intend to finance these stakes at the subsidiary level, creating an additional revenue stream beyond Etana’s electricity trading business.
Proactive: There's a lot happening at Chariot at the moment. What should investors expect to hear from the company in the coming months?
JMW: On the renewable side, we will see more projects reaching financial close, followed by the start of construction.
We will also begin trading through our Etana joint venture.
We believe we have something truly special in this business, with a significant first-mover advantage in one of Africa’s largest energy markets.
That’s not just our view—we now have four large financial institutions investing significant capital at a valuation much higher than Chariot’s current market capitalization.
On the oil and gas side, we continue to advance our onshore and offshore gas projects in Morocco, as well as our new ventures elsewhere in Africa.
We will be providing updates to the market soon on our progress in these areas, where we see significant potential and value.
Proactive: I hope we’ll be speaking again soon, Julian. Thank you for the update