Gas start-up company Bluedrop Energy plans to list its shares on the NYSE in 2022 and the JSE at a later stage.
Bluedrop in April secured $20-million, or R300-million, in funding from US-based private equity firm J Sassoon Group for the construction of a smart composite liquid petroleum gas (LPG) cylinder manufacturing plant.
The Export-Import Bank of the US has also issued a letter of interest providing a $36-million, or R497-million, financing guarantee in support of J Sassoon for this project.
J Sassoon in May signed a technical services agreement with the South African office of US engineering firm Fluor Corporation for the development of Bluedrop’s smart composite LPG cylinder plant.
J Sassoon chairperson David Sassoon comments that the company is pleased to advise Bluedrop on its next steps, adding that the South African market is in desperate need of foreign capital infusion.
Sassoon says the proposed floating of shares in New York will help Bluedrop grow exponentially through asset acquisitions, making it one of the leading LPG wholesalers and composite LPG cylinder manufacturers in Africa.
There has been a drought of investments in South Africa's capital market, forcing start-ups such as Bluedrop to seek funding from foreign markets. These are opportunities that should be available for local entrepreneurs and investors, but, unfortunately, these opportunities end up being transferred to markets like New York and London, he notes.
Government has to reenergise local markets. It needs to offer incentives to local investors to unleash local capital, which will encourage foreign investors to invest in South Africa and reduce risk exposure to foreign investors.
“Otherwise, local capital will continue to flow to foreign markets, which makes firms such as ours have incentives to co-invest with local partners.
“Co-investment goes beyond just capital. Co-investing with local partners allows for the creation of an intellectual highway of ideas and unlocks more opportunities, all of which fosters cooperation and helps local economies grow exponentially,” explains Sassoon.
J Sassoon is in the process of negotiations to secure bulk offtakes for Bluedrop from LPG suppliers in the US to complement and fulfill critical aspects of Bluedrop's value chain and strategy.
The US is a major producer of LPG and, therefore, Bluedrop has found the right partner in J Sassoon to help it source product from a market spoilt with an abundance of this critical energy source.
J Sassoon expects to help raise up to $100-million, or R1.4-billion, in private placement funding for Bluedrop's second round of funding for its pre-initial public offering (IPO) campaign, before its shares float on the NYSE.
J Sassoon is advising Bluedrop on its planned IPO in collaboration and consultation with its US-based industry partners and a local broker dealer firm in South Africa.
Bluedrop CEO Kenneth Maduna notes that the listing on the stock market will elevate the company’s profile within the energy sector and investment community.
“It is a value-accretive step in the growth of Bluedrop as a relatively new entrant in the energy markets and it fits in with our acquisitive growth strategy.”
He adds that the company will build an asset base within the high-growth market of LPG in South Africa and the broader Southern African Development Community region.