Our Business

Investing in renewable energy infrastructure to nurture opportunities for financial, socio-economic and environmental returns

Investing in renewable energy infrastructure to nurture opportunities for financial,
socio-economic and
environmental returns

Renewable Energy Investment

Track record of superior growth and investment returns

Hulisani Limited is an energy investment company listed on the Main Board of the Johannesburg Stock Exchange (JSE) since 2016, trading under the ISIN HUL.

We are one of the largest investors in clean energy projects on the African continent. Our projects, which include both renewable and conventional energy, have delivered consistently profitable returns over the long term.

With Sustainability, Consistency and Growth at the heart of our business, Hulisani is a leading, long-term energy investor and innovator in emerging markets.

Renewable Energy Investment

Track record of superior growth and investment returns

Hulisani Limited is an energy investment company listed on the Main Board of the Johannesburg Stock Exchange (JSE) since 2016, trading under the ISIN HUL.

Track record of superior growth and investment returns

Hulisani Limited is an energy investment company listed on the Main Board of the Johannesburg Stock Exchange (JSE) since 2016, trading under the ISIN HUL.

Socio-Economic Development

Meaningful socio-economic development

Our TshiVenda name, Hulisani, means ‘to nurture.’ It is aligned with our company mission, which is to:

  • Ensure economic benefits for all our stakeholders
  • Help build an environment for sustainable job creation and socio-economic development.

On this website, we highlight our track record in making a meaningful contribution to economic development – through sustainable jobs, support for education and community upliftment in the host communities where we operate.

Socio-Economic Development

Meaningful socio-economic development

Our TshiVenda name, Hulisani, means ‘to nurture.’ It is aligned with our company mission, which is to:

  • Ensure economic benefits for all our stakeholders
  • Help build an environment for sustainable job creation and socio-economic development.

On this website, we highlight our track record in making a meaningful contribution to economic development – through sustainable jobs, support for education and community upliftment in the host communities where we operate.

Our Approach

Hulisani is one of the first renewable energy equity investment companies listed on the JSE. We are the go-to partners for sustainable, profitable, clean energy revenue-generating ventures.

Hulisani is well positioned to take advantage of the anticipated growth across all renewable energy categories, supported by positive Government policy and the African Continental Free Trade Agreement (AfCFTA).

Together with our Board and our experienced executive team, we add value to the companies in which we invest by offering strategic insight and active involvement in the management of our portfolio to enhance returns for our stakeholders.

Exceeding inflation

Hulisani partners with reputable and like-minded companies and invests where we believe we can add value to maximise potential upside, which means a return that will always exceed inflation by a significant margin.

Our investment assets, projects pipeline and potential transactions are diversified and designed to consistently deliver guaranteed returns above CPI, which enables long term cashflow predictability.

CPI + 6%-8% = Target for long-term net return for our acquisitions

We currently focus on assets in South Africa, where we continue to build on our reputation for reliability, credibility and innovation. At this point we are seeking to grow our shareholding in existing operations to consolidate our foundation and growth.

Expansion into Sub-Saharan Africa is the logical next step, where we will consider opportunities in assets already in operation as well as developing those that are ready for bid.

Investment Opportunities

Hulisani identifies and invests in the most promising electricity generation prospects. We look for positive operating leverage with a very long-term investment horizon and consider any of the clean power energy investment projects for due diligence, including:

Hulisani identifies and invests in the most promising electricity generation prospects. We look for positive operating leverage with a very long-term investment horizon and consider any of the clean power energy investment projects for due diligence, including:

Wind Energy

Wind power is a cheap and sustainable form of energy that can be established in many areas in southern Africa. When implemented correctly, wind power projects can substantially reduce energy costs due to the generally short payback period.

Hydro Power

South Africa has a mix of small hydroelectricity stations and pumped water-storage schemes. As long as there is water available, energy generated from waves, tides, waterfalls and rivers will always be available.

Solar Energy

Solar energy is the most readily accessible resource in South Africa. With the development of the country’s solar-equipment industry, it lends itself to a number of potential uses. Solar energy is also suited to providing power in remote locations, as well as for independent consumers such as mines, office buildings and shopping centres. The added advantage of solar power is the long term cost predictability

Peaking Power

Peaking power stations are able to react quickly to changes in demand and supplement power generated by base load stations when required, to avoid power supply disruptions.

Clean Coal

By sourcing internationally-proven Circulating Fluidised Bed (CFB) technology it is possible to build new power generation plants fuelled by discarded coal that meets all its atmospheric emission permit levels without any post-combustion.

Biomass Power

To generate electricity, biomass power uses plant material which includes agricultural residues, wood waste, paper trash, municipal solid waste (MSW), energy crops and methane captured from landfill sites.

Energy Distribution

Distribution connects all energy consumers and provides access to electricity, giving people the opportunity for employment, education and various means to enjoy a better life. Access to energy distribution opportunities is a crucial component of the energy value chain, and is a hey focus in Hulisani’s energy investment strategy.

2019 Highlights

100%

Growth in dividends from R18.1m in 2018 to R36.9m in 2019

R42 million

Increase in net cash generated from operations over 2018 and 2019

R1 billion

Current realisable project pipeline in the secondary and primary markets

1GW

Capacity of projects pursued at year end

2019 Highlights

100%

Growth in dividends from R18.1m in 2018 to R36.9m in 2019

R42 million

Increase in net cash generated from operations over 2018 and 2019

R1 billion

Current realisable project pipeline in the secondary and primary markets

1GW

Capacity of projects pursued at year end

Our Team

The success of our business relies on strong leadership and robust corporate governance.
Hulisani has a leadership team of highly experienced professionals with a deep knowledge of the energy sector.

The success of our business relies on strong leadership and robust corporate governance. Hulisani has a leadership team of highly experienced professionals with a deep knowledge of the energy sector.

Marubini Raphulu

Chief Executive Officer

Marubini is an admitted attorney with extensive deal- making and investment experience in Africa’s energy sector. He is focused on driving Hulisani’s investment strategy, drawing on 15 years of corporate commercial experience.

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Masibulele Dem

Chief Financial Officer

Masibulele is a Chartered Account with extensive financial services experience. For over 16 years he worked with leading financial services organisations including KPMG, Barclays, Standard Bank, Mazwe Financial Services and Africa Rising Capital.

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Non-Executive Directors

Patilizwe Mdoda

Independent Non-Executive Chairperson

Pat is a seasoned executive who served at various bluechip companies. He has held executive positions at South African Breweries – Beer Division, Edgars Consolidated Group (Edcon) and Kumba Resources Limited.

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Dudu Hlatshwayo

Independent Non-Executive Director

Dudu has over twenty years’ solid business management experience across a broad range of areas including corporate finance, business process re-engineering, organisational design, corporate strategy development, business planning, change management and programme and project management.

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Harald Schaaf

Independent Non-Executive Director and Investment Committee Chairperson

Harald has over 30 years’ experience in the development and implementation of power generation projects. He gained this experience leading a diverse range of projects across various continents, while employed by Lahmeyer International and UCI Utility Consultants International for 26 years.

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Professor Marx

Chief Executive Officer

Professor Marx is the Head of Department at the Department of Accountancy, University of Johannesburg. His extensive experience includes board governance in general and has served on many committees such as accounting and auditing, corporate governance and sustainability and social and ethics.

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Asanda Notshe

Non-Executive Director

Asanda has an impressive 12 years’ financial services experience as a Research Analyst and Portfolio Manager in pensions, banking and investment management.

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Investment Policy

We look for where we can make meaningful investments in assets that demonstrate solid operational performance and have potential for long-term returns.

We look for where we can make meaningful investments in assets that demonstrate solid operational performance and have potential for long-term returns.

A Compelling Investment Strategy

Our aim is to look specifically for investment opportunities in consistent, predictable and reliable inflation-linked long-term energy projects. One of the key areas in which we invest is Independent Power Producers (IPPs), where we consider both primary and secondary opportunities.

Our initial focus has been on secondary opportunities, which are investments in established operating assets that already have a Power Purchase Agreement (PPA) in place. These provide stable, consistent, predictable and reliable inflation-linked cash flows from largely de-risked energy-related projects that have operational performance history and either a dividend paying history or with the potential to pay dividends in the near term.

Primary investment opportunities are where we invest at bid stage, during construction or at any time before the commercial operation date.

These opportunities require investment partnerships with established developers to manage the risk from financial close to the commercial operation date. This includes the management of the risks during construction through a fully wrapped turnkey construction contract, which ensures the delivery of a power plant at the agreed time and at the agreed cost. If the costs escalate, the plant is not delivered on time or there are engineering challenges, the risk is borne by the construction company.

We believe that there is a benefit in investing earlier than the commercial operation date in that Hulisani realises a higher yield as a result of our investment in these projects at an early stage. This ensures that Hulisani receives a higher yield whilst only contributing equity once all the contracts have been signed. We believe that investing in both primary and secondary projects is complementary and that a combination of primary and secondary transactions in our portfolio will ensure a sufficiently diversified basket of assets with an attractive yield.

The projects we invest in typically have a guarantee mechanism behind them provided by the off-taker of the power to ensure consistent, predictable and reliable inflation-linked returns. In the case of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), and other South African IPP programmes, there is ultimately a sovereign guarantee in place that ensures payment.

It is worth reiterating that our PPA returns are linked to the Consumer Price Index (CPI), meaning that returns are automatically adjusted by the prevailing CPI, thus ensuring that real returns are realised throughout the term of the PPA as the returns are not eroded by inflation.

The assets held by Hulisani provide opportunities for potential shareholders to invest in an asset class that gives sustainable, long-term, consistent, predictable and reliable inflation-linked returns. We participate in equity investments as well as other instruments that allow us to have exposure to a similar return profile from the project.

This is a strategy that has borne fruit as it has positioned Hulisani well and provides flexibility when looking at structuring to realise the most optimal returns. Through our hands-on involvement in each of our assets, we carefully track trends in the energy sector and pre-empt market demand by ensuring that we are well placed to take up opportunities as and when they arise

Where and when do we invest?

Currently our focus is in South Africa, where we are establishing and building a reputation for reliability, credibility and innovation. We plan to move into other sub-Saharan African regions once a strong local foundation is established. This is to ensure that our growth is sustainable and sufficiently de-risked to mimic a similar framework to what we have in South Africa. Opportunities range from operating assets and joint ventures, to developing those that are ready to bid for a PPA.

Hulisani pursues various acquisitions and investments in energy assets. These assets include energy generation, distribution and transmission infrastructure and general assets in the energy value chain. The primary focus is on energy generation IPPs which currently make up more than 70%of the company’s investments, with the other complementary businesses supplying the energy production value chain to enhance the upside and good management of the IPPs.

These complementary businesses will not constitute more than 10% to 15% of total investments in the long term. The bankability of REIPPP and other related IPP programmes like the gas-to-power and coal-to-power programmes is secured through the terms of four non-negotiable agreements:

  • PPA – Eskom enters into a PPA with the IPPs, securing power off-take.
  • Government Framework Support Agreement (GFSA) – Eskom and Government set the terms of support and interfacing.
  • Direct Agreement (DA) – IPPs enter into a DA with lenders to secure project financing.
  • Implementation Agreement (IA) – IPPs and government enter into an IA which confirms, inter alia, Socio-Economic Development (SED) commitments and Government’s support for Eskom’s payment obligations.

We look for similar guarantee mechanisms when we consider power generation projects that have private off-takers, are not located in South Africa or when the off-taker is not the government of South Africa.

Why energy and Hulisani are attractive investments?

Hulisani’s investments have several appealing characteristics:

  • The assets are insensitive to the economic climate as they offer a high level of security with regards to their future revenues, with a contract that contains an inflation-protection mechanism. This leads to a low risk correlation to other major asset classes, resulting in compelling defensive and diversification benefits.
  • Energy Infrastructure will continue to require investment because the need for this infrastructure is a never-ending cycle. Growing populations need to be supported by additional infrastructure while ageing infrastructure needs to be periodically upgraded or replaced, as is the case with Eskom at the moment.

Hulisani has crafted its investment portfolio with the right level of diversity across various types of energy investments as well as with the optimum balance between guaranteed, stable returns and upside on new investments that are still coming to the fore, which means that we have a base return but have the potential to realise upside.

Our investment philosophy looks for, and takes into account, the need for a positive socio-economic impact in the communities where our assets operate, and typically extends well beyond compliance requirements. We have taken the opportunity in the past year to further enhance our stimulus through active and careful monitoring of the impact of our investments. The company has established strong corporate governance mechanisms and exercises prudent financial management to ensure that not only does Hulisani realise consistent, predictable and reliable inflation-linked returns, but also has a positive impact in the communities where we invest.

Hulisani’s experienced board and executive team members have led to Hulisani realising synergies inherent in the investments as well as creating additional organic opportunities that only experience and innovation can unlock, which is particularly important for long term sustainability in a rapidly changing and challenging energy landscape.

Key Features of Hulisani Investments

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Stable cash flows Due to the contracted nature of the cash flows, we can predict with certainty, the long-term, cash-yielding ability of the asset.
Economic insensitivity The assets are insensitive to the economic climate as they are contracted with an inflation-protection mechanism
Inflation protection Contracted cash flows in the Power Purchase Agreements (PPAs) have a sovereign guarantee with the ability to increase rates linked to inflation over time.
Attractive long-term returns The long-term nature of Hulisani’s investments ensures increasing yields over the life of the asset.
Predictable usage profile As a result of low-usage volatility, it is easier to predict the use of the asset over its life-span.
Low correlation to other major asset classes Compelling defensive and diversification benefits.
Operating Environment

The future of energy is green, with growing global demand for renewable energy solutions.

The future of energy is green, with growing global demand for renewable energy solutions.

Global Environment

Green energy demand in Africa will be strongly influenced by the huge global growth in this sector. As costs of wind, solar and battery storage continue a rapid decline, by 2050 approximately two thirds of the world’s electricity is expected to come from renewable energy, primarily solar and wind, with the balance attributed to hydro and nuclear power, and other resources to a limited extent.

Over the same period worldwide demand for electricity is likely to increase 62%, with $13,3 trillion invested in new projects. In the US, clean energy resources supplied more of that nation’s electricity than coal for the first time ever in April 2019 (USA Energy Information Administration).

Regional Context

Hulisani aims to gain significant benefits from the current favourable policy environment for the growth of renewable energy projects. Government’s target is for the renewable energy sector to provide 42% of energy requirements by 2030.

The impact of policy certainty in the region is expected to see some R56 billion in foreign direct investment, rural development and upliftment by 2022

REIPPP and related IPP projects are expected to add energy infrastructure investments of over R1 trillion by 2030.

Furthermore, the unbundling and restructuring of Eskom will drive new opportunities for investment in clean power generation.

A significant potential project pipeline for Hulisani is also anticipated as a result of the relaxation of regulations in licensing 500 Megawatt solar projects and other renewal energy projects below 10 Megawatts.

Operational Imperatives

Hulisani focuses on primary and secondary opportunities in diversified Independent Power Producers (IPPs). We target primary investment opportunities at bid stage, either during construction or prior to commercial operation date, where early stage investment will provide a much higher yield.

Secondary opportunities are sought via operating assets that already have a Power Purchase Agreement (PPA) in place, to provide inflation-linked cash flows through dividends.

Our due diligence process shortlists assets with solid operational performance or track record in the project developer and monitors contract performance, returns, risks, socio-economic impact and sustainability.

Thereafter, we remain actively involved in management of the portfolio through mandatory board seats and constant engagement with management at the asset level.

Governance

We practice ethical, effective and sound leadership in determining strategy and monitoring business performance.

We practice ethical, effective and sound leadership in determining strategy and monitoring business performance.

Best Business Practices

Since Hulisani’s listing in 2016, we have steadily enhanced governance and nurtured our ability to identify opportunities that align with the trends we anticipate in the energy landscape.

The board recognises that the group’s practices can always be improved upon, and accordingly the board has and will continue to review the group’s governance framework against best practices.

Our business practices are directed to ensure that the best interests of the stakeholders are upheld and are in accordance with the principles of good corporate governance.

Commitment to Corporate Governance

The board is committed to:

  • Meeting high standards of corporate governance and building strong relationships with stakeholders
  • Exercising ethical, effective and reasonable leadership in determining strategy and monitoring business performance
  • Adhering to the highest standards of corporate governance, ethical leadership and sound judgment, which is fundamental to the sustainability of our business.

Alignment with KING IV™

  • The board maintains effective control of the business through a governance structure and has established committees to assist it in accordance with the provisions of our Board Charter and in alignment with the King IV Report on Corporate Governance ™ for South Africa, 2016 (King IV™).
  • The board recognises that delegating authority does not reduce the responsibility of directors to discharge their statutory and common-law fiduciary duties in terms of the Companies Act No. 71 of 2008 (Companies Act), JSE Limited Listings Requirements (JSE Listings Requirement) and King IV™.

For full details of our Corporate Governance review, please refer to the Hulisani Integrated Annual Report 2019 available on www.hulisani.co.za