Hulisani is an
energy infrastructure
investment company
focused on long-term
energy investment
and innovation in
emerging markets.

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

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.

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