SA gas start-up Bluedrop Energy eyes JSE listing

SA gas start-up Bluedrop Energy says it is gearing up to list on the JSE, but will first list in the US, as part of an ambitious expansion plan aimed at tapping into rising demand for liquefied natural gas (LPG) in Southern Africa.

Bluedrop, which plans to build an LPG cylinder manufacturing plant in Johannesburg, will first float its shares on the New York Stock Exchange in 2022, and is now seeking to raise $100m (R1.4bn) in private placement funding ahead of that initial public offering. Its JSE listing will follow at a date still to be announced, but would prove welcome news for Africa’s largest stock exchange, which has struggled in recent years to attract new listings.

Bluedrop has already secured a R300m investment from global investment firm J Sassoon Group, for the construction of the LPG cylinder manufacturing plant. Washington-based J Sassoon is one of the world’s oldest independent investment firms.

“The SA market is in desperate need for foreign capital infusion and this potential floating of Bluedrop’s shares in New York is going to help Bluedrop grow exponentially through asset acquisitions, making it one of the leading LPG wholesalers and composite LPG cylinder manufacturers in Africa,” J Sassoon group chair David Sassoon said in a statement.

“Unfortunately, there has been a drought of investments in SA’s capital market, forcing start-ups such as Bluedrop to seek funding from foreign markets,” said Sassoon.

SA’s tepid economy and policy uncertainty, as well as the regulatory burden of being listed, have been cited as reasons the number of JSE-listed companies has about halved over the past two decades, with 300 on the main board of the JSE at the end of December.

In 2020, the JSE saw 20 delistings, from 24 in the prior year. There were only four initial public offerings in 2020, compared with five in 2019.

Bluedrop CEO Kenneth Maduna said listing would elevate the group’s profile in the energy industry and with investors.

“It is a value accretive step in the growth of Bluedrop as a relatively new entrant in the energy markets and it fits in perfectly with our acquisitive growth strategy,” Maduna said in a statement. “We have a very good launch project and it gives us leverage to build an impressive asset base within this high growth market of LPG in SA and the Southern African Development Community region.”

Construction of the manufacturing plant is expected to commence in 2021’s fourth quarter and will take 12-14 months to complete, the group has said previously.

Bluedrop says its composite LPG cylinders were a modernised and superior alternative. They are made of polymeric and composite materials, which make them safer, nonexplosive, noncorrosive and lighter, saving up to 40% of the weight as opposed to traditional steel cylinders.

gernetzkyk@businesslive.co.za