Coastal Africa signs deal with BP subsidiary ahead of London debut
Coastal Africa Group Ltd on Friday said it is eyeing a market capitalisation in the region of £218.7 million when it debuts in London next week.
The newly incorporated, Tortola, British Virgin Islands-registered company targets West African resources.
Coastal Africa plans to join junior trading venue AIM on Wednesday. It aims to raise £17.4 million at 161 pence per share. That will give the company a market cap of £218.7 million, based on 135.8 million shares in total.
The company has entered an agreement with BP Oil International Ltd, a subsidiary of the London-based oil major BP PLC.
BP Oil has agreed to subscribe for £10 million in convertible loan notes issued by Coastal Africa. In parallel, the two firms have entered an exclusivity agreement for the offtake and marketing of crude oil and condensate.
Coastal Africa noted that the £17.4 million that it expects to raise in its AIM IPO does not include the CLN agreement with BP Oil.
Around 93% of Coastal Africa will not be held in public hands at admission. After its debut, the Crest Trust, which is beneficially owned by the wife and children of Coastal Africa Chief Executive Conrad Clauson, will hold an 83% stake, while Non-Executive Chair Peter Kimpel will hold a 4.6% stake.
Joh Berenberg Gossler & Co KG will hold 4.74%. The investment bank is being paid a £500,000 commission for the subscription by a person introduced by it, Coastal Africa noted.
SP Angel Corporate Finance LLP is acting as Coastal Africa’s nominated advisor and broker in relation to the AIM listing.
Going forward, Coastal Africa will seek a primary acquisition and minority investments in the oil and gas sector, energy infrastructure, energy services and energy assets. Its initial search will target offshore West Africa, specifically Nigeria and Angola.
‘In the future, the company may invest across Africa and, where there is a marine evacuation opportunity, may consider onshore or swamp assets,’ it said.
Coastal Africa plans to make an acquisition and become operational within 18 months of listing on AIM, as per listing regulations.
Last month, CEO Clauson commented: ‘We are seeking to replicate the strategy deployed in Southeast Asia by Coastal Energy Co, which has already proven successful, delivering around six-times return on equity capital raised. That strategy is based on an integrated approach, which better aligns operational interests, enhances project execution efficiency, reduces execution risk, and supports better asset returns.
‘That approach also unlocks transactions that may not otherwise be plausible, creating a wider opportunity set, and reducing exposure to oil price volatility.’
Back in 2008, Clauson invested in Coastal Energy Co, a Houston, Texas-based oil and gas company operating in Thailand, which was acquired in 2014 by Compania Espaaola de Petroleos SAU for an enterprise value of approximately C$2.3 billion, or $1.7 billion.
Coastal Energy is dual-listed on London’s AIM and in Toronto.
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