The company set up the fund last month in order to give qualifying Bahamian investors a route to invest in the company and its upcoming hydrocarbon exploration activities in the waters off the islands.
The fund is open to qualifying investors between 6 January until 7 February 2020.
Utilising the fund, the company aims to provide 100mln new shares in the company at the same price as a recent equity raise (2p per share) thereby putting Bahamian investors on the same footing as other shareholders.
“It has long been the company’s intention to provide Bahamians a means of investing directly in this nationally significant project,” said Simon Potter, Bahamas Petroleum chief executive.
“Whilst the royalty regime under which BPC operates ensures economic value for the people of the Bahamas via government revenues, the mutual fund initiative will allow Bahamian individuals to hold a stake in the outcome of this exciting and potentially transformational project, and thus to personally benefit should the project be successful.”
The fund is designated as a ‘professional fund’ meaning that only professional and institutional investors will qualify to subscribe, however, Leno Corporate Services (which is running the fund launch) intends to apply for a new designation as a ‘standard fund’ which would further open up the fund, to non-professional retail investors in The Bahamas.
Shore Cap sees upside
Shore Capital analyst Craig Howie, in a note, said: “We continue to agree that BPC’s mutual fund initiative provides an important opportunity for the people of the Bahamas to individually participate in the company’s high impact and potentially transformational project, whilst also providing a mechanism for further supplementation of BPC’s financial resources.”
The broker has a 6p per share valuation (risked NAV) for BPC and Howie noted the potential for upside.
“With the required financing for drilling essentially in place, and the company having taken demonstrative steps towards spudding of its first well in 2020, we continue to see scope for a meaningful upgrade to this figure, as our assumed ‘double discount’ unwinds and overall risk declines to a level more consistent with the geological probabilities of success,” he said.
In afternoon trading, shares in Bahamas Petroleum held steady at 2.10p.
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