Oil & Gas fund to raise GH¢50 million

A fund solely dedicated to supporting companies in the oil and gas industry will be launched in June this year, and seeks to raise GH¢50million.

Licenced by the Securities and Exchange Commission (SEC) and managed by Weston Capital, a local private equity and investment-advisory firm, the Weston Oil and Gas Fund will focus on investing in majority-owned Ghanaian companies that provide services to the oil and gas industry.

At 20 pesewas per share, the fund promises to give retail investors with as little as GH¢50 the opportunity to directly invest in the burgeoning oil and gas sector.

The fund will target companies that provide services such as engineering, transportation and catering to oil producers as well as refiners and oil-marketing companies.

Chief Executive Officer of Weston Capital Frederick Ofori-Mensah said the fund will position itself to become a specialist financier for SMEs participating under the local content provisions in the sector, with the sole aim of transforming such companies and eventually helping them list either on the Ghana Alternative Exchange (GAX) or the main Ghana Stock Exchange (GSE).

“We want to reignite the ordinary Ghanaian’s interest in the sector -- which at this point has rapidly dwindled over the past few years; we also want to enhance the participation of indigenous companies by helping them access funding that is relatively cheaper and patient.”

State-owned Ghana National Petroleum Corporation (GNPC) says it will invest US$20billion with its partners, including Tullow Oil Plc and Anadarko Petroleum Corp., in the next 10 years to boost production at its offshore fields to 500,000 barrels from about 100,000 barrels currently. Tullow operates the country’s Jubilee oil field.

The Weston fund will help deepen Ghana’s mutual funds market, Adu Anane Antwi, Director-General of the Securities and Exchange Commission (SEC) said. “As a specialty fund with a focus on the oil and gas industry, it creates an avenue for every Ghanaian to invest in the oil and gas sector.”

Mr. Ofori-Mensah said that Weston’s agenda was driven by the unavailability of an investment vehicle that enables indigenous Ghanaians (retail/institutional investors) to invest indirectly in the oil and gas sector.

“Upstream exploration activities require hundreds of millions in capital, and the downstream set-up takes several millions to succeed. In line with Weston Capital’s value proposition to bring innovation to the financial market, this mutual fund has been set up to improve on the product base within the mutual funds space.

“The other side of Weston’s agenda is actively contributing to the local content agenda by helping to alleviate the financing challenge indigenous companies participating in the sector are facing.”

He emphasised that the complexities of the risk profiles for companies participating in the sector make it slightly unattractive even for mainstream commercial banks.