Finance

African Gold Acquisition Corp raised $360mln in IPO on the New York Stock Exchange to buy gold assets in Africa

Tuesday, 02 March 2021 15:27
African Gold Acquisition Corp raised $360mln in IPO on the New York Stock Exchange to buy gold assets in Africa

(Ecofin Agency) - African Gold Acquisition Corp, a Special Purpose Acquisition Company, mobilized last February 26 a total of $360 million as part of an IPO on the New York Stock Exchange.

The company will use the resources to buy gold assets in Africa. It is the first SPAC focused on African mining assets. Rob Hersov, Founder and Chairman of African Gold Acquisition Corp, and heir to a family of miners in South Africa, initially sought $300 million. The higher mobilization shows the appetite of investors not only for SPACs but also for entities that are in sectors that seem secure.

"We believe there is a strong probability that record levels of global debt will suppress global growth. It could become increasingly difficult for governments to finance this deficit and this would force them to turn to monetization (central bank debt buybacks), which will heighten concerns about government debt. We believe that these potential trends would be positive for gold prices," the company said.

Actors of the international gold sector believe that the uncertainties of the current recovery, as well as low-interest rates on government bonds and rising inflation, are factors that will once again make gold attractive. Rob Hersov's project also finds further relevance in the fact that gold, whether in US dollars, South African rand, or Ghana cedi, posted a return of more than 28% in 2020.

In any case, African Gold Acquisition Corp has provided an opportunity to achieve what political differences have not allowed in Ghana. The Agyapa project aimed to establish a special investment structure, whose business model is to rely on the value of the country's gold assets to mobilize financial resources permanently. It was strongly criticized by the civil society and the opposition. Now, African Gold Acquisition Corp could afford Ghanaian assets using the same model.

Idriss Linge



 
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