From gambling to oil and gas: HCI reckons why the heck not?
Empowerment investment giant makes a whopping R1bn leap into energy exploration in Africa
Shareholders at the AGM of Hosken Consolidated Investments (HCI) may have been surprised to learn the level of commitment by the empowerment investment giant to the oil and gas exploration sector.
HCI, of course, is best known for its sizeable investment in gaming group Tsogo Sun. The group also has listed and unlisted investments that span transport, media, technology, property, mining and the industrial sector.
The company, which still carries a slab of debt at the centre, has also been cautious on the investment front, preferring not to make too many investments that breach the R500m mark.
So it surprised some when HCI CEO Johnny Copelyn disclosed that about R1bn had been invested in Impact Oil and Gas, an African energy exploration vehicle. Copelyn conceded it was a big gamble but was hopeful the first well would be drilled in 12 to 18 months “when the project will be more front of mind”.
While Copelyn might be stressing about the speculative nature of the Impact investment, it is doubtful that HCI, which has been a superb allocator of capital in the past 20 years, would commit such a chunk of capital without some inkling that the exploration efforts were promising.
Investors may remember some scepticism when HCI embarked on its coal mining venture about eight years ago. HCI Coal now has profitable critical mass and looks well capable of becoming a consolidator in the sector. The potential impact of HCI’s oil and gas endeavours should perhaps not be underestimated.