Transaction financed via issuance of a novel $43 million Shariah-compliant senior secured debt instrument
Sancta Capital acquires 75% equity stake in RSS, with 25% allotted as management incentive
Substantial portion of issuance to fund RSS’ hybrid solar-diesel power transition strategy, supporting early-mover advantage in a rapidly growing segment
Dubai, United Arab Emirates: Sancta Capital, the alternative investment manager focused on special situations in the Middle East & North Africa, is pleased to announce the successful acquisition and growth debt funding of Rental Solutions & Services Limited (“RSS”), a leading tech-enabled temporary and backup power solutions provider with a 16-year operating history in the UAE, Saudi Arabia and Bahrain.
The acquisition is funded via the issuance of a novel $43,000,000 Shariah-compliant senior secured debt instrument that offers an attractive minimum contractual annual return over four years. The structure provides Sancta Capital with an all-encompassing security package, a robust governance framework, and substantial upside participation on 75% of RSS’ equity, with a 25% stake allotted as management incentive.
Critically, a substantial portion of the issuance will fund the Company’s hybrid solar-diesel power transition strategy. Since 2020, RSS has made significant investment in data capture and analytics to allow for the integration of solar technology on customer grids to generate cleaner, cheaper and more reliable power. The capital provided by Sancta Capital will accelerate the roll-out of this strategy, where RSS enjoys an early-mover advantage in a rapidly growing segment.
Stewart Murray, CEO of RSS, commented: “This is a historic day for our business and marks a new chapter in the RSS story. The investment by Sancta Capital adds firepower to our hybrid solar-diesel transformation, supported by our talent, differentiated technology, and unique go-to-market systems. Together with Sancta Capital, we have an unprecedented opportunity to innovate for our customers as we continue to build a bigger, stronger, and more profitable business.”
Commenting on the transaction, Ahmad Alanani, CEO of Sancta Capital, said: “Ambitious government-led decarbonization efforts are driving demand for energy efficient power, while the Gulf’s population growth and transformative giga-projects are placing greater strains on traditional power infrastructure. Backing RSS’ high calibre management team and leveraging its technology and data driven insights will provide strong, cost-efficient solutions for hybrid power customers, while creating significant value for Sancta Capital’s investors.”
Sancta Capital’s Ahmad Alanani (Founder and CEO) and Gus Chehayeb (Founder and CIO) will both join the Board of RSS as non-executive directors. Stewart Murray will continue as CEO and will be focused on driving a more expansive growth agenda. He will be supported by Adam Charlesworth, Managing Director, and Imran Syed, COO, who bring with them years of technical and commercial expertise in designing and developing hybrid microgrid solutions.
The transaction was completed on 29 November 2023. Teneo acted as financial advisor and Addleshaw Goddard acted as legal advisor to Sancta Capital.
Elie Fakhoury, Senior Managing Director at Teneo, commented: “This is a landmark and market-defining transaction with a unique structure, and we are proud to have advised Sancta Capital throughout the deal. The acquisition and growth debt funding of RSS is a clear demonstration of the important and growing role that alternative investors are playing in the regional market, providing innovative financing solutions to high-growth companies in critical sectors. We look forward to working on similar transactions in the future.”
Victoria Mesquita, Partner at Addleshaw Goddard, said: “This transaction required an innovative approach to credit structuring, marrying a tight covenant and security package with an equity enhancer and the liquidity of a Shariah-compliant capital markets product. We are proud to have been involved in it and thank Sancta Capital for the opportunity.”
About Sancta Capital
Sancta Capital is an independent alternative investment manager focused on special situations investing in the Middle East and North Africa. The firm employs a disciplined value investing strategy that combines rigorous due diligence with on-the ground insight to produce superior absolute returns. The team invests across the corporate capital structure in assets that are misunderstood or overlooked by the broader investment community. This includes publicly listed debt and equity securities, loans and claims of stressed and distressed borrowers, and alternative financing solutions to companies outside the traditional bank market. www.sanctacapital.com
About Rental Solutions & Services Limited (RSS)
RSS is a leading provider of temporary power and cooling solutions, offering the most reliable and fuel-efficient power generation equipment in the market to customers in the Gulf region. The Company offers a complete package of data enabled hybrid solar-diesel power, temporary power rental, and temperature control solutions. From its offices in Saudi Arabia, the UAE and Bahrain RSS provides engineered solutions to a variety of critical industry sectors and customers. www.rss.ae