EXPLANATORY NOTE
This Offering Circular of Energea
Portfolio 3 Africa LP is filed as a Post-Qualification Amendment No. 1 ("PQA")
to the offering statement qualified by the U.S. Securities and Exchange
Commission on June 17, 2024 pursuant to Rule 252(f) of Regulation A under the
Securities Act of 1933, which was filed by Energea Portfolio 3 Africa LLC prior
to its conversion to a limited partnership as described below.
This PQA includes audited
financial statements as of December 31, 2024, and updates certain disclosures
in the previously qualified Offering Circulars. In particular, this PQA
consolidates disclosures made in all Form 1-U, Form 1-SA, Form 253(g) and Form
1-K filings made on behalf of the Company since June 17, 2024. It is filed to
maintain the qualification of the offering beyond twelve months from the
original qualification date.
Unless otherwise indicated or the
context otherwise requires, all information in this Offering Circular reflects
the terms and conditions of the as of the date of this amendment.
No material changes have been
made to the terms of the securities being offered.
Post-Qualification
Offering Circular
Amendment No. 1
File No. 024-12383
Part II -
Information Required in Offering Circular
AN OFFERING STATEMENT PURSUANT
TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). INFORMATION CONTAINED IN
THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE
OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING
CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR
QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR
OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN
TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL
WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL
OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.
Page i
Energea Portfolio
3 Africa LP
Up to $50,000,000
in Class A Investor Shares
Offering Circular
(Subject to Completion) Dated
July 17, 2025
This Offering
Circular Follows the Form 1-A Disclosure Format
Energea Portfolio 3 Africa LP (the
"Company", "us", "we", "our" and similar terms) is a limited partnership
organized under the laws of Delaware to invest in the acquisition, development,
and operation of solar energy projects in Africa (each a "Project"). The
Company may also lend money to Development Companies and use solar projects as
collateral rather than acquiring Projects for direct ownership (each a "Loan").
The Company's day-to-day operations are managed by Energea Global LLC (the "General
Partner" and together with its affiliates "Energea Global").
The Company is currently offering
up to $50.0 million in limited partnership interests designated as "Class A
Investor Shares" (the "Offering") pursuant to Regulation A ("Regulation
A") of the Securities Act of 1933, as amended (the "Securities Act").
The current price of the Class A Investor Shares is $1.30 per Class A Investor
Share, and the minimum initial investment is $100.
There is currently no
established secondary market for the Class A Investor Shares, and Investors may
not be able to sell their Class A Investor Shares. While Investors should view
an investment in the Company as long-term, the Company offers a Redemption Plan
in order to provide Investors with an opportunity to obtain liquidity. See
"Redemption Plan" and "Risk Factors-No Market for the Class A Investor Shares".
Investors
may not be able to sell their Class A Investor Shares except by submitting a
Redemption Request to the Company through our General
Partner's website, www.energea.com (the "Platform"). Pursuant to
the Redemption Plan, Investors must hold their Class A Investor Shares for at
least 60 days before they can request redemption of their Class A Investor
Shares via the Platform; if the General Partner agrees to honor a Redemption
Request, the Company has 90 days to make payment on such redemption; and the
General Partner may, in its sole discretion, amend, suspend, or terminate the
Redemption Plan at any time without prior notice. Additionally, Class A
Investor Shares may not be transferred without the Company's consent, which can
be withheld in its sole discretion, and the General Partner has a right of
first refusal to purchase any Class A Investor Shares proposed to be
transferred. See "Redemption Plan" and "Risk Factors-No
Market for the Class A Investor Shares".
Investors should note that
the General Partner may decide to sell the Projects or the Company at any time.
Should the General Partner decide to sell the Company, Investors could be
forced to sell their Class A Investor Shares at the direction of the General
Partner. See "Drag-Along Right".
The purchase of these
securities involves a high degree of risk. Before investing, you should read
this entire Offering Circular and exhibits hereto, including "Risk Factors".
The Company is selling Class A
Investor Shares directly to the public through the Platform. Neither the
Company nor any affiliated entity involved in this Offering is a member firm of
the Financial Industry Regulatory Authority, Inc. ("FINRA"), and no
person associated with this Offering will be deemed to be a broker solely by
reason of his or her participation in the sale of our Class A Investor Shares.
Investors will not pay upfront selling commissions or broker fees in connection
with the purchase of Class A Investor Shares. We will reimburse our General
Partner for certain expenses incurred on our behalf, and pay our General
Partner certain fees, as described further under "Compensation of General
Partner".
This is a
"best efforts - no minimum" offering. The Offering commenced on June 17,
2024 and will end on the date we raise the maximum amount being offered, unless
earlier terminated by the Company. We will reimburse the General Partner for
marketing expenses in an amount up to 5% of the total Offering amount raised. See
"Use of Proceeds".
|
|
Per Share
|
Total Maximum
|
|
Public
Offering Price
|
$1.30
|
$50,000,000
|
|
Marketing Expenses
|
$0.065
|
$2,500,000
|
|
Proceeds
to the Company from this Offering to the Public
|
$1.235
|
$47,500,000
|
Page ii
THE SEC DOES NOT PASS UPON THE
MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE
OFFERING, NOR DOES IT PASS JUDGEMENT UPON THE ACCURACY OR COMPLETENESS OF ANY
OFFERING CIRCULAR OR OTHER SOLICITING MATERIALS. THESE SECURITIES ARE OFFERED
PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE
COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES
OFFERED ARE EXEMPT FROM REGISTRATION.
GENERALLY, NO SALE MAY BE MADE
TO A NON-ACCREDITED INVESTOR FROM THIS OFFERING IF THE AGGREGATE PURCHASE PRICE
THE NON-ACCREDITED INVESTOR PAYS IS MORE THAN 10% OF THE GREATER OF THEIR
ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND
NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES
NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE
251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE
ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV FOR MORE INFORMATION, SEE "LIMIT
ON AMOUNT A NON-ACCREDITED INVESTOR CAN INVEST".
NEITHER THE SEC NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Page iii
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We
make statements in this Offering Circular that are forward-looking statements.
The words "outlook," "believe," "estimate,"
"potential," "projected," "expect,"
"anticipate," "intend," "plan," "seek,"
"may," "could" and similar expressions or statements
regarding future periods are intended to identify forward-looking statements.
These forward-looking statements involve known and unknown risks, uncertainties
and other important factors that could cause our actual results, performance or
achievements, or industry results, to differ materially from any predictions of
future results, performance or achievements that we express or imply in this
offering circular or in the information incorporated by reference into this
offering circular.
The
forward-looking statements included in this Offering Circular are based upon
our current expectations, plans, estimates, assumptions and beliefs that
involve numerous risks and uncertainties. Assumptions relating to the foregoing
involve judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
our control. Although we believe that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, our actual
results and performance could differ materially from those set forth in the
forward-looking statements. Factors which could have a material adverse effect on
our operations and future prospects include, but are not limited to:
· our
ability to effectively deploy the proceeds raised from this Offering;
· ability
to attract and retain Investors on the Platform;
· risks associated
with breaches of our data security;
·
public health crises, pandemics and
epidemics, such as those caused by new strains of viruses such as H5N1
(avian flu), severe acute respiratory syndrome (SARS) and, most recently, the
novel coronavirus (COVID-19);
·
climate change and natural disasters that could
adversely affect our Projects and our business;
·
changes in economic conditions generally and the
renewable energy and securities markets specifically;
·
limited ability to dispose of assets because of the
relative illiquidity of renewable energy Projects and Loans;
·
our failure to obtain necessary outside financing;
·
risks associated with derivatives or hedging activity;
·
intense competition in African renewable energy markets
that may limit our ability to attract or retain Customers (as defined below);
·
defaults under Supporting Contracts (see "Summary of
Supporting Contracts");
·
increased interest rates and/or operating costs;
·
the risk associated with potential breach or expiration
of a ground lease, if any;
·
our failure to successfully construct, interconnect,
operate or maintain the Projects;
·
inability of a Borrower to make payments on a Loan;
·
the failure of Projects and Loans to yield anticipated
results;
·
exposure to liability relating to environmental and
health and safety matters;
Page 1
·
our level of debt and the terms and limitations imposed
on us by our debt agreements;
·
our General Partner's ability to retain executive
officers and other key personnel;
·
the ability of our General Partner to source, originate
and service our Projects and Loans;
·
the ability for our engineering, procurement and
construction contractors and equipment manufacturers to honor their contracts
including warranties and guarantees;
·
regulatory changes impacting our business or our assets
(including changes to the laws governing the taxation of corporations and SEC
guidance related to Regulation A, or the Jumpstart Our Business Startups Act of
2012 (the "JOBS Act");
·
changes in business conditions and the market value of
our Projects, including changes in renewable energy policy, interest rates,
prepayment risk, operator or Borrower defaults or bankruptcy, and generally the
increased risk of loss if our investments fail to perform as expected;
·
our ability to implement effective conflicts of interest
policies and procedures among the various renewable energy investment
opportunities sponsored by our General Partner;
·
our compliance with applicable local, state and federal
laws, including the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), the Investment Company Act of 1940, as amended, and other laws; and
·
changes to U.S. generally accepted accounting principles ("U.S.
GAAP").
Any of the assumptions
underlying forward-looking statements could be inaccurate. You are cautioned
not to place undue reliance on any forward-looking statements included in this Offering
Circular. All forward-looking statements are made as of the date of this Offering
Circular and the risk that actual results will differ materially from the
expectations expressed in this Offering Circular will increase with the passage
of time. We undertake no obligation to publicly update or revise any
forward-looking statements after the date of this Offering Circular, whether
because of new information, future events, changed circumstances or any other
reason. Considering the significant uncertainties inherent in the
forward-looking statements included in this Offering Circular, including, without
limitation, those named above and those named under "Risk Factors",
the inclusion of such forward-looking statements should not be regarded as a
representation by us or any other person that the objectives and plans set
forth in this Offering Circular will be achieved.
Energea Portfolio 3 Africa LP (the
"Company") is a limited partnership organized under the laws of
Delaware. The Company has elected to be taxed as a "C" corporation for United
States federal and state income tax purposes. The Company's day-to-day
operations are managed by Energea Global LLC (the "General Partner").
The Company was created to invest
in the acquisition, development, and operations of solar energy projects in
various countries in Africa, but mainly in South Africa (each a "Project").
The Projects will sell power and, in some cases, environmental commodities, to
offtakers (who we collectively refer to as "Customers") who purchase the
power or the environmental commodities under long term contracts. The Company
may also lend money to Development Companies (which we collectively refer to as
"Borrowers") and use solar projects as collateral rather than acquiring
Projects for direct ownership (each a "Loan").
Page 2
To date, the Projects and Loans have
produced a stable and predictable stream of cash flow from Customers and
Borrowers. As the Company earns revenue, it uses the revenue to pay for
operating expenses (see "Our Operating Costs and Expenses") and distributes
the remaining cash to the holders of our Class A Investor Shares (our "Investors"),
our Reg D Investors (as such term is defined herein and together with the
Investors, the "Preferred Equity Investors") and the holders of our
Common Shares (which is currently the General Partner). See "Company
Operations and Other Matters".
Projects are currently owned by a
special-purpose entity (the "Holdco"). Holdco is organized as a South
African (PTY) LTD company, the South African equivalent of a U.S. limited
liability company. Holdco is a wholly owned subsidiary of the Company.
The Company is offering up to
$50.0 million of Class A Investor Shares pursuant to Regulation A. The proceeds
of our Offering will be used to construct and/or acquire Projects and to issue
Loans.
We
are offering to sell, and seeking offers to buy, the shares only in
jurisdictions where such offers and sales are permitted. You should rely only
on the information contained in this Offering Circular. We have not authorized
anyone to provide you with any information other than the information contained
in this Offering Circular. The information contained in this Offering Circular
is accurate only as of its date, regardless of the time of its delivery or of
any sale or delivery of our securities. Neither the delivery of this Offering
Circular nor any sale or delivery of our securities shall, under any
circumstances, imply that there has been no change in our affairs since the
date of this offering circular. This offering circular will be updated and made
available for delivery to the extent required by federal securities laws.
The Company generates cash flow
in three ways: (i) payments from Projects, (ii) payments from Loans and (iii)
returns from investments (for example, interest gained from a money market
savings account from cash-on-hand) ("Company Investments"). Cash flow
will first be used to pay operating costs and expenses, including fees and
reimbursements payable to our General Partner (see "Our Operating Costs and
Expenses"). The remaining cash flow, if any, is
distributed to the Preferred Equity Investors and the General Partner in
the following order of priority:
·
First, a preferred return equal to a 7% IRR payable to Preferred
Equity Investors, as more fully described in the Authorizing Resolutions (the "Preferred
Return");
·
Thereafter, any additional cash flow will be split between the
Preferred Equity Investors and the General Partner such that 70% is distributed
to Preferred Equity Investors and 30% to the General Partner (the "Carried
Interest").
Be advised that only proceeds on
the interest, and not on the repayment of the principal, which the Company
receives from Loans and returns from Company Investments will be eligible for
distribution. Repayment of principal of either Loans or Company Investments
will not be eligible to be distributed to either the General Partner or the
Limited Partners (together, the "Partners") and will be available for
investment by the Company, in the General Partner's sole discretion.
See "Compensation of General
Partner" and "Calculating Distributions" for more detailed
information regarding fees and distributions payable to the General Partner.
Preferred Equity Investors have
no voting rights.
CAUTION: ALTHOUGH THE CASH FLOW
FROM OUR PROJECTS AND LOANS WILL LARGELY BE ESTABLISHED BY CONTRACT IN ADVANCE,
THERE IS NO GUARANTEE THAT OUR PROJECTS OR LOANS WILL GENERATE ANY POSITIVE
CASH FLOW.
Page 3
BUYING CLASS A INVESTOR SHARES IS
SPECULATIVE AND INVOLVES SIGNIFICANT RISK, INCLUDING THE RISK THAT INVESTORS
COULD LOSE SOME OR ALL OF THEIR MONEY. THIS SECTION DESCRIBES SOME OF THE MOST
SIGNIFICANT FACTORS THAT THE COMPANY BELIEVES MAKE AN INVESTMENT IN THE CLASS A
INVESTOR SHARES RISKY. THE ORDER IN WHICH THESE FACTORS ARE DISCUSSED IS NOT
INTENDED TO SUGGEST THAT SOME FACTORS ARE MORE IMPORTANT THAN OTHERS. You should carefully consider the following
risk factors in conjunction with the other information contained in this
offering circular before purchasing the CLASS A INVESTOR SHARES.
Risks
Associated with Renewable Energy Projects: The market for renewable energy
is changing rapidly. If renewable technology proves unsuitable for widespread
commercial deployment or if demand for renewable energy products, especially
solar energy, fails to develop sufficiently, our Projects and Loans might not
be able to generate enough revenues to achieve and sustain profitability. The
factors influencing the widespread adoption of renewable energy technology
include, but are not limited to: cost-effectiveness of renewable energy
technologies as compared with conventional technologies; performance and
reliability of renewable energy products as compared with conventional energy
products; and the success of other enabling technologies such as battery storage
and Distributed Energy Resource Management Systems ("DERMS").
Fluctuations in Income from
Projects: Solar Leases typically provide for fluctuations in energy rate
based on changes in utility energy prices and/or changes in consumer prices.
Thus, it is possible that our income from one or more Projects could decrease.
The Investment environment may
change over time: The Company's investment in the Projects and Loans
is intended to extend over a period of years, during which the business,
economic, political, regulatory, and technology environment within which the
Company operates may undergo substantial changes, some of which may be adverse
to the Company. The General Partner will have the exclusive right and authority
(within limitations set forth in the LP Agreement) to determine the manner in
which the Company shall respond to such changes, and Limited Partners generally
will have no right to withdraw from the Company or to demand
specific modifications to the Company's operations in consequence thereof. A
major recession or adverse developments in the securities or credit markets
might have an impact on the Company's investments in the Projects and Loans. In
addition, factors specific to the Projects and Loans may have an adverse effect
on the Company.
Net Losses: We are
currently incurring net losses and may continue incurring net losses in the
future. If our operating expenses exceed our expectations, our financial
performance could be adversely affected. If our revenue does not grow to offset
these increased expenses, we may never become profitable. In future periods, we
may not have any revenue growth, or our revenue could decline.
Distributions to Investors:
Whether to distribute operating cash flow or capital proceeds and how much to
distribute, is at the sole discretion of the General Partner. No returns are
guaranteed, and Investors will receive distributions only if the Company
generates distributable cash flow from the Projects and Loans. Investors will
not have any recourse in the event we are unable to pay distributions. Because
we have not made any profit to date and have no current or accumulated earnings
and profits, such cash distributions to Investors will be considered a return
of capital for U.S. federal income tax purposes to the extent that the
distributions do not exceed the adjusted tax basis of the U.S. Holder's Class A
Investor Shares. See "Management Discussion and Analysis of Financial
Condition and Result of Operation-Distributions."
Distributions Generally:
Our ability to achieve our investment objectives and to pay distributions
depends upon the performance of our General Partner in the acquisition of our
Projects and Loans and the ability of our General Partner to source investment
opportunities for us. In the event we are unable to timely locate suitable
investments, we may be unable or limited in our ability to pay distributions
and we may not be able to meet our investment objectives. If we pay
distributions from sources other than our cash flow from Projects and Loans, we
will have less funds available for investments and your overall return will be
reduced.
Page 4
Competition:
There are many solar developers actively building solar projects in Africa and
we expect the number of competitors to increase as the market grows. Some of
our competitors could be larger and enjoy a lower cost of capital. Aggressive
pricing by competitors or the entrance of new competitors could reduce the
Company's ability to find high-quality Projects or to issues high-quality Loans.
Our
Customers and/or Borrowers Might Default: The Company will have a variety
of Customers and Borrowers, including businesses, retirement communities and
schools. Some Customers could default. A default would hurt the Project in
question financially, reducing the anticipated returns to Investors. Customers and
Borrowers may face intense competition, changing business and economic
conditions, risks of technological acceptance and obsolescence or other
developments that may adversely affect their ability to pay. Within the
limitations set forth in the LP Agreement, the General Partner will have the
right and authority to cause the Company's investment management and
liquidation strategies and procedures to deviate from those described in this
Offering Circular.
We Might Own Only a Small
Number of Projects: If the Company is successful in raising the current
maximum offering amount of $50.0 million in this Offering, the Company would
likely acquire or invest in between 50 and 100 Projects. If the Company raises
significantly less than the maximum offering amount, it may not be able to
invest in as many Projects. If the Company owns only a small number of
Projects, Investors will be exposed to greater concentration risk.
Possible
Changes in Governmental Policies: The Projects depend on South African
energy policy and the energy policy of other nations where we may invest. These
policies could expire, phase-out over time, require renewal by the applicable
authority, or become a victim of political pressure. The South African
government has instituted several changes to their policy over the past several
years. Some of those changes have positively affected our business while others
have had a negative impact. The new policies could disfavor solar projects in
general and our Projects in particular.
Delays in
Connecting to Power Grid: The Projects must be physically connected to the
power grid, a process that involves sophisticated engineering and government
regulation. Delays are not uncommon. For example, the utility involved might be
required to perform physical upgrades to allow for the safe and consistent
generation, distribution, and/or transmission of electricity from a Project to
the grid. Delays in the performance of the interconnecting utility's
obligations to make such grid upgrades can negatively impact the financial
performance of the Company.
Operational Risks: The
Projects are subject to operating and technical risks, including risk of
mechanical breakdown, failure to perform according to design specifications,
labor and other work interruptions and other unanticipated events that
adversely affect operations. The success of each Project, once built, depends
in part upon efficient operations and maintenance.
Load Shedding: South
Africa has faced significant challenges with load shedding, a practice where
the national electricity utility, Eskom, deliberately interrupts the power
supply to prevent the grid from overloading. Load shedding has been a recurrent
issue due to various factors, including aging power infrastructure, maintenance
issues, financial troubles within Eskom (the largest utility in South Africa),
and insufficient generation capacity. These factors have led to scheduled power
outages that have not only disrupted daily life for millions of South Africans
but have also had adverse effects on the country's economy and the Projects.
Load shedding has had
far-reaching consequences, impacting both households and businesses. Frequent
power cuts have disrupted productivity, leading to financial losses for
businesses, especially in sectors heavily reliant on continuous electricity
supply, such as manufacturing and technology. Moreover, the uncertainty caused
by unpredictable load shedding schedules has eroded investor confidence, making
it challenging for businesses to plan and expand, thereby hindering economic
growth.
Efforts to address this issue
have included urgent infrastructure repairs, increased focus on renewable
energy sources, and calls for improved management within Eskom. However, the
load shedding problem has persisted.
Construction
and Development Risks: In some cases, the Company will invest in Projects
before construction is complete. Construction of any kind involves risk,
including labor unrest, bad weather, design flaws, the unavailability of
materials, fluctuations in the cost of materials, and labor shortages. Delays
are common, which could adversely affect the economics of the Company.
Page 5
Equipment
Supply Constraints: The construction of renewable energy facilities relies
on the availability of certain equipment that may be in limited supply, such as
solar modules, trackers, inverters and monitoring systems. Much of this
equipment comes from China. There is no guarantee that the production of this
equipment will match demand, and this may adversely impact the ability to construct
and the cost of the Projects.
Finding Credible Development
Companies and Projects: Attracting and retaining relationships with
Development Companies who can originate Projects with quality Customers is
critical to the success of the Company (see "Investment Strategy"). If
we are unable to acquire a large enough volume of quality Projects, our revenues
may be lower than projected.
Discount Rates We Offer Our
Customers: Offering competitive discount rates to entice Customers to sign
a Solar Lease is a key strategy that underpins the success of the Company.
Setting appropriate rates that balance profitability with Customer incentives
is a delicate balancing act. If other solar companies offer more competitive
discount rates for Customers, we may be unable to find Customers for our
Projects.
Risks Associated with Investments Outside the U.S.: All
of the Projects will be in African countries; primarily South Africa. Projects
located in developing countries such as South Africa may be subject to certain
risks that generally do not apply to investments in developed countries such as
the United States. Such risks include the following:
·
Historically, the markets of developing countries have been more
volatile than the markets of developed countries.
·
Developing countries may have less developed legal and accounting
systems. The legal systems of developing countries might be less reliable in
terms of enforcing contracts.
·
The governments of developing countries may be more unstable and
more likely to impose capital controls, nationalize a company or industry,
place restrictions on foreign ownership and on withdrawing money from the
country, and/or impose punitive taxes that could adversely affect prices.
·
The economies of developing countries may be dependent on
relatively few industries that are more susceptible to local and global
changes.
·
South Africa faces security challenges, and the Projects can be
vulnerable to theft, vandalism, and damage. Ensuring robust security measures
is essential to mitigate these risks and protect project assets. If we are
unable to properly secure the Projects, the Projects could be negatively
affected by crime, which could reduce our net income.
·
Development challenges, such as land acquisition, permitting
delays, and poor infrastructure, can hinder progress and increase costs of the
Projects. Navigating these obstacles is crucial to the successful development
of our Projects. Ineffective land acquisition practices, slow reaction to
permitting delays or selecting sites with poor infrastructure can negatively
affect the financial performance of the Projects and the Company.
·
Investments in controlled foreign corporations ("CFCs") by
United States persons are subject to tax and information reporting in the
United States, and certain local taxes paid may not be creditable under the
foreign tax credit rules. With the exception of Morocco and Egypt, the United
States does not currently have a tax treaty with any African nation, which
would give rise to the risk of double taxation in certain circumstances.
Foreign Currency Exposure: The
foreign exchange rates between the South African rand ("ZAR") and
other currencies of other countries where we may invest, and the U.S. dollar ("USD")
have been subject to significant fluctuations. A mix of economic and geopolitical
factors have influenced the value of these currencies relative to each other.
Initially, the ZAR faced challenges due to uncertainties surrounding global
trade tensions and concerns about the country's domestic economic growth. These
factors led to periods of depreciation against the USD, creating volatility in
the exchange rates. Overall, the foreign exchange rates between the ZAR
and USD have been dynamic, influenced by a range of internal and external
factors, making it essential for Investors and businesses to closely monitor
these developments to navigate the potential impacts on trade, investment, and
financial planning. Unexpected weakness of the ZAR versus the USD will have a
negative impact on the returns of the Company. While the General Partner might
be able to hedge the Company's foreign currency exposure to some degree, such
hedging may be expensive and may not be entirely effective.
Page 6
Imprecise Language
Translations: All of the Company's legal contracts in South Africa will be
written in English, but certain documents we rely on for due diligence may be
written in Afrikaans or other languages commonly spoken in African countries.
Given that these languages have different historical and cultural roots, it is
possible that some of the materials or proceedings may not directly translate
across languages and any deviation from the Company's intentions, especially
with respect to some of the more technical terms or work involved, may cause
disruptions or misunderstandings that may negatively impact the Projects.
Risks Upon Disposition of Investments: If the Company
sells a Project, it might be required to make representations about the
business and financial affairs of the Project, and to indemnify the purchaser
if those representations prove to be inaccurate or misleading. These
arrangements may result in contingent liabilities.
Regulatory
Risks: The Projects will be subject to extensive regulatory requirements,
including those imposed by South African environmental, safety, labor and other
regulatory and political authorities. These regulatory requirements may impose
substantial costs on the Projects or Holdco. Further, should any Project or the
Holdco fail to comply with one or more regulatory requirements, it could result
in substantial fines and penalties or a shutdown of the Project or the Holdco.
Unavailability
of Insurance Against Certain Catastrophic Losses: Certain losses of a
catastrophic nature, such as earthquakes, wars, terrorist attacks or other
similar events, may be either uninsurable or insurable at such high rates that
to maintain such coverage would cause an adverse impact on the related Project.
As a result, not all Projects may be insured against all possible risks. If a
major uninsured loss occurs, the Company could lose both the amount it invested
in and anticipated profits from the affected Projects.
Potential
Environmental Liability: The Projects, like any large-scale physical plant,
could cause environmental contamination under some circumstances. Further, the Holdco
could be found liable for environmental contamination that occurred before the
Project was built. The cost of remediation and penalties could be very large.
Liability
for Personal Injury and Damage to Property: The Company could be held
liable for accidents and injuries at the Project site. The Holdco will carry
insurance to protect against the potential losses, but the insurance might not
be adequate.
Global or National Economic
Conditions: An economic slowdown in South Africa could affect our Customers
and therefore our Projects.
No
Participation in Management: Investors will have no voting rights and no
right to participate in the management of the Company or the Projects. Instead,
the General Partner will make all decisions. You will have the ability to
replace our management team only under very limited circumstances, as described
in "Summary of LP Agreement and Authorizing Resolution."
Reliance
on Management: The success of the Company and its Projects will depend in
part on the skills of our General Partner and its management team. If our General
Partner fails to retain its key personnel, the Company and its Investors could
suffer.
Sale of
Other Securities: The Company could, at any time, sell classes of Company
shares other than those being offered by this Offering, for example, in a
private placement (including, but not limited to, the sale of Reg D Shares). A
different class of securities could have greater rights than those associated
with the Class A Investor Shares, including but not limited to preferential
rights to distributions.
Limitations
on Rights in Investment Agreements: To purchase Class A Investor Shares,
you are required to sign an investment agreement, in the form attached hereto
and if you decide to invest over time or automatically reinvest your
distributions, you will be required to sign an additional investment agreement
(such investment agreements, the "Investment Agreements"). The
Investment Agreements will limit your rights in several important ways if you
believe you have claims against us arising from the purchase of your Class A
Investor Shares:
Page 7
·
Any claims arising from your purchase of Class A Investor Shares
must be brought in the state or federal courts located in Wilmington, Delaware,
which might not be convenient to you.
·
You would not be entitled to recover any lost profits or special,
consequential, or punitive damages. However, that limitation does not apply to
claims arising under Federal securities laws.
Following your initial purchase
of Class A Investor Shares, you may to continue to participate in this Offering
by electing to either (i) establish with the Company, a plan for you to
automatically invest in the Offering on a periodic basis, subject to the terms
of an Auto-Invest Agreement signed by you and the Company or (ii) to reinvest
the distributions you receive from your Class A Investor Shares into the
purchase of additional Class A Investor Shares, subject to the terms and
conditions of the applicable Investment Agreement, signed by you and the
Company.
General Partner's Drag-Along
Rights: The General Partner may decide to sell the Projects or the Company
at any time. Should the General Partner decide to sell the Company, Investors
could be forced to sell their Class A Investor Shares at the direction of the General
Partner according to the General Partner's drag-along rights granted to them in
the LP Agreement (see "Summary of LP Agreement and Authorizing Resolution.").
Forum
Selection Provision: Our Investment Agreements and our LP Agreement both
provide that disputes will be handled solely in the state or federal courts
located in the state of Delaware. We included this provision primarily because
(i) the Company is organized under Delaware law, (ii) Delaware courts have
developed significant expertise and experience in corporate and commercial law
matters and investment-related disputes (which typically involve very complex
legal questions), particularly with respect to alternative entities (such as LPs),
and have developed a reputation for resolving disputes in these areas in an
efficient manner, and (iii) Delaware has a large and well-developed body of
case law in the areas of corporate and alternative entities law and
investment-related disputes, providing predictability and stability for the
Company and its Investors. This provision could be unfavorable to an Investor
to the extent a court in a different jurisdiction would be more likely to find
in favor of an Investor or be more geographically convenient to an Investor. It
is possible that a judge would find this provision unenforceable and allow an
Investor to file a lawsuit in a different jurisdiction.
Section 27 of the Exchange Act
provides that Federal courts have exclusive jurisdiction over lawsuits brought
under the Exchange Act, and that such lawsuits may be brought in any Federal
district where the defendant is found or is an inhabitant or transacts
business. Section 22 of the Securities Act provides that Federal courts have
concurrent jurisdiction with State courts over lawsuits brought under the
Securities Act, and that such lawsuits may be brought in any Federal district
where the defendant is found or is an inhabitant or transacts business.
Investors cannot waive our (or their) compliance with federal securities laws.
Hence, to the extent the forum selection provisions of the Investment Agreements
or the LP Agreement conflict with these Federal statutes, the Federal statutes
would prevail.
Waiver of
Right to Jury Trial: The Investment Agreements and the LP Agreement both
provide that legal claims will be decided only by a judge, not by a jury. The
provision in the LP Agreement will apply not only to an Investor who purchases
Class A Investor Shares in the Offering, but also to anyone who acquires Class
A Investor Shares in secondary trading. Having legal claims decided by a judge
rather than by a jury could be favorable or unfavorable to the interests of an
owner of Class A Investor Shares, depending on the parties and the nature of
the legal claims involved. It is possible that a judge would find the waiver of
a jury trial unenforceable and allow an owner of Class A Investor Shares to
have his, her, or its legal claim decided by a jury. In any case, the waiver of
a jury trial in both the Investment Agreements and the LP Agreement do not
apply to claims arising under the federal securities laws.
Conflicts
of Interest: The interests of the Company and the General Partner could
conflict with the interests of Investors in a number of ways, including:
·
Our General Partner and its officers perform similar roles for
other entities that are affiliated with the General Partner and are not
required to devote all of their time and effort to the Company and are only
required to devote such time to our affairs as their duties require.
·
Our General Partner will receive fees based, in part, on the
amount of cash flow the Company generates. The General Partner might,
therefore, have an incentive to raise more capital, and invest in more Projects
and Loans, than they would otherwise, leading them to invest in borderline
Projects and Loans.
Page 8
·
The entire business of the General Partner consists of investing
in solar projects, including solar projects in South Africa. There could be
conflicts between Projects they decide to invest in through the Company and
projects they invest in through other vehicles.
Risk of Failure to Comply with
Securities Laws: The Offering relies on an exemption from registration with
the SEC pursuant to Regulation A. If the Offering did not qualify for exemption
from registration under the Securities Act, the Company could be subject to
penalties imposed by the federal government and state regulators, as well as to
lawsuits from Investors.
We may be subject to claims
for recission or damages from our Investors. Through December 26, 2023, a
prior offering sold 2,253,875 Class A Investor Shares and raised approximately
$2,577,000 in capital (the "Prior Offering"). During the Prior Offering,
we may not have been eligible for an exemption from registration under the
Securities Act for certain sales of Class A Investor Shares because we did not
file a post-qualification amendment on at least an annual basis with updated
financial statements as required by Rules 251(d)(3)(i)(F) and 252(f)(2)(i) of
Regulation A, and because of the at-the-market prohibition in Rule
251(d)(3)(ii) of Regulation A. Unless another exemption from registration under
the Securities Act is available for these sales, we may be subject to claims
for recission or damages for sales of up to $1,820,739 of Class A Investor
Shares that were made following the first anniversary of the initial
qualification of the Prior Offering.
No Market for the Class A
Investor Shares; Limits on Transferability: There is currently no
established market for the Class A Investor Shares. An Investor who wishes to
sell or otherwise transfer their Class A Investor Shares may be limited
because:
·
There will be no established market for the Class A Investor
Shares, meaning the Investor could have a hard time finding a buyer for its
shares.
·
Although the Company offers a Redemption Plan, there is no
guarantee that an Investor who wants to sell his, her, or its Class A Investor
will be able to do so.
·
Class A Investor Shares may not be transferred without the
Company's consent, which we can withhold in our sole discretion. The Company
also has a right of first refusal to purchase any Class A Investor Shares
proposed to be transferred.
Our General
Partner reserves the right to reject any Redemption Request for any reason or
no reason or to amend or terminate the Redemption Plan without prior notice.
Therefore, you may not have the opportunity to make a Redemption Request prior
to a potential termination of the Redemption Plan and you may not be able to
sell any of your Class A Investor Shares back to the Company pursuant to the
Redemption Plan. Moreover, if you do sell your Class A Investor Shares back to the
Company pursuant to the Redemption Plan, you may not receive the same price you
paid for the Class A Investor Shares being redeemed. In addition, pursuant to
our Redemption Plan, an Investor may only (a) have one outstanding Redemption
Request at any given time and (b) request that we redeem up to $50,000 worth of
Class A Investor Shares per each Redemption Request.
For more information regarding
the Redemption Plan, see "Redemption Plan".
"Best efforts-no minimum"
offering. The Offering is a "best efforts" basis and does not require a
minimum amount to be raised. This means that any investment made could be the
only investment in this Offering, leaving the Company without adequate capital
to pursue its business plan. If we are not able to raise sufficient funds, we
may not be able to fund our investment strategy as planned, and our growth
opportunities may be materially adversely affected. This could increase the
likelihood that an investor may lose their entire investment.
Corporate Governance Risk:
As a non-listed company conducting an exempt offering pursuant to Regulation A,
the Company is not subject to a number of corporate governance requirements
that an issuer conducting a registered offering or listed on a national stock
exchange would be. For example, the Company does not have (i) a board of
directors of which a majority consists of "independent" directors under the
listing standards of a national stock exchange, (ii) an audit committee
composed entirely of independent directors and a written audit committee
charter meeting a national stock exchange's requirements, (iii) a
nominating/corporate governance committee composed entirely of independent
directors and a written nominating/corporate governance committee charter
meeting a national stock exchange's requirements, (iv) a compensation committee
composed entirely of independent directors and a written compensation committee
charter meeting the requirements of a national stock exchange, and (v)
independent audits of the Company's internal controls.
Page 9
The
Company is an "Emerging Growth Company" Under the JOBS Act: Today, the
Company qualifies as an "emerging growth company" under the JOBS Act of 2012.
If the Company were to become a public company (e.g., following a registered
offering of its securities) and continued to qualify as an emerging growth
company, it would be able to take advantage of certain exemptions from the
reporting requirements under the Exchange Act and exemptions from certain
investor protection measures under the Sarbanes Oxley Act of 2002. Using these
exemptions could benefit the Company by reducing compliance costs but could
also mean that Investors receive less information and fewer protections than
they would otherwise. However, these exemptions - and the status of the Company
as an "emerging growth company" in the first place - will not be relevant
unless and until the Company becomes a public reporting company.
The Company has elected to delay
complying with any new or revised financial accounting standard until the date
that a company that is not an "issuer" (as defined under section 2(a) of the
Sarbanes-Oxley Act of 2002) is required to comply with such new or revised
accounting standard, if such standard also applies to companies that are not
issuers. As a result, owners of Class A Investor Shares might not receive the
same disclosures as if the Company had not made this election.
For example, because we are an
emerging growth company, you will not be able to depend on any attestation from
our independent registered public accounting firm as to our internal control
over financial reporting for the foreseeable future. Our independent registered
public accounting firm will not be required to attest to the effectiveness of
our internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act until the later of the year following our first annual
report required to be filed with the Commission or the date we are no longer an
"emerging growth company" as defined in the JOBS Act. Accordingly, you will not
be able to depend on any attestation concerning our internal control over
financial reporting from our independent registered public accounting firm for
the foreseeable future.
Breaches
of Security: It is possible that our Platform, systems or the systems of
third-party service providers could be "hacked," leading to the theft or
disclosure of confidential information Investors provide to us. Because
techniques used to obtain unauthorized access or to sabotage systems change
frequently and generally are not recognized until they are launched, the
Company, General Partner and our service providers may be unable to anticipate
these techniques or to implement adequate defensive measures.
Unanticipated changes in our
tax laws that may impact us, the enactment of new tax legislation, or exposure
to additional income tax liabilities could affect our profitability: We are
obligated to comply with income tax laws in the regions where we operate,
including recent changes like the Inflation Reduction Act. These evolving tax
regulations could impact our financial health. We also face potential tax
audits that may result in additional tax assessments, with uncertain outcomes.
Changes to our effective tax rate, driven by shifts in our operational
structure, could have significant effects on our financial well-being.
The
price of Class A Investor Shares was determined by our General Partner (see "Price
of Class A Investor Shares"). The Company sells shares to raise capital for
the purchase and construction of Projects and to issue Loans. As new Investors
purchase Class A Investor Shares (or other classes of stock, see "Other
Concurrent Offerings"), existing Investors may be temporarily diluted until
new Projects are acquired and/or constructed and new Loans are originated and
contribute to monthly cash flow. Cash in treasury may be invested into Company
Investments to optimize yield and minimize the dilution impact. Such Company
Investments will not earn as high of a return as we expect to earn on our
investments in Projects and Loans.
Additionally, we may in the
future offer additional classes and/or series of Investor Shares (such as in
the Reg D Offering) or other securities convertible into or exchangeable for
such class or series of Investor Shares. Although no assurances can be given
that we will consummate a financing, in the event we do, or in the event we
sell additional classes and/or series of Investor Shares (such as in the Reg D
Offering) or other securities convertible into shares of our Class A Investor
Shares in the future, additional and substantial dilution will occur. In
addition, investors purchasing Class A Investor Shares or other securities in
the future could have rights superior to Class A Investor Shares Investors in
this Offering. Subsequent offerings at a lower price (a "down round") could
result in additional dilution.
Page 10
The Company is offering to sell
up to $50,000,000 of Class A Investor Shares to the public. As of the date of
this Offering 494,347,676 Class A Investor Shares remain authorized but
unissued. This Offering is being conducted as a continuous offering pursuant to
Rule 251(d)(3) of Regulation A, meaning that while the offering of securities
is continuous, active sales of securities may happen sporadically over the term
of the Offering. Further, the acceptance of subscriptions, whether via the
Platform or otherwise, may be briefly paused at times to allow us to
effectively and accurately process and settle subscriptions that have been
received.
The Offering will commence as
soon as this offering statement is "qualified" by the SEC and will end on the
sooner of (i) a date determined by the Company, or (ii) the date the Offering
is required to terminate by law.
Only the Company is offering
securities in this Offering. None of our existing officers, directors, or
stockholders are offering or selling any of their securities of the Company in
this Offering.
The Company is not using an
underwriter or broker to sell the Class A Investor Shares and is not paying
commissions. Class A Investor Shares will be offered and sold only through the
Platform.
This is a "best efforts - no
minimum" offering. This means that the Offering does not have a minimum
threshold amount that we must raise before we can have a closing. Even if a
very small number of Class A Investor Shares are sold, the Company does not plan
to return funds to Investors.
The Company reserves the right to
reject any subscription to purchase Class A Investor Shares in this Offering in
whole or in part and for any reason (or no reason). If the Company rejects an
investment, it will promptly return all the Investor's money without interest
or deduction.
Anyone can buy Class A Investor
Shares. The General Partner does not intend to limit investment to people with
a certain income level or net worth, although there are limits on how much non-accredited
investors may invest in this Offering (see "Limit on the Amount a
Non-Accredited Investor Can Invest").
After the Offering has been
"qualified" by the SEC, the General Partner intends to advertise the Offering
using the Platform and through other means, including public advertisements,
social media and audio-visual materials, in each case, only as we authorize and
in compliance with the rules and regulations of Regulation A. Although these
materials will not contain information that conflicts with the information in
this Offering Circular and will be prepared with a view to presenting a
balanced discussion of risk and reward with respect to the Class A Investor
Shares, the advertising materials will not give a complete understanding of
this Offering, the Company, or the Class A Investor Shares and are not to be
considered part of this Offering Circular.
The Offering is made only by
means of this Offering Circular and prospective Investors must read and rely on
the information provided in this Offering Circular in connection with their
decision to invest in Class A Investor Shares.
In
addition to this Regulation A offering, the Company may conduct concurrent
private offerings of securities under Rule 506(c) of Regulation D of the
Securities Act of 1933. These private offerings (the "Reg D Offerings")
will be open exclusively to verified accredited investors and may be offered
through general solicitation and advertising, in compliance with applicable
securities laws. Each of these classes of Company shares ("Reg D Shares")
offered to investors participating in these private offerings (the "Reg D
Investors") shall participate in distributions with the Investors on a pari
passu basis.
Page 11
Securities
sold pursuant to Regulation D will not be registered with the SEC and will be
subject to transfer restrictions.
Proceeds
from the Regulation D offering will be combined with proceeds from this
Offering and used by the Company for the same common purpose (see "Use of
Proceeds"). While proceeds from each offering may be used to acquire
overlapping or similar energy infrastructure assets, the Company will maintain
separate accounting of capital raised under each offering and allocate capital
in a manner consistent with the rights and expectations of each investor class.
We expect to use all of the net
proceeds of this Offering, after marketing expenses, to acquire, develop and
construct Projects and to issue Loans. Proceeds waiting to be invested into
Projects and Loans may be invested into Company Investments like government
bonds or money market accounts. The Company expects to use Offering proceeds to
fund new Projects and Loans. For more information regarding our investment
strategy, see "Description of Business-Investment Strategy". For more
information regarding current Projects and Loans, see "Description of
Property".
We expect to pay for operating
expenses at the Company with cash flow from the Projects and Loans, but if the
Projects and Loans have not earned enough revenue to pay for any given
operating expense, the General Partner may use the proceeds from this Offering
to pay such operating expense. The types of operating expenses the Company
expects to pay are described in "Our Operating Costs and Expenses".
The capital raised in this
Offering will not be used to compensate officers or directors because the
Company has no employees. However, Offering proceeds may be used to pay fees
owed to the General Partner and its affiliates (see "Compensation of General
Partner"). The Company does not expect to pay
fees to the General Partner from the proceeds of the Offering. Fees are instead
expected to be paid with revenue produced by the Projects, Loans and Company
Investments. However, it is possible that the revenue would be insufficient to
pay management fees, at which time, fees may be paid for from the proceeds of
this Offering.
The General Partner may make
short term advances to the Company to make payments on an as-needed basis. The
General Partner has also secured a loan on behalf of the Company. We do not
anticipate any additional sources of capital apart from funds from operations,
the advances, funds generated through this Offering (and other concurrent
offerings) and the loan to fund the Projects and Loans and to cover marketing
expenses.
It is important to note that no
capital will be allocated to any Project or Loan until it has received formal
approval from the Investment Committee and has been reported in accordance with
the appropriate procedures (see "Investment Committee").
We might invest in Projects or
Loans using the General Partner's capital before we have raised enough capital
from Investors. In that case, we will replace the General Partner's capital
with capital from Investors as soon as we raise it. To the extent the General
Partner or its affiliates invest capital, they will do so on the same price and
terms as other Investors (see "Compensation of General Partner").
The table below sets forth our
estimated use of proceeds from this Offering assuming we sell $50.0 million in
Class A Investor Shares. This is a "best effort" offering. This Offering does
not have a minimum to close. The Company is not paying commissions to
underwriters, brokers, or anyone else in connection with the sale or
distribution of the Class A Investor Shares. In some cases, retirement
custodians, investment advisers, and other intermediaries will offer to invest
on behalf of their clients. In such cases, the custodian, adviser, or
intermediary will be paid a fee from their client's invested funds. In such
cases, the client (rather than the Company) is paying those fees.
Page 12
|
|
|
Maximum
Offering
|
|
10% of Maximum
|
|
25% of Maximum
|
|
50% of Maximum
|
|
|
|
Amount (1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Gross Offering Proceeds
|
$
|
50,000,000
|
|
5,000,000
|
|
12,500,000
|
|
25,000,000
|
|
Less Marketing Expenses (1)
|
$
|
2,500,000
|
|
250,000
|
|
625,000
|
|
1,250,000
|
|
Net Proceeds from this Offering
|
$
|
47,500,000
|
|
4,750,000
|
|
11,875,000
|
|
23,750,000
|
|
Estimated Amount Available for Projects and Loans
|
$
|
47,500,000
|
|
4,750,000
|
|
11,875,000
|
|
23,750,000
|
|
TOTALS
|
$
|
50,000,000
|
|
5,000,000
|
|
12,500,000
|
|
25,000,000
|
(1) The Company will
reimburse the General Partner in an amount up to 5% of proceeds from this
Offering to pay for organization and offering expenses, including marketing
expenses. Any such amounts in excess of such 5% will be paid, without
reimbursement, by the General Partner.
The Company reserves the right to
change the above use of proceeds without notice if the General Partner believes
it is in the best interests of the Company.
The Company's offices are located
at 52 Main Street, Chester, CT 06412. The Company itself has no employees.
Rather, the Company has engaged the General Partner to manage the Company and
utilizes employees and services provided by the General Partner as described
more fully in the section "Directors, Executive Officers & Significant
Employees".
Energea Portfolio 3 Africa LP is
a limited partnership, treated as a "C" corporation for United States federal
and state income tax purposes, and organized under the laws of Delaware as of
March 11, 2021. The Company and its day-to-day operations are managed by
Energea Global LLC (the "General Partner").
The Company was created to invest in the acquisition, development, and
operations of solar energy projects in Africa (each a "Project"). The
Company may also lend money and use solar projects as collateral rather than
acquiring Projects for direct ownership (each a "Loan").
The primary sources of revenue
for the Company comes from payments made by customers who buy energy from the
Projects ("Customers") and borrowers who make principal and interest
payments on Loans ("Borrowers"). The Company's profitability depends on
generating revenues from Projects and Loans that exceed the operating costs
(see "Our Operating Costs and Expenses").
Projects are owned by a
special-purpose entity (the "Holdco"). Holdco is organized as a South
African limited liability company, the South African equivalent of a U.S.
limited liability company. Holdco is a wholly owned subsidiary of the Company.
The Company generally plans to
hold the Projects indefinitely, creating a reliable stream of cash flow for
Investors. Should the Company decide to sell Projects in the future, however,
the General Partner would consider the following factors:
·
Yield and Cashflow: Many investment funds look for
reliable cashflows generating a targeted yield. With both revenue and most
expenses locked in by contract, the cash flow from any Project should be
predictable and consistent for as long as 25 years.
·
Project Consolidation: Some of the Projects will be too
small or unusual for institutional buyers to consider purchasing on their own.
The Company could package these Projects into a larger, more standardized
portfolio that will be attractive to these larger, more efficiency-focused
players. In the aggregate, a portfolio of Projects might be expected to
generate 50+ megawatts of power with relatively uniform power contracts,
engineering standards, and underwriting criteria. A portfolio of that size can
bear the fees and diligence associated with an institutional-grade transaction
or securitization.
Page 13
·
Cash Flow Stabilization: When the Company buys a Project,
it will typically share the construction or repowering risk with the
Development Company that originated the Project. Larger investors are generally
unwilling to take on construction risk and will invest only in Projects that
are already generating positive cash flow, referred to as "stabilization".
Thus, the Company may acquire Projects before stabilization and sell them after
stabilization. Institutional investor interest in the Portfolio should increase
as the portfolio stabilizes.
·
Increase in Residual Value: When the Company acquires a
Project, the appraisal is based solely on the cash flows projected from
executed Project Rental Contracts, with no residual value assumed for the
Project. There is a high probability that a Project will continue to create
revenue after its initial contract period in the form of a contract extension,
repositioning, or sale of energy into the merchant energy markets. This creates
a sort of built-in "found value" for our Projects, which may be realized upon
sale.
The Company sources its Projects
from other companies who specialize in developing solar projects in Africa ("Development
Companies") but it may source Projects from other sources. The Company's
relationship with Development Companies may take several different forms. A
Development Company might identify a potential project and permit, engineer and
construct it. It might provide operations and maintenance support for a Project
after it is built or might sell a Project to us and exit entirely.
Development Companies are
compensated for their work and their risk. As of the date of this Offering
Circular, the General Partner does not currently own a Development Company in
Africa and the Company acquires all Projects from unrelated Development
Companies. The General Partner may create or acquire a Development Company if
Projects from third parties become overpriced, if an exceptional market
opportunity presents itself or if deal flow is slow and we require additional
development capacity. If the Company were to acquire a Project from a
Development Company that is related to the General Partner or an affiliate of
the General Partner, we will cap the related-party origination fee at 5.0% of
the overall Project's cost, which we believe is below the standard market rate
for developing a Project (see "Compensation of General Partner").
The General Partner reviews
Projects submitted by the Development Companies to identify investments that we
believe represent the greatest potential risk-adjusted returns. We are
specifically searching for Projects in countries with what we believe to be
favorable economic conditions, large addressable markets and well-defined
renewable energy policies, like South Africa. The General Partner has a strong
preference for Projects with credible Customers, albeit adjusted for the
context of African economies.
The General Partner believes the
best investment strategy for African markets requires small investments in a
broad base of Projects in a concentrated geographic area. The average risk of
default by a Customer of a Solar Lease is higher in Africa than it may be in
other markets, thus diversification is central to the Company's investment
strategy. Placing small investments (<$2,000,000 per Project) will help
reduce risk of loss as a whole and increase the level of impact on the local
communities and businesses in which we invest. That said, every Project is
vetted for its financial credibility by the Investment Committee and only
approximately 20% of Projects we've reviewed have qualified for an investment
to date.
We primarily invest in Projects
with the following characteristics:
·
Locations: We select locations based primarily on:
o Demand for
alternative energy;
o Efficient
access for maintenance;
o Interconnection
points with the electricity grid;
o Acceptable
security risks. The Company tries to avoid selecting Projects in
locations with high crime areas which could expose the Project to an increased
risk of theft and vandalism;
o Solar
irradiance; and
o Country and
state-level policies that enable the development of renewable energy projects.
Page 14
·
Right to Site: Some Projects owned by the Company will be
installed on Customer's rooftops, while others will be located on remote
parcels of real estate. In either scenario, the Company will obtain rights to
access the Project to construct and maintain the Project ("Site Access").
For rooftop Projects, Site Access is most-commonly granted through the Solar
Lease with the Customer. For Projects on remote real estate, we will either
purchase or lease the property to ensure adequate Site Access is obtained.
·
Operation and Maintenance: The Holdco will hire a company
to perform some or all of the services necessary to maintain each Project in
good working order. This includes preventative maintenance (such as inverter
diagnostics, cleaning inverter fans and string testing), emergency maintenance
(which is when a technical crew is dispatched to a Project to address an
unexpected issue that occurred in the field), modules cleaning, site security
and landscaping.
·
Connecting Projects to the Electric Grid: Most Projects
acquired or constructed by the Company will require permission to interconnect
to the local electric grid ("Interconnection"). This permission is
granted by the local interconnecting utility company through an interconnection
agreement and an associated permission to operate. In the case of certain
smaller projects, interconnection rights may be granted through national and
utility policy and not require an individual interconnection agreement.
·
Minimum Technical Requirements ("MTR"): All
technical aspects of each Project we invest in must meet the Company's MTR. The
MTR is a comprehensive list of all venders and equipment makes/models which
have gotten through the General Partner's due diligence process and are
acceptable for use in the Projects. We analyze venders and the equipment they
make to predict the field performance of the equipment and the financial
strength behind warranties and guarantees. In addition to tracking venders and
materials used in the construction, we also track best installation practices
through the MTR. Each Project leaves lessons learned, and those lessons are
incorporated into the collective memory of the General Partner by being added
to the best practices component of the MTR.
·
Country-Level Policies and Environmental Commodities: Some
regions in Africa have certain policies to promote the development of renewable
energy projects. There are a wide range of policy types that include carbon
credits, property and sales tax exemptions, net metering and community solar
(referred to as "wheeling" in the South African context). The Company will seek
to optimize those country-level policies in order to increase the expected
return on investment for Investors which may include transactions with third
parties to monetize carbon and renewable energy credits.
·
When the Company Invests in Projects: Normally, the
Company will not invest in a Project until certain conditions are satisfied.
Among these:
o The Holdco has
executed contracts for the lease of the underlying land;
o A signed Solar
Lease Agreement with a dependable Customer;
o The electric
utility has confirmed that the Project can connect with the electric grid;
o All
environmental and installation permits have been obtained;
o We have
executed a Construction Contract (see "Summary of
Supporting Contracts"); and
o We have
obtained insurance.
Thus, in most cases, Investors
are not exposed to significant Project-level risks until all these conditions
are satisfied. However, the General Partner might make exceptions for
exceptionally promising Projects. The General Partner will have sole discretion
over whether to acquire or invest in a Project. See "Risks Factors" for
more information.
The
Company provides Loans to Borrowers in Africa or with U.S. companies that do
business in Africa. Borrowers are usually Development Companies and single-purpose
entities which own solar projects. These Loans are designed to finance the
development of new solar projects while relying on the credit of existing
projects that rest on the balance sheet of the Borrower as collateral. Each
time a new project reaches commercial operation; it contributes to the
Borrower's overall collateral which allows the Company to extend additional
credit to the Borrower.
Page 15
·
Loan Issuance: As the Company raises capital through this Offering, the General
Partner may lend some or all of it to Borrowers each month. Each disbursement
is amortized on a separate amortization schedule which adheres to the terms and
conditions of a Loan Agreement (see "Summary of Supporting Contracts").
·
Collateral: The Loans are senior debt and collateralized by a pledge
of the shares in the Borrower's enterprise which includes solar projects held
on the corporate balance sheet. Thus, by serving as the sole lender to a
Borrower, the solar projects act as the primary form of collateral. As Loans
are issued, the Borrower uses the loan proceeds to develop and construct more
projects which are added to the overall collateral calculations.
As the Projects achieve commercial operation, the
Borrower's customer begins to make payments to our Borrower for energy produced
by the Project. In some cases, payments from the customers to our Borrower are
made directly to a segregated account controlled by the Company. As a condition
to close a Loan, the Borrower grants the Company controlling rights to the
collateralized assets, in the event of a default, the General Partner can easily
step into the Borrower's cash flow to prevent revenue leakage. We believe
the Company is particularly well-suited to issue Loans when solar projects act
as collateral due to our General Partner's extensive experience owning and
operating solar projects.
·
Loan Management: The General Partner will oversee the performance and
compliance of Borrowers and the associated collateral. Their responsibilities
include continuous monitoring of construction progress, energy production and
cash flows to help ensure that loan terms are met. By working closely with the
Borrowers and their projects, we mitigate risks associated with project delays
and underperformance which could impair the Borrower. Close scrutiny of
underlying projects during due diligence and loan servicing also ensures an
efficient step-in during a default scenario.
Investment Committee
When we find a Project or Loan that
meets the fundamental criteria described above, we consider the opportunity at
a multi-disciplinary committee of experienced renewable energy executives of
the General Partner ("Investment Committee"). To approve a Project or
Loan for funding, a unanimous approval of the investment by the Investment
Committee is required to move forward. A copy of the memorandum prepared by the
General Partner for each Project or Loan is provided to Investors on the
Platform and in our filings with the SEC through "Form 1-U" and
253(g)(2) filings. As of the date of this Offering Circular, the Investment
Committee consists of the members outlined in the table below:
|
Name
|
Title
|
Due Diligence
Responsibility
|
|
Arthur
Issa /
Daniel
Chavez
|
Financial Analyst
|
Review
historical financials and prepare projections for each Project and Loan
incorporating cash flow, tax, technical and energy market variables.
|
|
Dave Rutty
|
Project Analyst
|
Compiles the IC Memos for
Projects
|
|
Francielle
Assis
|
HR & HSEC Legal Coordinator
|
Examines
the area where a Project is located for environmental, crime and
community-related risk factors.
|
|
Isabella Mendonca
|
General Counsel
|
Examine and/or prepares all
documents related to a Project or Loan to ensure contracts meet Energea Global's
requirements.
|
|
Juan
Carvajales
|
Loan Analyst
|
Compiles
the IC Memo for Loans
|
|
Julio Cezar dos Santos de
Morais
|
Electrical Engineer
|
Ensures all Projects meet our
MTR. Produces a "punch list" of failures to be remedied if necessary.
|
|
Mike Silvestrini
|
Managing Partner
|
Originates
and negotiates most investment opportunities.
|
|
Paulo Vieira
|
Director of Operations & Maintenance
|
Confirms cost and strategy for
operating and maintaining Project investments.
|
Page 16
Our net income depends, in large
part, on our ability to source, acquire and manage investments with attractive
risk-adjusted yields. We compete with many other entities engaged in renewable
energy in the African market, including individuals, corporations, and private
funds, many of which have greater financial resources and lower costs of
capital than we have.
There are numerous companies with investment objectives similar to ours. That said, the industry is going through a
consolidation phase where a large pool of market participants is being
consolidated into a smaller group of "successful" enterprises. Thus, we have
fewer competitors today than we did five years ago, but those competitors are
generally larger and more sophisticated than those that have folded or sold
their position in the market.
Competitive
variables include market presence and visibility, amount of capital to be
invested per Project and underwriting standards. To the extent that a
competitor is willing to risk larger amounts of capital in a particular
transaction or to employ more liberal underwriting standards when evaluating
potential risk
than we are, our investment volume and profit margins could be impacted. Our
competitors may also be willing to accept lower returns on their investments
and may succeed in buying projects that we have targeted for acquisition.
Although
we believe we are well positioned to compete effectively in each facet of our
business, there is competition in the market and there can be no assurance that
we will compete effectively or that we will not encounter increased competition
in the future that could limit our ability to grow
the portfolio in the future.
The revenue comes from payments
from our Customers in our Projects and the interest portion that we receive
from Borrowers on our Loans. For the fiscal years ended December 31, 2024 and
2023, respectively, the Company's total revenue was $217,122 and $85,420,
respectively, which is broken down below:
|
Revenue Recognition
|
Amount as of
12/31/2024
|
Amount as of
12/31/2023
|
|
Project Revenue
|
$195,712
|
$85,420
|
|
Loan Revenue
|
$21,410
|
$0
|
In addition to the revenue
described above, the company may also earn additional income from Company
Investments and gains from the sale of Projects. For the fiscal years ended
December 31, 2024 and 2023, respectively, the Company's total other income was
$101,953 and $4, respectively, which is broken down below:
|
Other Income Recognition
|
Amount as of
12/31/2024
|
Amount as of
12/31/2023
|
|
Company Investments
|
$101,953
|
$4
|
|
Sale of Projects
|
$0
|
$0
|
Our Revenue Recognition Policy
follows ASC-606 which is a five-step procedure:
|
Procedure
|
Example
|
|
Step
1 - Identify the Contract
|
Solar
Lease Agreement or Loan Agreement
|
|
Step 2 - Identify the
Performance Obligations
|
Delivery of electricity from
solar plant or issuance of debt
|
|
Step
3 - Determine the Transaction Price
|
Amount
contractually signed with Customer or Borrower
|
|
Step 4 - Allocate the
Transaction Price
|
Obligation is satisfied by
transferring control of the electricity produced to the Customer
|
|
Step
5 - Recognize Revenue
|
At a
point in time when the Customer or Borrower is invoiced
|
The Company incurs a variety of
costs and expenses, including:
·
banking fees;
Page 17
·
legal expenses;
·
payments to the General Partner for fees;
·
fees to wire money from Africa to the U.S.;
·
payments to U.S. states to comply with their respective
securities law ("Blue Sky Laws");
·
debt service and transactional payments (where we borrow money at
the Company level);
·
annual financial audit expenses;
·
depreciation; and
·
U.S. and African taxes.
The Projects also incur a variety
of costs and expenses, including:
·
payments to third parties to operate and maintain the Projects;
·
lease payments to landowners (if applicable);
·
debt service and transactional payments (where we borrow money at
the Project level);
·
utilities;
·
property taxes;
·
banking fees;
·
taxes levied in African countries;
·
depreciation; and
·
Project insurance.
The Company's total operating
expenses for the fiscal year ended December 31, 2024 were $212,659.
This PQA is not providing, or
purporting to provide, any tax advice to Investors. Every potential Investor
is advised to seek the advice of his, her or its own tax professionals before
making this investment. The securities sold in this Offering may have issues
related to taxation at many levels, including tax laws and regulations at the
state, local and federal levels in the United States, and at all levels of
government in non-U.S. jurisdictions.
It is impractical to comment on
all aspects of federal, state and local, and foreign tax laws that may affect
the tax consequences of participation in the Company. Therefore, each
prospective Investor should satisfy himself, herself or itself as to the tax
consequences of participating in the Company by obtaining independent advice
from his, her or its own tax advisers. Furthermore, while the Company will
furnish to you any information required to be provided to you under applicable
tax laws, preparation and filing of each Investor's tax returns shall be such
Investor's responsibility.
The following summarizes the most
significant taxes that will be imposed on the Holdco and the Company by
countries and localities in Africa, as well as the Federal income tax
consequences of acquiring Class A Investor Shares. This summary is based on the
current tax laws of certain African jurisdictions, the current U.S. Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
issued by the Internal Revenue Service ("Regulations"), and current
administrative rulings and court decisions, all as they exist today. All of
these tax authorities could change in the future (and such change may possibly
be retroactive so as to result in different U.S. federal income tax
consequences from those set forth below).
Page 18
This is only a summary,
applicable to a generic Investor. Your personal situation could differ. We
encourage you to consult with your own tax advisor before investing.
The Projects could be located in
any number of African countries. Each country, and each local governmental
units (e.g., states, towns, cities, counties, municipalities, etc.) might
include any number of taxes on the Projects and the Company, including but not
limited to income taxes, gross receipts taxes, and value-added taxes. In
selecting Projects, the Company will take into account any material tax
burdens. However, it is impossible to predict the actual tax burden today.
Below are descriptions of the
taxes the Company and Holdco anticipate incurring for Projects either the
Company or Holdco directly own pursuant to the terms and conditions of a
Purchase and Sale Agreement:
·
Corporate Income Tax ("CIT")
o 27% rate
applied to net taxable income.
o Income, for
calculating CIT, is equal to the Project revenue minus Project operating
expenses, interest, and depreciation.
o Section 12B of
the South African Income Tax Act allows for 100% first-year depreciation on
qualifying renewable energy assets, which may significantly reduce taxable
income in early years.
·
Value-Added Tax ("VAT")
o 15% VAT charged
on electricity sales (output VAT).
o Input VAT on
capital expenditures and operating costs is generally recoverable.
o Net VAT
liability is typically neutral if buyers are VAT-registered. Both the Company
and the Customers are VAT-registered.
·
Dividends Withholding Tax
o 20% withholding
tax on dividends paid by HoldCo to the Company.
o Tax is withheld
at the time of distribution and remitted to the South African Revenue Service ("SARS").
o There currently
exists no tax treaty between the United States and South Africa, which prevents
a reduction to the withholding rate from being applied.
Currently,
the only outstanding Loans the Company has are with a U.S. domiciled Borrower,
so we are not subject to South African taxes for any current Loans. If the
Company issues a Loan to a Borrower in South Africa in the future, the Company
will be subject to the following taxes on the interest portion of the revenues
generated from the Loan:
·
A withholding tax on interest ("WHT"):
·
South Africa imposes a 15% WHT on interest paid to non-residents.
·
This tax is levied on the Borrower but withheld from payments
made to the Company.
·
The tax must be remitted to the SARS on or before the end of the
month following the month in which the interest is paid.
·
There currently exists no tax treaty between the United States and
South Africa, which prevents a reduction to WHT from being applied to such tax
on Loans.
Page 19
If the
Company makes a Company Investment in South Africa, it will be subject to the
following taxes on interest income, depending on the duration of the
investment:
·
A WHT:
·
South Africa imposes a 15% WHT on interest paid to non-residents.
·
However, certain government bonds and listed debt instruments may
be exempt if the interest qualifies under local exemptions (e.g., bonds listed
on the Johannesburg Stock Exchange).
·
There currently exists no tax treaty between the United States and
South Africa, which prevents a reduction to WHT from being applied to such tax
on Company Investments.
·
A capital gains tax ("CGT"):
·
South Africa does not generally tax non-residents on gains from
the sale of bonds, unless the bonds are considered "South African assets of a
permanent establishment" in South Africa. In this case, we do not currently
anticipate a CGT being applied to the Company in its role as a passive U.S.
investor with respect to the Company Investments.
As used herein, the term "U.S.
Holder" means a beneficial owner of the Class A Investor Shares that is,
for U.S. federal income tax purposes, an individual citizen or resident of the
United States, a corporation (or any other entity taxable as a corporation for
U.S. federal income tax purposes) created or organized in or under the laws of
the United States or any state or political subdivision thereof or the District
of Columbia, an estate the income of which is subject to U.S. federal income
taxation regardless of its source, or a trust, if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more U.S. persons control all of the substantial decisions of
the trust or if a valid election is in place to treat the trust as a U.S.
person.
In addition, if a partnership, including any entity or
arrangement, domestic or foreign, classified as a partnership for United States
federal income tax purposes, holds Class A Investor Shares, the tax treatment
of a partner generally will depend on the status of the partner and upon the
activities of the partnership. Accordingly, partnerships that hold Class A
Investor Shares, and partners in such partnerships, should consult their tax
advisors.
The Company, although formed as a
Delaware limited partnership, has affirmatively elected to be treated as a
corporation under Subchapter C of the Code for federal income tax purposes.
Thus, the Company will be taxed at regular corporate rates on its income before
making any distributions to holders of Class A Investor Shares as described
below.
The General Intangible Low-Tax Income ("GILTI")
tax on foreign investments is more favorable to our investors under a corporate
tax structure as opposed to a partnership, where the tax on international
assets would be levied on individuals. Under a partnership an investor would be
responsible for 37% of all foreign profits generated from an international
investment. A corporate tax structure allows the corporation to realize foreign
tax credits. Under this corporate tax reporting structure, the corporate entity
would only pay 21% tax on 50% of the foreign profits after foreign tax credits
have been applied.
Page 20
The income of the Company will
consist primarily of cash available for distribution ("CAFD") received
from the Holdco in the form of a dividend. Because the Holdco will be foreign
corporations, these dividends will be "non-qualified dividends" within the
meaning of the Code and therefore subject to tax at ordinary income tax rates
("qualified dividends," including dividends from most U.S. corporations, are
subject to tax at preferential rates).
The Company, but not the
Investors, might be entitled to credits for taxes paid by the SPEs in Brazil.
Taxes imposed in Brazil which are not imposed on income may not receive a
foreign tax credit.
Distributions to U.S. Holders out
of the Company's current or accumulated earnings and profits, if any, will be
taxable as dividends. A non-corporate U.S. Holder who receives a distribution
constituting "qualified dividend income" may be eligible for reduced federal
income tax rates. U.S. Holders are urged to consult their tax advisors
regarding the characterization of corporate distributions as "qualified
dividend income." Dividends received by a corporate U.S. Holder may be eligible
for the corporate dividends-received deduction if certain holding periods are
satisfied. Distributions in excess of the Company's current and accumulated
earnings and profits will not be taxable to a U.S. Holder to the extent that
the distributions do not exceed the adjusted tax basis of the U.S. Holder's
Class A Investor Shares. Rather, such distributions will reduce the adjusted
basis of such U.S. Holder's Class A Investor Shares. Distributions in excess of
current and accumulated earnings and profits that exceed the U.S. Holder's
adjusted basis in its Class A Investor Shares will be taxable as capital gain
in the amount of such excess if the Class A Investor Shares are held as a
capital asset. In addition, Section 1411 of the Code imposes on individuals,
trusts and estates a 3.8% tax on certain investment income (the "3.8% NITT").
Upon any taxable sale or other
disposition of Class A Investor Shares, a U.S. Holder will recognize gain or
loss for federal income tax purposes on the disposition in an amount equal to
the difference between the amount of cash and the fair market value of any
property received on such disposition; and the U.S. Holder's adjusted tax basis
in the Class A Investor Shares. A U.S. Holder's adjusted tax basis in the Class
A Investor Shares generally equals his or her initial amount paid for the Class
A Investor Shares and decreased by the amount of any distributions to the
Investor in excess of the Company's current or accumulated earnings and
profits. In computing gain or loss, the proceeds that U.S. Holders receive will
include the amount of any cash and the fair market value of any other property
received for their Class A Investor Shares, and the amount of any actual or
deemed relief from indebtedness encumbering their Class A Investor Shares. The
gain or loss will be long-term capital gain or loss if the Class A Investor
Shares are held for more than one year before disposition. Long term capital
gains of individuals, estates and trusts currently are taxed at a maximum rate
of 20% (plus any applicable state income taxes) plus the 3.8% NIIT.
The Code imposes an alternative
minimum tax on individuals and corporations. Certain items of the Company's
income and loss may be required to be taken into account in determining the
alternative minimum tax liability of Investors.
The Company will report its
income and losses using the calendar year.
The Company will furnish each
Investor with the information needed to be included in his or her federal
income tax returns, if any; provided, however, the Investors shall be
responsible for determining their adjusted basis in their respective Class A
Investor Shares. Each Investor is personally responsible for preparing and
filing all personal tax returns that may be required as a result of his
purchase of Class A Investor Shares. The tax returns of the Company will be
prepared by accountants selected by the Company.
Page 21
If the tax returns of the Company
are audited, it is possible that substantial legal and accounting fees will
have to be paid to substantiate our position and such fees would reduce the
cash otherwise distributable to Investors.
Each Investor must either report
Company items on his or her tax return consistent with the treatment on the
information return of the Company or file a statement with his tax return
identifying and explaining the inconsistency. Otherwise the IRS may treat such
inconsistency as a computational error and re-compute and assess the tax
without the usual procedural protections applicable to federal income tax
deficiency proceedings.
The Code imposes interest and a
variety of potential penalties on underpayments of tax.
The foregoing discussion
addresses only selected issues involving Federal income taxes and does not
address the impact of other taxes on an investment in the Company, including
federal estate, gift, or generation-skipping taxes, or State and local income
or inheritance taxes. Prospective Investors should consult their own tax
advisors with respect to such matters.
The Company will cause the Holdco
to enter into four (4) main contracts when buying a Project:
·
Purchase and Sale Agreements: When the General Partner identifies
a project that it believes, in its sole discretion, meets the investment
criteria of the Company, it signs a "Purchase and Sale Agreement" to
acquire the rights to the Project from a Development Company.
·
Solar Leases: In all cases, the Holdco will sell
electricity produced by the Projects to Customers pursuant to a contract we
refer to as a "Solar Lease". A typical Solar Lease is a 20-year deal
where a lessee rents a solar system, paying a rental rate (fixed or per kWh)
that may rise annually, with ownership transferring at the end for minimal cost
if terms are met. The lessor handles financing and maintenance, while the
lessee secures and uses.
·
Construction Contracts: To build the Projects, the Holdco
will hire a third party to provide engineering, procurement, and construction
services pursuant to a contract referred to as a "Construction Contract".
·
Project Maintenance Contracts: The Holdco will then hire a
third party to operate and maintain the Projects pursuant to a contract
referred to as a "Project Maintenance Contract" (see "Interest of
Management and Others in Certain Transactions" and "Compensation of General
Partner").
The Company will enter into three
(3) main contracts when making a Loan to a Borrower:
· Loan
Agreement: A Loan Agreement ("Loan Agreement") is a contract where
the Lender provides funds to a Borrower up to a specified limit over a set
borrowing period. The Borrower uses these funds to construct new solar
projects. The Borrower grants the Lender a first-priority lien on all its
assets as collateral, including the solar projects. The agreement includes
conditions for advances, default triggers, and remedies for the Lender, with
covenants ensuring compliance and asset segregation when appropriate.
·
Collateral Agreements: The "Collateral Agreements"
are a collection of agreements and instruments designed to secure obligations
under a Loan Agreement between a Borrower and the Company. These documents
collectively establish, and perfect the Company's security interests in various
assets and equity interests of the Borrower and related parties. They may
include personal guarantees, corporate guarantees, promissory notes outlining
repayment terms, and pledge agreements granting the Company priority liens on
specific collateral. Supporting resolutions and certificates confirm the
Borrower's authorization and compliance. The Collateral Agreements address
repayment conditions, default remedies, rights over collateral, and ensure the
Company's enforcement capabilities while defining limits on recourse where
applicable.
Page 22
·
Trust Agreement: Some, but not all, Loans will also have a
"Trust Agreement". In circumstances where the General Partner requires
more fiscal oversite over a Borrower, we will set up a trust which will receive
all of the Borrowers revenue (usually payments for energy from their Customers).
The General Partner will instruct the Trustee to pay principal and/or interest
payments owed to the Company prior to distributing the remaining cash to the
Borrower for their use in operations.
As of the date of this Offering
Circular, neither the Company nor the Holdco are currently involved in any
material legal proceedings.
Factors Likely to
Impact the Performance of the Company
A comprehensive discussion on
risks of investing in the Company can be found at the beginning of this
Offering Circular. Below are risks that we believe deserve specific attention
as they have the highest likelihood of impacting Investor returns. Following
each risk is a brief description of mitigating strategies employed by the General
Partner:
·
Foreign Country: There is an inherent risk when doing business in a foreign
country. Foreign country risks include unexpected fees and taxes, unfair
contact disputes, policy changes and other risks which may negatively affect
estimated internal rate of return ("IRR").
o Mitigating Strategy:
Energea Global works with local partners who are key to our success in each
foreign country. Foreign country risk is highest when we start doing business
in a new foreign country and diminishes as we gain experience, diversify our
local partnerships and develop best practices for dealing with unique
challenges specific to a country.
·
Foreign Exchange Rates: The revenue contracts for the Projects are paid in ZAR.
Exchange rates could worsen creating reduced dividends to our investors which
are paid in USD.
o Mitigating Strategy:
First, our long-term financial projections include a perpetual weakening of ZAR
versus USD, so we expect a continuation of that phenomenon but can tolerate
some level of FX softening while still maintaining our targeted returns.
Second, the Company currently has a mixture of ZAR-denominated solar projects
and USD-denominated debt. Interest payments from Loans in USD reduce the Company's
overall FX exposure substantially.
·
Load Shedding: Load shedding in
South Africa is a measure to balance the electricity supply and demand by
intentionally cutting power to certain areas, ensuring the stability of the
national grid and preventing a total blackout. Our Projects must be shut down
for safety reasons during these scheduled outages unless a battery is
installed.
o Mitigating Strategy:
Most of the Projects owned by the Company have battery back-up systems ("BESS")
which allow the Project to produce revenue even during a load shedding event.
Load shedding only effects projects in South Africa and has no impact on our
Loans. Furthermore, since the 2024 general election in South Africa, load
shedding has been mostly eliminated, and power supply has been more consistent
since.
·
Construction: There is a risk that
the Project could encounter unforeseen delays or costs during the construction
phase that could potentially delay dividends and result in a lower-than
expected IRR.
o Mitigating Strategy:
All Construction Contracts (see summary of "Summary of Supporting
Contracts") have liquidated damages clauses. Liquidated damages hold the
contractor building the Project responsible for any lost revenue resulting from
construction delays. The Company has been successful capturing liquidated
damages from construction companies in the past when Projects are delayed. The
Company also acquires all Projects on a fixed-price basis to limit our exposure
to cost overruns during construction.
Page 23
·
Customer Default: The primary source of
revenue from the Projects and Loans in this portfolio will come from long-term
Solar Leases and Loans. There is a risk that an entity could default on their
Solar Lease or Loan obligations.
o Mitigating Strategy:
Energea Global carefully evaluates the credit risk of the Customers and
Borrowers. Several Projects in this portfolio are backed by large companies
with established cash flow and good credit. Most Projects in South Africa are
relatively small, ensuring that we have many investments across multiple
Customers. Borrower credit on Loans is slightly different. For Loans, we look
for oversized collateral. That can come in the form of a personal guarantee
from ownership or operational solar assets. We do not consider projects in the
development or construction phases as collateral for a Loan.
·
Theft / Damage: The equipment may be
subject to theft or damage which is beyond the Company's control.
o Mitigating Strategy:
Energea Global always carries insurance to protect against major loss. We carry
property insurance to cover theft or unexpected damage to the equipment as well
as business interruption insurance to cover lost income during Project downtime.
Most Projects are on Customer rooftops where they enjoy some level of
protection. Loans are less exposed to theft and damage losses.
·
Solar Irradiance: Energea Global
forecasts the energy production of each Project based on historical weather
patterns. A deviation from historical weather patterns could result in
lower-than-expected electrical production and decreased dividends. Projected
returns use a P-50 production estimate. P-50 is an estimate of electrical
production where there is a 50% statistical probability that the Project will
produce more electricity and a 50% probability that the Project will produce
less. This is an industry standard method of weather prediction and production
estimating.
o Mitigating Strategy:
Diversifying across many Projects and different geographical markets helps to
mitigate the solar irradiance risk of any specific Project. The Projects are
impossible to predict one day to the next, but over a year, it is actually
quite predictable for experienced managers. Loans carry a lower exposure to
solar irradiance than Projects. A "debt service coverage ratio" is designed to
"make room" for the collateral to underperform and still make the debt service
payment as scheduled. While the effects of solar irradiance on Projects in the
short term are almost impossible to predict, we believe that in the long term
the effects of solar irradiance become more predictable.
·
Materials / Equipment: Equipment may fail or
break down resulting in lower than anticipated production or unplanned
additional operating expenses.
o Mitigating Strategy:
Equipment used in the Projects come with warranties (ranging from 2 to 25 years
depending on the component) and guarantees from contractors (ranging from 2 to
5 years). Warranties and guarantees protect against failure when they are
properly managed and pursued. Energea Global also accounts for degradation in
our project models and sets aside a contingency reserve for unforeseen
mechanical issues that may arise.
To date, the Company owns the
following Projects and has issued the following Loans:
As of the date of this Offering
Circular, we have acquired a total of sixteen (16) Projects.
Page 24
|
Project Name
|
Acquisition Date
|
Project Size (AC)
|
Amount Invested
|
Form 1-U
|
|
Spar
Lulekani
|
04/29/2021
|
360kW
|
$23,369
|
|
|
Nhimbi Fresh
|
04/29/2021
|
500kW
|
$24,631
|
|
|
Anchor
Foods
|
11/30/2021
|
110kW
|
$109,334
|
|
|
CPOA Avondrust
|
06/02/2022
|
150kW
|
$99,025
|
|
|
CPOA
Trianon
|
06/02/2022
|
100kW
|
$163,624
|
|
|
Zandvliet Care Facility
|
09/12/2022
|
100kW
|
$74,999
|
|
|
Baysville
|
09/12/2022
|
100kW
|
$25,000
|
|
|
Connaught Park
|
11/16/2022
|
400kW
|
$411,362
|
|
|
CPOA
Quadrant Gardens
|
05/26/2023
|
100kW
|
$90,710
|
|
|
CPOA Constantia Place
|
10/04/2023
|
125kW
|
$115,108
|
|
|
Laerskool
Havinga
|
10/04/2023
|
100kW
|
$191,151
|
|
|
Bosmandam High School
|
10/04/2023
|
100kW
|
$148,234
|
|
|
Montagu
High School
|
03/14/2024
|
100kW
|
$182,256
|
|
|
CPOA Eventide
|
02/14/2024
|
50kW
|
$98,806
|
|
|
Robertson
Voorbereiding
|
05/13/2024
|
62kW
|
$117,306
|
|
|
Swellendam Secondary School
|
07/10/2024
|
200kW
|
$251,494
|
|
|
Total
|
|
|
$2,126,409
|
As of the date of this Offering Circular, the Company has
issued one (1) Loan.
|
Borrower Name
|
Closing Date
|
Maximum Loan
Amount
|
Amount Lent as
of 12/31/24
|
Form 1-U
|
|
Hecate
Global Renewables
|
10/25/2024
|
$20,000,000
|
$1,429,000
|
|
|
Total
|
|
|
$1,429,000
|
The following discussion of our
financial condition and results of operations should be read in conjunction
with our financial statements and the related notes thereto contained in this Offering
Circular. The following discussion contains forward-looking statements that
reflect our plans, estimates, and beliefs. Our actual results could differ
materially from those discussed in herein (see "Caution Regarding
Forward-Looking Statements" and "Risk Factors"). Unless
otherwise indicated, the latest results discussed below are as of December 31,
2024.
For financial statement purposes, the Company accounts for
investments in Projects under ASC 360. The Projects are carried at cost and
will be depreciated on a straight-line basis over the estimated useful life of
the related assets.
The Company evaluates for impairment under ASC 360,
utilizing the following required steps to identify, recognize and measure the
impairment of a long-lived asset to be held and used:
· Indicators of impairment
- Consider whether indicators of impairment are present
·
Test
for recoverability - If indicators are present, perform a recoverability test
by comparing the sum of the estimated undiscounted future cash flows
attributable to the long-lived asset in question to its carrying amount (as a
reminder, entities cannot record an impairment for a held and used asset unless
the asset first fails this recoverability test).
Page 25
·
Measurement of an impairment - If the undiscounted cash flows
used in the test for recoverability are less than the carrying amount of the
long-lived asset, determine the fair value of the long-lived asset and
recognize an impairment loss if the carrying amount of the long-lived asset
exceeds its fair value.
The
company follows ASC 606 guidelines for revenue recognition. To apply this
principle, the standard establishes five key steps:
·
Step
1: Recognize the contract with the Customer/Borrower
·
Step
2: Specify performance obligations
·
Step
3: Establish transaction price
·
Step
4: Allocate transaction price to performance obligations
·
Step
5: Recognize revenue
Over the past 12 months, the ZAR
has experienced notable volatility against USD, influenced by both global and
domestic factors. In April 2025, the USD/ZAR exchange rate peaked at
approximately 19.93, marking the ZAR's weakest point during this period. We
believe that this depreciation was driven by a combination of U.S. tariff
announcements and political instability within South Africa. Conversely, the
ZAR reached its strongest level of around 17.71 per one USD in December 2024.
As of early June 2025, the exchange rate stands near 17.86, reflecting a
recovery from its earlier lows.
The fluctuations in the ZAR's
value have been influenced by several factors, including U.S. monetary policy
decisions, domestic economic performance, and political developments. For
instance, the South African economy faced challenges such as infrastructure
inefficiencies and stagnant GDP growth, which have impacted investor
confidence. Additionally, global market dynamics, including shifts in investor
sentiment towards emerging markets, have played a role in the ZAR's
performance.
Overall, while the ZAR has shown
resilience at times, its exchange rate against USD remains sensitive to both
internal and external economic and political factors.
Load shedding in South Africa has
significantly declined throughout 2024, with Eskom managing to suspend rolling
blackouts for over 170 consecutive days by September. This improvement is due
to several factors, including better maintenance of power generation units,
strategic use of Open-Cycle Gas Turbines ("OCGTs"), and the return of
several generation units to service. Additionally, the Energy Availability
Factor ("EAF"), which measures the reliability of power plants, improved
by about 8.5% compared to 2023, signaling a more stable power grid.
The government's efforts to boost
private sector involvement in energy generation, particularly through
investments in renewable energy projects and rooftop solar installations, have
also played a key role. Furthermore, Eskom has significantly reduced its diesel
usage, cutting costs by 75% compared to the previous year. These developments,
alongside structural reforms and increased generation capacity have created
optimism for a load shedding-free future, with Eskom forecasting continued
stability throughout the year.
Page 26
The Company intends to make
distributions monthly, to the extent the General Partner, in its discretion,
determines that cash flow is available for distributions and in a manner
consistent with the Authorizing Resolutions. Any other distributions shall be
made pursuant to the terms of the LP Agreement which gives the General Partner
broad discretion whether to make any distributions. To date, the Company has
not made a profit, although it has had distributable cash flow. Below are the
activities of the Company that generate the cash flow which could be used to
fund distributions:
- Net income received from the Projects;
- Interest payments received from the Borrowers;
- Interest payments received from Company Investments;
- Net Proceeds from Capital Transactions;
- Originates from the sale or refinancing of Projects;
- Net proceeds are the gross proceeds of the capital transaction minus associated expenses, including debt repayment; and
- Liquidated Damages from Construction Agreements;
- Penalties paid by EPC Contractors when Projects are delivered behind schedule;
- Liquidated Damages are not booked as revenue but are considered distributable cash flow.
When the Company has
distributable cash flow and the General Partner determines to make a
distribution, here is an overview of how these distributions are allocated and
calculated:
Distributable cash flow, if any,
is distributed to the Preferred Equity Investors, on a pari passu basis,
and the General Partner in the following order of priority:
- First, the Preferred Return;
- Thereafter, any additional cash flow shall be distributed 70% to Preferred Equity Investors and the Carried Interest to the General Partner.
The General Partner discounts
each month of Estimated NOI (see "Price of Class A Investor Shares") by
the same discount rate until the cash flow results in an internal rate of
return ("IRR") of 7% ("Adjusted NOI"). The IRR is calculated
using the XIRR function and is based upon the price an Investor paid per Class
A Investor Share. The resulting Adjusted NOI is the monthly distribution that
would need to be paid to Investors for them to receive their Preferred Return.
Since all months of Estimated NOI are discounted evenly, the Adjusted NOI
maintains the same seasonality curve as the Estimated NOI. If the actual NOI
for any month is less than the Adjusted NOI, the Investors receive all the cash
distributed that month and the shortfall is carried forward so that Investors
catch up on their Preferred Return prior to any Carried Interest being paid.
The IRR is calculated based upon the price an Investor paid per Class A
Investor Share, and not on any revenue or profit achieved by the Company. To
date, the Company has not made a profit, although it has had distributable cash
flow. To the extent the Company has distributable cash flow but has no current
or accumulated earnings and profit, such distributions are considered a return
of capital for U.S. federal income tax purposes to the extent that the
distributions do not exceed the adjusted tax basis of the U.S. Holder's Class A
Investor Shares.
Page 27
If the General Partner determines
that a distribution can be made with distributable cash flow, and the amount of
distributable cash flow is greater than the Adjusted NOI for the month (and the
Investors are therefore on track to receive their Preferred Return), the
General Partner will receive a Carried Interest. Any distributable cash flow
that is greater than the Adjusted NOI (plus any shortfall from previous months)
will be divided between the General Partner and the Preferred Equity Investors
where the General Partner will get 30% of the excess and Preferred Equity
Investors will get 70% of the excess.
Provided we have distributable
cash flow (see "Sources of Distributable Cash Flow"), we will authorize
and declare distributions based on the Projects' net income, interest paid on
Loans and interest earned on Company Investments during the preceding month
minus any amounts held back for reserves.
While we are under no obligation
to do so, our General Partner may declare other periodic distributions as
circumstances dictate.
To date, the Company has not made
a profit, although it has had distributable cash flow. To the extent the
Company has distributable cash flow but has no current or accumulated earning
and profit, such distributions are considered a return of capital for U.S.
federal income tax purposes to the extent that the distributions do not exceed
the adjusted tax basis of the U.S. Holder's Class A Investor Shares and
reported to Investors on a Form 1099-B. To the extent the Company makes
distributions from profits in the future, such distributions will be classified
as dividends and reported to Investors on a Form 1099-DIV.
Please note that in some cases,
Investors have cancelled their purchase of Class A Investor Shares after
distributions were made. In that case, the distribution allocated to that
Investor is returned to the Company and the bookkeeping is updated to reflect
the change in cash distributed. Thus, all figures below are subject to change.
Below is a table depicting the
fees paid and distributions made from the Company since inception. Note that
whenever the table shows that the General Partner has received its Carried
Interest, the Investors have received their full Preferred Return, as defined
in "Allocations of Distributions". In those cases where the General
Partner does not receive its Carried Interest, distributions were not
sufficient to distribute to Investors their Preferred Return.
Page 28
|
Distribution Date
|
Distributable Cash Flow
|
Preferred Return
|
Additional Cash Flow (70%)
|
Carried Interest* (30%)
|
Class A Investor Distributions**
|
Cash on Cash Yield***
|
|
4/6/21
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00%
|
|
4/26/21
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00%
|
|
5/21/21
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00%
|
|
7/29/21
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00%
|
|
8/26/21
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00%
|
|
9/23/21
|
116.81
|
81.83
|
34.98
|
0.00
|
116.81
|
0.24%
|
|
10/30/21
|
241.58
|
169.23
|
72.35
|
0.00
|
241.58
|
0.50%
|
|
11/30/21
|
101.74
|
74.35
|
27.39
|
0.00
|
101.74
|
0.06%
|
|
12/24/21
|
112.23
|
79.77
|
32.46
|
0.00
|
112.23
|
0.06%
|
|
2021
Total
|
$572.36
|
$405.18
|
$167.18
|
$0.00
|
$572.36
|
0.86%
|
|
1/26/22
|
209.71
|
148.46
|
61.25
|
0.00
|
209.71
|
0.08%
|
|
2/24/22
|
120.23
|
85.33
|
34.91
|
0.00
|
120.23
|
0.03%
|
|
3/29/22
|
334.48
|
232.94
|
101.54
|
0.00
|
334.48
|
0.08%
|
|
4/29/22
|
331.59
|
236.00
|
95.59
|
0.00
|
331.59
|
0.07%
|
|
5/31/22
|
938.81
|
677.23
|
261.58
|
0.00
|
938.81
|
0.15%
|
|
6/30/22
|
1,084.96
|
782.66
|
302.30
|
0.00
|
1,084.96
|
0.16%
|
|
7/29/22
|
913.84
|
700.28
|
213.56
|
0.00
|
913.84
|
0.13%
|
|
8/27/22
|
1,119.77
|
846.48
|
273.29
|
0.00
|
1,119.77
|
0.14%
|
|
9/27/22
|
1,401.61
|
1,020.15
|
381.46
|
0.00
|
1,401.61
|
0.18%
|
|
10/27/22
|
1,801.99
|
1,280.11
|
521.88
|
0.00
|
1,801.99
|
0.23%
|
|
11/29/22
|
2,304.20
|
1,636.87
|
667.33
|
0.00
|
2,304.20
|
0.26%
|
|
12/28/22
|
3,101.53
|
2,203.29
|
898.24
|
0.00
|
3,101.53
|
0.31%
|
|
2022 Total
|
$13,662.72
|
$9,849.80
|
$3,812.93
|
$0.00
|
$13,662.72
|
1.82%
|
|
1/26/23
|
3,528.87
|
2,542.37
|
887.85
|
98.65
|
3,430.22
|
0.31%
|
|
2/24/23
|
3,995.29
|
2,847.59
|
1,032.93
|
114.77
|
3,880.52
|
0.31%
|
|
3/27/23
|
3,605.33
|
2,603.73
|
901.44
|
100.16
|
3,505.17
|
0.25%
|
|
4/27/23
|
4,540.45
|
3,332.65
|
1,087.02
|
120.78
|
4,419.67
|
0.29%
|
|
5/26/23
|
5,011.38
|
3,352.25
|
1,410.26
|
248.87
|
4,762.51
|
0.28%
|
|
6/26/23
|
5,923.70
|
4,054.70
|
1,682.10
|
186.90
|
5,736.80
|
0.30%
|
|
7/25/23
|
3,239.31
|
2,223.81
|
913.95
|
101.55
|
3,137.76
|
0.16%
|
|
8/28/23
|
2,294.09
|
1,826.45
|
467.64
|
0.00
|
2,294.09
|
0.10%
|
|
9/27/23
|
2,759.92
|
1,863.81
|
815.46
|
80.65
|
2,679.27
|
0.11%
|
|
10/27/23
|
4,554.37
|
3,233.48
|
1,202.01
|
118.88
|
4,435.49
|
0.18%
|
|
11/24/23
|
5,540.10
|
3,916.42
|
1,479.42
|
144.26
|
5,395.84
|
0.22%
|
|
12/26/23
|
8,703.84
|
6,194.69
|
2,283.32
|
225.83
|
8,478.01
|
0.33%
|
|
2023 Total
|
$53,696.65
|
$37,991.95
|
$14,163.40
|
$1,541.30
|
$52,155.35
|
2.84%
|
|
1/26/24
|
7,974.79
|
5,732.77
|
2,039.75
|
202.13
|
7,772.52
|
0.28%
|
|
2/27/24
|
14,209.99
|
10,479.42
|
3,729.31
|
0.00
|
14,208.73
|
0.47%
|
|
3/26/24
|
13,000.00
|
9,424.71
|
3,394.32
|
178.76
|
12,819.03
|
0.40%
|
|
4/26/24
|
13,792.76
|
10,164.67
|
3,446.69
|
181.40
|
13,611.36
|
0.41%
|
|
5/24/24
|
14,000.00
|
10,681.27
|
3,318.68
|
0.00
|
13,999.95
|
0.39%
|
|
6/27/24
|
14,229.14
|
11,085.27
|
3,144.00
|
0.00
|
14,229.27
|
0.38%
|
|
7/26/24
|
13,219.27
|
10,391.09
|
2,827.93
|
0.00
|
13,219.02
|
0.33%
|
|
8/27/24
|
18,022.78
|
13,751.04
|
3,416.94
|
854.35
|
17,167.98
|
0.43%
|
|
9/27/24
|
16,696.51
|
12,858.65
|
3,070.06
|
767.57
|
15,928.71
|
0.37%
|
|
10/28/24
|
22,461.87
|
17,266.84
|
4,396.21
|
779.25
|
21,663.05
|
0.47%
|
|
11/26/24
|
30,503.74
|
24,692.64
|
5,779.63
|
0.00
|
30,472.27
|
0.63%
|
|
12/24/24
|
33,401.71
|
27,717.40
|
5,674.41
|
0.00
|
33,391.81
|
0.66%
|
|
2024 Total
|
$211,512.56
|
$164,245.78
|
$44,237.92
|
$2,963.46
|
$208,483.70
|
5.22%
|
|
1/24/25
|
34,979.86
|
28,885.40
|
6,094.46
|
0.00
|
34,979.86
|
0.65%
|
|
2/25/25
|
31,193.39
|
25,797.63
|
5,395.76
|
0.00
|
31,193.39
|
0.54%
|
|
3/27/25
|
31,675.00
|
26,113.18
|
5,561.82
|
0.00
|
31,675.00
|
0.52%
|
|
2025 Total
|
$97,848.25
|
$80,796.21
|
$17,052.04
|
$0.00
|
$97,848.25
|
1.71%
|
|
TOTAL
|
$377,292.54
|
$293,288.92
|
$79,433.47
|
$4,504.76
|
$372,722.38
|
12.45%
|
*Note: The General Partner
reserves the right to reduce its Management Fees and/or Carried Interest payments for any reason or to protect the
desired cash yield to Investors. For more information regarding the Management
Fees and Carried Interest paid to our General
Partner, see "Compensation of General Partner".
**Note: Class A Investor
distributions are equal to the Preferred Return plus any additional cash flow,
please see "Calculating Distributions".
***Note: Monthly cash-on-cash
yield values are calculated by dividing the Investor Distributions amount by
the total cost basis of all outstanding shares at the time the distribution is
issued. Year-end cash-on-cash yields are calculated by summing all monthly
cash-on-cash yields for the respective year.
Since its inception, the Company
has steadily increased its ownership over a portfolio of commercial and
industrial sized Projects in South Africa. The main Customers for the Company
have been schools and a chain of senior living facilities called CPOA. We have
focused the majority of our Project activity in two major South Africa urban
centers: Johannesburg and Cape Town.
Page 29
Most of the Projects we own have
now been operational for more than a year and have appeared to stabilize their
generation behavior, which is anticipated to set the Company on a path of
consistent, long-term monthly cash distributions for the next two decades.
About half of the investments we
made have been in the form of Loans to Hecate Global Renewables ("HGR")
with a pipeline of over 500 MW of utility-scale projects in multiple African
countries. The Loan charges a 13.5% interest rate, paid in USD. As of December
31, 2024, the Company has lent a total of $1,414,000 to HGR to support HGR's projects
under development and backed by a limited personal guarantee from an owner of
HGR.
Operating Results for Fiscal
Years ended December 31, 2024, and 2023
As of
December 31, 2024 and 2023, the Company had assets totaling $4,797,390 and
$2,577,214, respectively, on its balance sheet, comprised of cash on hand of
$1,267,925 and $1,109,421, respectively, property and equipment net of
depreciation of $2,041,142 and $1,446,628, respectively, other current assets
of $59,323 and $21,165, respectively, and non-current assets of $1,429,000 and
$0, respectively. The Company's total liabilities and members' equity was
$4,797,390 and $2,577,214, respectively. Liabilities totaled $34,975 and
$164,829, respectively and equity owned by the Investors totaled $4,762,415 and
$2,412,385, respectively.
The
significant increase in assets and liabilities, was due to the escalation of
investments to complete the Projects under construction and the increase of
capital raised from Investors.
For
the fiscal years ended December 31, 2024 and 2023, the Company generated
revenue of $217,122 and $85,420, respectively. This significant increase was
primarily driven by the Projects CPOA Constantia Place, CPOA Eventide,
Bosmansdam, Montagu High School, Laerskool Havinga, Robertson Voorbereiding
School, and Swellendam School which began generating revenue in 2024.
As of
December 31, 2024 and 2023, the Company's total operating expenses were
$212,659 and $86,692, respectively, including professional fees, advertising
and marketing, software subscription, taxes, depreciation, and other general
and administrative expenses. The increase in operating expenses was due to the
addition of Projects being turned on.
For
the fiscal year ended December 31, 2024, the Company's net income from
operations was $4,463, compared to a loss in 2023 of $1,272. In addition, total
other income in 2024 amounted to $107,349, compared to other expenses of $8,558
in the prior year. Provision for income taxes in 2024 was $33,551 and $0 in
2023. As a result, the Company achieved a total net income of $78,261 for 2024,
reversing the net loss of $9,830 incurred in 2023. Unrealized foreign currency
exchange loss for the years ended December 31, 2024 and 2023 was $363 and $0,
respectively.
The
Company experienced a significant increase in revenue in 2024, primarily due to
increased investment in Projects and the issuance of the Company's first Loan.
The Company might borrow money to
invest in Projects, depending on the circumstances at the time. If the Company
needs to move quickly on a Project and has not yet raised enough capital
through the Offering, it might make up the shortfall through borrowing. The General
Partner will make this decision on an as-needed basis. Neither the Company nor
the Projects currently have any loans.
We are dependent upon the net
proceeds from the Offering to conduct our proposed investments. We will obtain
the capital required to purchase new Projects, issue new Loans and conduct our
operations from the proceeds of the Offering and any future offerings we may
conduct, from secured or unsecured financings from banks and other lenders,
from short term advances from the General Partner and from undistributed funds
from our operations. As of December 31, 2024, the Company had $1,267,925 of
cash on hand and equivalents, which will be used to complete the acquisition of
new Projects approved by the Investment Committee or issuance of new Loans.
Page 30
The compensation described in
this section was calculated using the accrual method in accordance with U.S. GAAP.
The Company itself has no
officers or employees. The individuals listed below are the Managing Partners,
Executive Officers, and Significant Employees of Energea Global, the General
Partner of the Company.
|
Name
|
Position with General Partner
|
Age
|
Term of Office
|
Approximate Hours Per Week If Not Full Time (1)
|
|
Executive Officers
|
|
|
|
|
|
Mike Silvestrini
|
Managing Partner
|
45
|
01/01/2017 - Present
|
Full Time
|
|
Chris Sattler
|
Managing Partner
|
45
|
01/01/2017 - Present
|
Full Time
|
|
Gray Reinhard
|
Managing Partner, CTO
|
40
|
01/01/2020 - Present
|
Full Time
|
|
Isabella Mendonça
|
Managing Partner, General
Counsel
|
33
|
10/02/2020 - Present
|
Full Time
|
|
|
|
|
|
|
|
Significant Employees
|
|
|
|
|
|
Arthur Issa
|
Financial Analyst
|
30
|
05/23/2018 - Present
|
Full Time
|
|
Paulo Vieira
|
Director of O&M
|
38
|
01/29/2024 - Present
|
Full Time
|
|
Francielle Assis
|
HR & HSEC Legal Coordinator
|
33
|
07/24/2023 - Present
|
Full Time
|
|
Marta Coelho
|
Controller, Global
|
52
|
12/07/2018 - Present
|
Full Time
|
|
Dave Rutty
|
Project Analyst
|
35
|
06/13/2022 - Present
|
Full Time
|
|
Julio Cezar dos Santos de Morais
|
Electrical Engineer
|
35
|
09/25/2023 - Present
|
Full Time
|
|
Juan Carvajales
|
Loan Analyst
|
52
|
08/01/2023 - Present
|
Full Time
|
(1) The above listed employees
do not record specific hours to each company managed by Energea Global. Rather,
the employees focus their full-time and energy to each Project, Loan, or
process as needed. The General Partner cannot estimate number of hours per week
spent managing this or any particular company as the employees are salaried.
The work required to manage the Company and other companies managed by Energea
Global changes from time to time depending on the number and frequency of
Projects resulting from the amount they raise in each Offering. As the
companies grow, dedicated staff are brought in to exclusively manage a specific
company. As of December 31, 2024, there are no staff members exclusively
dedicated to the Company and it is managed by the General Partner's executive
team and certain significant employees.
Marta Coelho, the General Partner's
Controller, is the sister-in-law of Mike Silvestrini, the Managing Partner.
There are no other family relationships among the executive officers and
significant employees of the General Partner.
Energea Global, the General
Partner of the Company, is majority owned by Mike Silvestrini, a resident of
Chester, Connecticut.
Page 31
Mike Silvestrini
Mike is an accomplished
professional with over 15 years of experience in the solar energy industry. He
has played an executive key role in the development of over 500 solar projects
across the United States, Brazil, and Africa while being directly responsible
for nearly one billion of combined solar project finance.
Since 2017, Mike has been the
Co-Founder & Managing Partner at Energea Global LLC. In his capacity as
Co-Founder & Managing Partner of the General Partner, Mike directs the
Investment Committee which determines the investment strategy for all funds
managed by the business. To date, Energea Global manages 3 funds formed to
acquire and operate solar power projects: the Company, Energea Portfolio 2 LP,
and Energea Portfolio 4 USA LLC. See "Other Solar Energy Funds" below
for the status each fund's offerings.
Since 2015, Mike has served as a
Board Member of the Big Life Foundation, an organization dedicated to
preserving over 1.6 million acres of wilderness in East Africa. Through
community partnerships and conservation initiatives, Big Life protects the region's
biodiversity and promotes sustainable practices.
From 2008 to 2017, Mike
co-founded and served as the CEO of Greenskies Renewable Energy LLC, a leading
provider of turnkey solar energy services. His expertise contributed to the development,
financing, design, construction, and maintenance of solar projects across the
United States. Notably, he was involved in solar installations on Target
Corporation stores and distribution centers, Wal-Marts and Sam's Clubs, Amazon
distribution centers, capped municipal landfills, and any schools and
universities.
Mike's track record in renewable
energy, his involvement in hundreds of solar projects worldwide, and his
dedication to environmental sustainability position him as a driving force in
managing investments in solar generating assets.
Chris Sattler
Chris is a seasoned energy
entrepreneur with a proven track record in building and scaling companies in
the renewable and retail energy sectors. Most recently, he served as Chief
Executive Officer of IVI Energia, a joint venture between Energea Global and
Brookfield Asset Management. Over his 18-month tenure, he led the company from
inception to a $280 million valuation before returning to his role at Energea
Global.
Earlier in his career, Chris
co-founded North American Power and served as Chief Operating Officer. Under
his leadership, the company expanded into more than 35 utility markets across
the U.S., serving over one million residential and small commercial customers.
In 2017, the company was acquired by Calpine Corporation with annual gross
sales exceeding $850 million.
Chris holds a Bachelor's degree
in Real Estate and Urban Economics from the University of Connecticut School of
Business and is an alumnus of Harvard Business School's Program for Leadership
Development. He currently resides in Rio de Janeiro.
Gray Reinhard
Gray is an experienced software
engineer specializing in business intelligence tools across multiple
industries. Early in Gray's career, he worked primarily in E-Commerce where he
built and supported sites for over 20 brands including several Fortune 500
companies. From there, Gray moved into renewable energy where he developed the
project management software for the country's largest commercial solar
installer, Greenskies. This custom platform managed everything from sales and
financing to the construction, maintenance, and performance monitoring of over
400 solar projects owned by the company.
Prior to joining Energea Global
in January 2020, Gray served as the CTO of Dwell Optimal Inc. which assists
businesses providing employees with travel accommodations.
Gray studied at Princeton
University.
Page 32
Isabella Mendonça
Isabella is a corporate lawyer
with experience in cross-border M&A transactions and the drafting and
negotiation of highly complex contracts and corporate acts in different
sectors, such as energy, oil & gas and infrastructure. Isabella has
previously worked as an attorney for Deloitte and Mayer Brown in Brazil, where
she was an associate in the Energy group, working in regulatory, contractual
and corporate matters related to renewable energy project development.
From 2016 until she joined
Energea Global, Isabella was an associate in the corporate and securities
practice at Mayer Brown in the Rio de Janeiro office.
Isabella studied law at Fundacão
Getulio Vargas, in Brazil and has a master's degree (LLM) from the University
of Chicago.
Arthur Issa
Arthur Issa was one of the first
employees at Energea Global, starting in May, 2018. Over the course of his time
with the business, Arthur has participated in the successful closing of more
than 100 MW of solar projects and developed the financial models that support
more than $300mm of AUM. Arthur is responsible for financial modeling of all
Projects and Loans at Energea Global. He also supports the company's corporate
financial planning through detailed financial modelling, reporting and cash
flow management. As an integral part of the team, he provides the tools
necessary for management to make investment decisions for Energea Global and
the Company. Arthur has a B.S. in Production Engineering from University
Candido Mendes in Rio de Janeiro, Brazil.
Paulo Vieira
Paulo is an accomplished
electrical engineer with a master's degree in Energy Resources Engineering and
over 5 years of leadership experience in the renewable energy sector. He
currently serves as the Global O&M Manager at Energea Global, where he oversees
operations and maintenance across a global portfolio of photovoltaic assets
spanning the USA, Brazil, and South Africa. Paulo is a member of Energea
Global's Investment Committee.
Specializing in solar energy
systems, Paulo has led the operations of more than 2.2 GW of solar projects.
His expertise includes O&M strategy development, performance optimization,
technical team leadership, and cost control initiatives aimed at improving
operational KPIs and financial performance. His professional journey includes
strategic roles at Recurrent Energy, Enel Green Power, COMERC Energia, Solarig,
and AKTOR SA, where he managed large-scale solar assets and drove operational
excellence through data-driven decision-making and cross-functional
coordination.
Paulo also brings a strong
academic foundation, with a postgraduate specialization in Photovoltaic Solar
Systems and international experience through Brazil's Scientific Mobility
Program in the U.S., where he studied at The University of Texas at El Paso. He
is deeply committed to advancing clean energy and delivering high-impact,
data-driven solutions in the solar power sector.
Francielle Assis
Francielle has over five years of
professional legal experience with a focus on labor and corporate law within
large-scale corporate environments. Since September 2024, she has served as HR
& HSEC Legal Coordinator at Energea Global. In that capacity, she ensures
compliance with labor laws and regulations for all corporate Human Resources
and oversees the company's Health, Safety, Environment and Community ("HSEC")
compliance and risk mitigation. Her responsibilities include managing labor
litigation, advising on employment law matters, and coordinating with
regulatory agencies and external legal counsel. She also attends site visits
for each Project to opine on the community and security risk prior to
investment and sits on Energea Global's Investment Committee.
Prior to joining Energea Global,
Francielle was a Senior Strategic Labor Attorney at CPFL Energia, one of
Brazil's largest energy companies. There, she led complex employment litigation
strategies and advised on collective labor issues. She also served as Labor
Attorney at CPFL, supporting operational and strategic labor matters across the
company's various business units.
Page 33
Earlier in her career, Francielle
worked in both private law firms and governmental institutions, handling labor
and civil litigation. Her experience includes managing procedural strategies
and representing corporate clients in both individual and collective labor
disputes, demonstrating a high level of legal and operational competence.
Marta Coelho
Since its inception in 2018,
Marta Coelho has served as the Controller at Energea Global, bringing with her
a wealth of experience and expertise in finance and accounting. As the global
Controller, Marta plays a crucial role in managing all financial aspects,
including account management, taxation, and audits, for Energea Global's
diverse range of operating entities and projects across Africa, Brazil, and the
USA. Marta leads a team of subordinate controllers and accountants at Energea
Global and coordinates with a bench of third-party accounting firms across our
jurisdictions of operation.
Dave Rutty
Dave is a highly experienced
solar professional with over 12 years of hands-on experience building,
maintaining, and managing solar projects. As a Project Analyst at Energea
Global, he plays a pivotal role in overseeing construction and maintenance
operations across all markets, ensuring projects are executed with precision,
safety, and technical excellence. Dave is responsible for preparing Investment
Committee memos across Energea Global's multidisciplinary team of experts to
ensure all investments meet the company's stringent compliance requirements.
From 2020 to 2022, Dave served as
a Managing Partner at SRES, a solar contracting company based in the
northeastern U.S. Prior to that, Dave was served as the Vice President of
Operations and Maintenance at Greenskies Renewable Energy LLC.
Julio Cezar dos Santos de
Morais
Julio is an experienced
electrical engineer specializing in photovoltaic systems, currently serving as
an Electrical Engineer at Energea Global since October 2023. He oversees
project design, field and factory inspections, and engineering analysis for distributed
generation systems. His technical expertise includes tools such as PVSyst,
AutoCAD, and protection design for medium-voltage applications.
Over the past nine years, Julio
has held engineering roles at CPFL Renováveis, Deode Energia, MEPEN Energia,
and others, where he managed solar projects exceeding 100 MW of combined solar
power generation capacity. Julio led technical teams and performed system
simulations and commissioning. He holds both bachelor's and master's degrees in
Electrical Engineering from the Federal University of Technology - Paraná
(UTFPR), with academic research published in the field of power electronics.
Juan Carvajales
Juan is a seasoned business
development professional with over 15 years of experience in the renewable
energy sector across U.S. and Latin American markets. Since August 2023, he has
worked as a Loan Analyst at Energea Global, where he supports investment
strategies and portfolio architecture, leveraging his background in project
development, financing, and cross-border renewable energy transactions to
identify private credit opportunities.
Before joining Energea Global,
Juan held key leadership roles including Director of Business Development at
GeneraSol (2007-2023) and Board Member at SUA Power Company (2021-2023), where
he focused on structuring and executing solar PV and off-grid energy projects.
He has also led utility-scale solar development at Grupo BAZ and has a
foundational background in project and operations management. Juan holds a BBA
from Politécnico Costa Atlántica and additional certifications in solar energy
and environmental science.
Page 34
Within the last five years, no
Director, Executive Officer, or Significant Employee of the Company has been
convicted of, or pleaded guilty or no contest to, any criminal matter, excluding
traffic violations and other minor offenses.
Within the last five years, no
Director, Executive Officer, or Significant Employee of the Company, no
partnership of which an Executive Officer or Significant Employee was a general
partner, and no corporation or other business association of which an Executive
Officer or Significant Employee was an executive officer, has been a debtor in
bankruptcy or any similar proceedings.
Energea Global, the General
Partner of the Company, is also the general partner or manager of two other
funds formed to acquire and operate solar power projects, each of which is
conducting an offering under Regulation A:
·
Energea Portfolio 2 LP ("Portfolio 2"), which was formed
to acquire and operate projects located in Brazil with residential and small
business customers.
·
Energea Portfolio 4 USA LLC ("Portfolio 4"), which was
formed to acquire and operate projects located in the United States.
The status of each of the
Company's, Portfolio 2's and Portfolio 4's current and prior offerings, as of
December 31, 2024, is below:
|
|
Energea
Portfolio 2 LP
|
Energea
Portfolio 3 Africa LP
|
Energea
Portfolio 4 USA LP
|
|
Date of Prior Offering
Qualification
|
08/13/2020
|
08/2/2021
|
07/01/2021
|
|
Offering Amount Raised Through 12/31/24*
|
$22,061,519.49
|
$5,152,094.63
|
$4,753,234.65
|
|
Solar Projects Owned
|
Thirteen
|
Sixteen
|
Four
|
|
Prior Offering Status
|
Terminated
|
Terminated
|
Terminated
|
|
Current Maximum Offering Amount
|
$50,000,000
|
$50,000,000
|
$50,000,000
|
|
Date of Current Offering
Qualification
|
06/06/2024
|
06/17/2024
|
06/26/2024
|
*
Gross of stock issuance costs
Our General Partner is
compensated when the Company pays the fees described in the table below ("Fees"):
Page 35
|
Type of Fee
|
Timing of Fee
|
Description
|
|
Reimbursement of Marketing
Expenses
|
Ongoing
|
The Company must reimburse the
General Partner for expenses the General Partner incurs while promoting the
Company to potential investors. The maximum reimbursable amount is 5% of the
total amount raised. Types of costs that will be reimbursed by the Company to
the General Partner for marketing expenses include digital and conventional
advertisements, marketing personnel and third-party costs, promotional events
and any other cost associated with communicating this Offering to the general
public.
|
|
Management Fees
|
Ongoing
|
The General Partner will charge the Company a monthly
management fee equal to 0.167% of the aggregate capital that has been
invested into the Company.
|
|
Carried Interest
|
When the distributions exceed
the Preferred Return
|
The General Partner will receive
30% of all distributed cash flow above the monthly amount necessary for
Preferred Equity Investors to receive their Preferred Return. For more
detail, see "Carried Interest" below.
|
|
Origination Fees
|
When Projects and Loans are originated
|
The General Partner might originate and develop Projects
and Loans that are acquired by the Company. If so, the General Partner shall
be entitled to compensation that is no greater than 5.0% of the Project's
cost or the Loan's outstanding balance.
|
|
O&M and Energy Sales
Services ("Ancillary Services")
|
Ongoing as services are rendered
according to contract
|
The Company does not currently
pay the General Partner for any Ancillary Services.
|
|
Interest on Loans
|
Whenever due and payable
|
The General Partner might lend to the Company to fund the
acquisition or investment in Projects and Loans or for other purposes. Such a
loan will bear interest at market rates. The amount of interest will depend
on the amount and term of any such loans.
|
While the General Partner is not entitled to any
compensation other than the Fees as described above, it may defer some or all
of Fees at any time based on the General Partner's assessment of the cash flow
at the Company. Some Fees may be deferred indefinitely at the discretion of the
General Partner. To date, the General Partner has provided services without
charging the full amount owed by the Company. As the Company and its cash flow
stabilize, the General Partner may charge for deferred Fees ("Deferred Fees")
- see "Fees Paid to General Partner" for more information.
As the Company grows, markets,
exceeds Preferred Returns and requires the General Partner for Ancillary
Services, fees are accrued to the General Partner, some of which are deferred,
as described above. Below is a table which calculates the total amounts paid to
the General Partner from all possible fees, which have been paid as of December
31, 2024:
|
Fees Paid to General
Partner in 2024
|
Fees Paid Since
Inception (including 2024 fees)
|
|
|
Reimbursement of Marketing
Expenses
|
$50,000.00
|
$50,000.00
|
|
Asset Management Fee
|
$1,292.01
|
$1,590.09
|
|
Carried Interest
|
$2,963.46
|
$4,504.76
|
|
Origination Fees
|
$0.00
|
$0.00
|
|
Ancillary Services
|
$0.00
|
$0.00
|
|
Interest on Loans
|
$0.00
|
$0.00
|
|
TOTAL
|
$54,255.47
|
$56,094.85
|
The General Partner and its
affiliates might purchase Class A Investor Shares. If so, they will be entitled
to the same distributions as other Preferred Equity Investors. If such
investment is made to facilitate the Company's acquisition of or investment in
Projects before there are sufficient offering proceeds, the General Partner will
be entitled to redeem its Class A Investor Shares from additional Offering
proceeds as they are raised.
Page 36
The individuals named below, as
well as other employees of the General Partner may own Class A Investor Shares
that they purchased privately through the Platform in the same manner as any
Investor.
The following table sets forth
the approximate beneficial ownership of our Class A Investor Shares as of
December 31, 2024, for each person or group that holds more than 10.0% of our
Class A Investor Shares, and for each director and executive officer of our General
Partner and for the directors and executive officers of our General Partner as
a group.
|
Name of Beneficial Owner (1)(2)
|
Number of
Shares Beneficially Owned
|
Amount and
Nature of Beneficial Ownership Acquirable
|
Percent of All
Shares
|
|
Energea Global LLC
|
12,381
|
N/A
|
0.2884%
|
|
Michael Silvestrini
|
5,169(3)
|
N/A
|
0.1204%
|
|
Christopher Sattler
|
4,070(3)
|
N/A
|
0.0948%
|
|
Gray Reinhard
|
61
|
N/A
|
0.0014%
|
|
All directors and executive
officers of our General Partner as a group (3 persons)
|
190
|
N/A
|
0.0044%
|
|
-
|
|
-
|
(1) Under SEC
rules, a person is deemed to be a "beneficial owner" of a security if that
person has or shares "voting power," which includes the power to dispose of or
to direct the disposition of such security. A person also is deemed to be a
beneficial owner of any securities which that person has a right to acquire
within 60 days. Under these rules, more than one person may be deemed to be a
beneficial owner of the same securities and a person may be deemed to be a
beneficial owner of securities as to which he or she has no economic or
pecuniary interest.
(2) Each listed
beneficial owner, person or entity has an address in care of our principal
executive offices at 52 Main Street, Chester, CT 06412.
(3) Includes shares
beneficially owned by Energea Global LLC, under the control of its Class A
Shareholders. Notably, Michael Silvestrini and Chris Sattler, as the largest
principal shareholders, hold 41.33% and 32.24% of the shares of Energea Global LLC,
respectively. (As of December 31, 2024)
The Company might enter into
other transactions with related parties. If so, any compensation paid by the
Company to the related party shall be (i) fair to the Company, and (ii)
consistent with the compensation that would be paid to an unrelated party.
By "related party" we mean:
·
The General Partner or a subsidiary of the General Partner;
·
Any director, executive officer, or significant employee of the
Company or the General Partner;
·
Any person who has been nominated as a director of the Company or
the General Partner;
·
Any person who owns more than 10% of the voting power of the
Company or the General Partner; and
·
An immediate family member of any of the foregoing.
As of the date of this Offering
Circular, the Company has entered into transactions with related parties as set
forth below:
Page 37
·
Credit Advance: The Company entered into several credit
advances from the General Partner to accelerate the availability of capital
needed to make certain small payments. These amounts are recorded as
due-to/due-from transactions and no interest is charged to the Company for
these advances.
The Company has not, and does not
intend to, enter into any related party transaction with the General Partner or
its subsidiaries or any other related party other than those transactions
described above in "Compensation of General Partner". As discussed
above, the Company may pay or reimburse the General Partner for marketing
expenses, management fees, Carried Interest, Ancillary Services and interest on
loans. There are no other expenses, nor will there be other expenses in the
future, where the Company pays a related party other than the Fees.
The Company is offering up to $50,000,000
of Class A Investor Shares. All of the rights and obligations associated with
the Class A Investor Shares are set forth in:
·
The LP Agreement, which can be found here;
and
·
The Authorizing Resolution, which can be found here.
The fixed
price of Class A Investor Shares was determined by calculating the Net Asset
Value ("NAV") of the Company and dividing the NAV by the total number of
outstanding shares. The NAV is calculated as the Net Present Value ("NPV")
of the Estimated Net Operating Income ("Estimated NOI") of the Company.
The Estimated NOI calculation
begins with an estimation of cash flow. Cash flow comes from distributions from
Projects, interest payments from Loans and interest earned from Company
Investments. To estimate distributions from Project, we estimate monthly energy
produced by each Project using predictive software called PVsyst. PVsyst is a
vital tool in the solar industry for designing and simulating the performance
of photovoltaic systems. Its comprehensive features enable precise predictions
of solar power generation ("kWh"), considering a wide range of variables
and site-specific conditions. To estimate monthly revenue for each Project, the
energy rate described in the Project Rental Contract ("Energy Rate") is
multiplied by kWh throughout the term of the Project Rental Contracts. We then
deduct the expected Project Operating Expenses to determine the cash
available for distribution to the Company from the Projects (see "Our
Operating Costs and Expenses - Project Operating Expenses"). In addition,
to the cash available for distribution from the Projects, in determining the
Estimated NOI, we add any anticipated interest payments from Loans and Company
Investments.
We then deduct all of the
expected operating expenses Company level (see "Our Operating Costs and
Expenses - Company Operating Expenses") from the cash flow. These expenses
are fairly easy to estimate as they are either consistent and predictable (like
a bank fee) or fixed (like a management fee). By subtracting the estimated
operating costs and expenses from the estimated cash flow, we establish a
monthly Estimated NOI. We then use an XIRR calculation to compute the NPV of
that Estimated NOI using the Company's IRR as the discount rate in the NPV
equation. For example, if the Estimated NOI would result in a 12% IRR, we use
12% as the discount rate when calculating the NPV of the Estimated NOI.
Therefore, the NPV of the
Estimated NOI using the IRR as the discount rate establishes the NPV of the
Company. When we divided the NPV of the Company by the number of outstanding
Class A Investor Shares, we arrive at a price per share.
Investors will have no right to vote
or otherwise participate in the management of the Company. Instead, the Company
will be managed by the General Partner exclusively.
Page 38
The Company is governed by a Limited Partnership
Agreement dated June 5, 2025 (the "LP Agreement"). A copy of the LP
Agreement can be found here.
The Class A Investor Shares being offered were created by the General Partner
under an Authorizing Resolution pursuant to Section 3.01 of the LP Agreement. A
copy of the Authorizing Resolution can be found here.
The LP Agreement establishes
Energea Global LLC, a Delaware limited liability company, as the General
Partner.
The following summarizes some of
the key provisions of the LP Agreement and the Authorizing Resolution. This
summary is qualified in its entirety by the LP Agreement itself, a copy of
which can be found here,
and by the Authorizing Resolution itself, a copy of which can be found here.
The Company was formed in
Delaware on March 11, 2021, pursuant to the Delaware Limited Liability Company
Act. On June 5, 2025, the Company converted from a Delaware limited liability
company to a Delaware limited partnership, pursuant to the Delaware Revised
Uniform Partnership Act.
Under the LP Agreement, ownership
interests in the Company are referred to as "Share", while the owners,
are referred to as "Limited Partners".
The General Partner adopted the
Authorizing Resolution to create the Class A Investor Shares. Any Investor who
buys Class A Investor Shares in the Offering will be an "Limited Partner"
under the LP Agreement.
The interests in the Company are
denominated by 2,501,000,000 "Shares". 2,000,000,000 of these Shares are
designated as either Class B Shares, Class C Shares, Class D Shares or Class I
Shares, with the exact amount of each such class being determined by the
General Partner. In accordance with the Partnership Agreement, the General
Partner may reclassify any unsold existing class of Investor Shars into one or
more classes by adopting Authorizing Resolutions. f Investor Shares into one or
more classes, by adopting one or more authorizing resolutions.
The Class A Investor Shares will
be owned by Investors and are the subject of this Offering. By adopting other
authorizing resolutions, the General Partner may create, offer, and sell other
classes of Investor Shares in the future, which could have rights superior to
the rights of the Class A Investor Shares.
Management
The General Partner has complete
discretion over all aspects of the business conducted by the Company. For
example, the General Partner may (i) create classes of Shares with such terms
and conditions as the General Partner may determine in its sole discretion;
(ii) issue Shares to any person for such consideration as the General Partner
maybe determine in its sole discretion, and admit such persons to the Company
as Limited Partners; (iii) engage the services of third parties to perform
services on behalf of the Company; (iv) enter into one or more joint ventures;
(v) purchase, lease, sell, or otherwise dispose of any assets, including
Projects or Loans, in the ordinary course of business or otherwise; (vi) enter
into leases and any other contracts of any kind; (vii) incur indebtedness on
behalf of the Company, whether to banks or other lenders; (viii) determine the
amount of the Company's distributable cash (as described herein) and, subject
to any authorizing resolutions, the timing and amount of distributions to
Limited Partners; (ix) determine the information to be provided to the Limited
Partners; (x) grant mortgages, liens, and other encumbrances on the Company's
assets; (xi) make all elections under the Code and the provisions of State and
local tax laws; (xiii) file a petition in bankruptcy; (xiv) discontinue the
business of the Company; and (xv) dissolve the Company.
Page 39
Investors who purchase Class A
Investor Shares will not have any right to vote on any issue other than certain
amendments to the LP Agreement, or to remove the General Partner.
The General Partner can be
removed for "cause" under a procedure set forth in Section 5.06 of the LP
Agreement.
The term "cause" includes:
·
An uncured breach of the LP Agreement by the General Partner; or
·
The bankruptcy of the General Partner; or
·
Certain misconduct on the part of the General Partner, if the
individual responsible for the misconduct is not terminated.
A vote to remove the General
Partner for cause must be approved by Limited Partners owning at least seventy
five percent (75%) of the issued and outstanding Class A Investor Shares and
the Reg D Shares, voting together as a single class (the Class A Investor
Shares and the Reg D Shares being collectively referred to herein as the "Investor
Shares"). Whether "cause" exists would then be decided in arbitration
proceedings conducted under the rules of the American Arbitration Association,
rather than in a court proceeding.
These provisions are binding on
every person who acquires Class A Investor Shares, including those who acquire
Class A Investor Shares from a third party, i.e., not from the Company.
The LP Agreement protects the
General Partner and its employees and affiliates from lawsuits brought by
Investors. For example, it provides that the General Partner will not be liable
to the Company for mistakes, errors in judgment, or other acts or omissions
(failures to act) as long as the act or omission was not the result of the
General Partner's fraud or willful misconduct under the LP Agreement. This
limitation on the liability of the General Partner and other parties is
referred to as "exculpation."
The LP Agreement also requires
the Company to indemnify (reimburse) the General Partner, its affiliates, and
certain other parties from losses, liabilities, and expenses they incur in
performing their duties. For example, if a third party sues the General Partner
on a matter related to the Company's business, the Company would be required to
indemnify the General Partner for any losses or expenses it incurs in
connection with the lawsuit, including attorneys' fees. However, if it is
judicially determined that such General Partner is not entitled to be
exculpated under the standard described in the preceding paragraph by the LP
Agreement, such General Partner shall promptly reimburse the Company for any
reimbursed or advanced expenses.
Notwithstanding the foregoing, no
exculpation or indemnification is permitted to the extent such exculpation or
indemnification would be inconsistent with the requirements of federal or state
securities laws or other applicable law.
The detailed rules for
exculpation and indemnification are set forth in section 6.02 of the LP
Agreement.
Once an Investor pays for his,
her, or its Class A Investor Shares, the Investor will have no obligation to
make further contributions to the Company (except for the return of
distributions under certain circumstances as required by Sections 17-607 and 17-804
of the Delaware LP Act, as described in more detail under "Liability To Make
Additional Contributions" below.
No Investor will be personally
liable for any of the debts or obligations of the Company.
Page 40
The manner in which the Company
will distribute its available cash is described in "Securities Being Offered
- Calculating Distributions".
In general, Investors may freely
transfer their Class A Investor Shares. However, if an Investor wants to sell
Class A Investor Shares, the Investor may only offer the Class A Investor
Shares to the General Partner via the Platform. The General Partner generally
has a first right of refusal to purchase Class A Investor Shares pursuant to
Article 8of the LP Agreement. See "Risk Factors-No Market for the Class A
Investor Shares; Limits on Transferability."
If an Investor who is a human
being (as opposed to an Investor that is a legal entity) should die or become
incapacitated, the Investor or his, her or its successors will continue to own
the Investor's Class A Investor Shares.
The Company will pay certain
management fees and other fees to the General Partner, as summarized in "Compensation
of General Partner".
The General Partner may require an Investor to sell his,
her, or its Class A Investor Shares back to the Company:
·
If the Investor is an entity governed by the Employee Retirement
Income Security Act of 1974, Code section 4975, or any similar Federal, State,
or local law, and the General Partner determines that all or any portion of the
assets of the Company would, in the absence of the redemption, more likely than
not be treated as "plan assets" or otherwise become subject to such laws.
·
If the General Partner determines that the Investor has engaged
in certain misconduct described in the LP Agreement.
If an Investor's Class A Investor
Shares are purchased by the Company as provided above, the price will be equal
to 90% of the then-current share price of such Class A Investor Shares as
published on the Platform.
The purchase price will be paid
by wire transfer or other immediately available funds.
If the General Partner wants to sell
the business conducted by the Company, it may affect the transaction as a sale
of the Project owned by the Company or as a sale of all the Shares in the
Company. In the latter case, Investors will be required to sell their Class A
Investor Shares as directed by the General Partner, receiving the same amount
they would have received had the transaction been structured as a sale of
assets.
All documents, including all
tax-related documents, will be transmitted by the Company to Investors via
email and/or through the Platform.
The General Partner may amend the
LP Agreement unilaterally (that is, without the consent of anyone else) for a
variety of purposes, including to:
Page 41
·
Cure ambiguities or inconsistencies in the LP Agreement;
·
Add to its own obligations or responsibilities;
·
Conform to this Offering Circular;
·
Comply with any law;
·
Ensure that the Company isn't treated as an "investment company"
within the meaning of the Investment Company Act of 1940;
·
Do anything else that could not reasonably be expected to have, a
material adverse effect on Investors.
An amendment that has, or could
reasonably be expected to have, a material adverse effect on Investors,
requires the consent of the General Partner and Investors holding a majority of
the Class A Investor Shares.
An amendment that would require
an Investor to make additional capital contributions, delete or modify any
amendments listed in Section 11.03 of the LP Agreement or impose personal
liability on an Investor requires the consent of the General Partner and each
affected Investor.
Within a reasonable period after
the end of each fiscal year of the Company, the General Partner will provide
Investors with (i) a statement showing in reasonable detail the computation of
the amount distributed, and the manner in which it was distributed (ii) a
balance sheet of the Company, (iii) a statement of income and expenses, and
(iv) such additional information as may be required by law. The financial
statements of the Company need not be audited by an independent certified
public accounting firm unless the General Partner so elects or the law so
requires. While the Company currently maintains audited financial statements,
under the LP Agreement, the Company is not required to maintain audited
financial statements unless the General Partner so elects or the law so
requires.
As a "Tier 2" issuer under
Regulation A, the Company will also be required to provide investors with
additional information on an ongoing basis, including annual audited financial
statements, annual reports filed on SEC Form 1-K, semiannual reports filed on
SEC Form 1-SA, special financial reports filed on SEC Form 1-K, and current
reports on SEC Form 1-U. If, however, our Class A Investor Shares are held "of
record" by fewer than 300 persons, these reporting obligations could be
terminated.
A Member's right to see
additional information or inspect the books and records of the Company is
limited by the LP Agreement.
Distributions made in liquidation
of the Company will be made in the manner described "Calculating
Distributions", depending on whether the distributions consist of ordinary
operating cash flow or net capital proceeds.
The holders of the Class A
Investor Shares will not have preemptive rights. That means that if the Company
decides to issue securities in the future, the holders of the Class A Investor
Shares will not have any special right to buy those securities.
Once an
Investor pays for his, her, or its Class A Investor Shares, the Investor will
have no obligation to make further contributions to the Company (except for the
return of distributions under certain circumstances as required by Sections
17-607 and 17-804 of the Delaware LP Act).
Page 42
Under Section 17-607 of the
Delaware LP Act, a limited partnership may not make a distribution to a partner
if, after the distribution, all liabilities of the limited partnership, other
than liabilities to partners on account of their partnership interests and
liabilities for which the recourse of creditors is limited to specific property
of the limited partnership, would exceed the fair value of the assets of the
limited partnership. The Delaware LP Act provides that a partner who receives a
distribution and knew at the time of the distribution that the distribution was
in violation of Section 17-607 of the Delaware LP Act shall be liable to the
limited partnership for the amount of the distribution for three years.
Under Section 17-804 of the
Delaware LP Act, a limited partnership is required to distribute its assets:
(i) first to creditors, to the extent otherwise permitted by law, in
satisfaction of the limited partnership's liabilities other than liabilities
for which payment has been made and distributions to partners and former
partners; (ii) unless otherwise provided in its limited partnership agreement,
to partners and former partners in satisfaction of liability for distributions
under the Delaware LP Act; and (iii) unless otherwise provided in its limited
partnership agreement, to partners first for the return of their contributions
and second respecting their partnership interests, in the portions in which
they share in distributions. The Delaware LP Act provides that a member who
receives a distribution and knew at the time of the distribution that the
distribution was in violation of Section 17-804 of the Delaware LP Act shall be
liable to the limited partnership for the amount of the distribution for three years.
In some situations, the General
Partner might be required by law to withhold taxes and/or other amounts from
distributions made to Investors. The amount we withhold will still be treated
as part of the distribution. For example, if we distribute $100 to an Investor
and are required to withhold $10 in taxes, for our purposes the Investor will
be treated as having received a distribution of $100 even though only $90 was
deposited in the Investor's bank account.
At this time, all Investors are
U.S. persons for all federal tax purposes. To the extent at any point in the
future any Investors may be non-U.S. persons, the distributions to Investors
may be subject to additional tax withholding and other reporting requirements.
The Company can only distribute
as much cash flow as the Company has available for distributions (see "Distributions").
There is no guarantee that the Projects will generate enough cash flow, after
paying expenses, to distribute enough to pay a positive return to Investors or
even to return all their invested capital.
Redemption Plan
Investors
should note that the General Partner may, in its sole discretion, amend,
suspend, or terminate the Redemption Plan at any time without prior notice for
any reason, and the General Partner reserves the right to reject any Redemption
Request at any time for any reason.
Our Class A Investor Shares are
currently not listed on a national securities exchange or included for
quotation on a national securities market, and currently there is no intention
to list our Class A Investor Shares. While Investors should
view an investment in the Company as long-term, we are adopting a redemption
plan ("Redemption Plan") whereby an Investor has the opportunity to
obtain liquidity.
At any time after sixty (60) days
following the purchase of Class A Investor Shares, an Investor may request
redemption of their Class A Investor Shares in accordance with the Company's
Redemption Plan as set forth herein.
In order to submit a redemption
request ("Redemption Request") Investors must (1) submit a time-stamped
request via the Platform, (2) have no more than one outstanding request at any
given time, and (3) request that the Company redeem no more than $50,000 worth
of Class A Investor Shares per request. In addition, the Redemption Plan is
subject to certain liquidity limitations, which may fluctuate depending on the
liquidity of the Company. We reserve the right to reject any Redemption Request
at any time to protect our operations and our non-redeemed Investors, to
prevent an undue burden on our liquidity, or for any other reason, including,
what we deem to be a pattern of excessive, abusive or short-term trading.
Page 43
As calculated below, the
redemption price ("Redemption Price") may be reduced by a discount based
on the time of the Redemption Request, rounded down to the nearest cent. The
Redemption Price will be equal to (i) the current price of the Class A Investor
Shares in effect at the time the Redemption Request is made, reduced by (ii)
the aggregate sum of distributions, if any, with record dates during the period
between the Redemption Request date and the redemption date. The current price
of the Class A Investor Shares is published on the Platform, and Investors will
be informed of the estimated Redemption Price at the time a Redemption Request
is submitted, subject to the adjustment for distributions described above.
Based on the time when an
Investor submits a Redemption Request, the Redemption Prices are set forth
below:
|
Holding Period from Date
of Settlement
|
Redemption Price (as
percentage of per share redemption price) (1)
|
|
|
Settlement date to 60 days
|
No Redemptions
|
|
|
60 days to 3 years
|
95.0
|
%(2)
|
|
More than 3 years
|
100.0
|
%(3)
|
(1) The
Redemption Price will be the per share price for our Class A Investor
Shares in effect as of the time the Redemption Request is made (i) reduced by
any distributions, if any, with record dates during the period between the
Redemption Request date and the redemption date and (ii) rounded down to the
nearest $0.01.
(2) For Class A
Investor Shares held between 60 days and three (3) years, the Redemption Price
includes a fixed 5.0% discount based on the per share price for our Class A
Investor Shares in effect at the time of the Redemption Request.
(3) There is
no discount to redemptions of Class A Investor Shares held at least three
(3) years.
Investors may withdraw their
Redemption Request at any time before the redemption is paid. If we agree to
honor a Redemption Request, such Redemption Request will be paid within 90
days.
In light of the SEC's current
guidance on redemption plans, we generally intend to limit redemptions in any
calendar quarter to Class A Investor Shares whose aggregate value is 5.00% of
the NAV of all of our outstanding Class A Investor Shares on the last business
day of the preceding quarter, with excess capacity carried over to later
calendar quarters in that calendar year, up to a maximum of 20.00% of the NAV
of all of our Class A Investor Shares outstanding during any calendar year.
Notwithstanding the foregoing, we are not obligated to redeem Class A Investor
Shares under the Redemption Plan.
We cannot guarantee that the
funds, if any, set aside for the Redemption Plan will be sufficient to
accommodate all Redemption Requests. In the event our General Partner
determines, in its sole discretion, that we do not have sufficient funds
available to redeem all of the Class A Investor Shares for which Redemption
Requests have been submitted, such pending Redemption Requests will be honored
on a first in first out basis, if at all. In the event that not all Redemption
Requests are being honored in a given quarter, due to reaching the 5.00%
quarterly limit or otherwise, the Redemption Requests not fully honored will
carry over to the first business day of the next quarter and Investors will not
need to submit a new Redemption Request the following quarter. Investors will
be notified within 10 days of submitting a Redemption Request whether their
request for Redemption has been accepted or denied.
We intend to limit Investors to
one (1) Redemption Request outstanding at any given time, meaning that, if an
Investor desires to request more or less Class A Investor Shares be redeemed,
such Investor must first withdraw the first Redemption Request. For Investors
who hold Class A Investor Shares with more than one record date, Redemption
Requests will be applied to such Class A Investor Shares in the order in which
they settled, on a first in first out basis - meaning, those Class A Investor
Shares that have been continuously held for the longest amount of time will be
redeemed first. In addition, we intend to limit Redemption Requests to $50,000
worth of Class A Investor Shares per Redemption Request.
In addition, our General Partner
may, in its sole discretion, amend, suspend, or terminate the Redemption Plan
at any time without prior notice, including to protect our operations and our
non-redeemed Investors, to prevent an undue burden on our liquidity, following
any material decrease in our NAV, or for any other reason. In the event that we
suspend our Redemption Plan, we expect that we will reject any outstanding
Redemption Requests and do not intend to accept any new Redemption Requests. In
the event that we amend, suspend or terminate our Redemption Plan, we will file
an Offering Circular supplement and/or Form 1-U, as appropriate, and post such
information on the Platform to disclose such action. Therefore, you may not
have the opportunity to make a Redemption Request prior to any potential
termination of our Redemption Plan.
Page 44
Investors will own all the Class
A Investor Shares while the General Partner will own all the Common Shares. The
principal rights associated with the Common Shares are as follows:
·
Distributions: As the holder of the Common Shares, the
General Partner will be entitled to the distributions of the Carried Interest.
·
Voting Rights: The Common Shares will have no voting
rights per se. However, the General Partner, in its capacity as the
general partner of the Company, will control the Company.
·
Obligation to Contribute Capital: Holders of the Common
Shares will have no obligation to contribute capital to the Company.
·
Redemptions: Holders of the Common Shares will have no
right to have Common Shares redeemed.
To purchase Class A Investor
Shares, you are required to sign an investment agreement, the forms of which
are attached hereto (See "How to Invest"). Each of the Investment Agreements
enable Investors to make an initial purchase of Class A Investor Shares (to the
extent the Investor is making a one-time purchase of the Class A Investor
Shares). The Auto-Invest Agreement and the Auto-Reinvestment Agreement permit
an Investor to make a one-time purchase of Class A Investor Shares and/or
enable an Investor to elect to make additional purchases of Class A Investor
Shares, pursuant to the terms of this Offering, on a periodic basis, by either
(i) establishing with the Company, a plan for the Investor to automatically
invest in the Offering on a periodic basis, subject to the terms of an
Auto-Invest Agreement signed by the Investor and the Company or (ii) to
reinvest the distributions the Investor receives from their Class A Investor
Shares into the purchase of additional Class A Investor Shares, subject to the terms
and conditions of the an Auto-Reinvestment Agreement, signed by the Investor
and the Company.
The Investment Agreements will
limit your rights in several important ways if you believe you have claims
against us arising from the purchase of your Class A Investor Shares:
- Any claims arising from your purchase of Class A Investor Shares must be brought in the state or federal courts located in Wilmington, Delaware, which might not be convenient to you.
- You would not be entitled to recover any lost profits or special, consequential, or punitive damages. However, that limitation does not apply to claims arising under federal securities laws.
To buy Class A Investor Shares,
go to the Platform and follow the instructions. You will be asked for certain
information about yourself, including:
·
Your name and address
·
Your email address
·
Your social security number (for tax reporting purposes)
·
Whether you are an "accredited investor"
·
If you not an accredited investor, your income and net worth
Page 45
You will also be asked to sign an
Investment Agreement, a copy of which is available here.
To the extent you wish to
participate in the Offering by automatically investing on a periodic basis, you
will be asked to sign an Auto-Invest Agreement, a copy of which is available here.
To the extent you wish to
participate in the Offering by electing to use the amount of distributions that
you receive to purchase additional Class A Investor Shares, you will be asked
to sign an Auto-Reinvestment Agreement, a copy of which is provided here.
The minimum investment is $100.
You will pay for your Class A Investor Shares using one of the options
described on the Platform.
The information you submit,
including your signed Investment Agreement, is called your "subscription." The General
Partner will review your subscription and decide whether to accept it. The General
Partner has the right to accept or reject subscriptions in our sole discretion,
for any reason or for no reason.
When you invest, your money will
be held in an escrow account with a third party until your subscription is
reviewed and the General Partner decides whether to accept it. When and if the General
Partner confirms that your subscription is complete and decided to accept your
subscription, the General Partner will release your money from the escrow
account to the Company.
Once the General Partner has
accepted your subscription, you will be notified by email and the investment
process will be complete. The General Partner will also notify you by email if
it does not accept your subscription, although it might not explain why.
You will not be issued a paper
certificate representing your Class A Investor Shares.
Anyone can buy Class A Investor
Shares. The General Partner does not intend to limit investment to people with
a certain income level or net worth, although there are limits on how much
non-accredited investors may invest in this Offering.
As long as an Investor is at
least 18 years old, they can invest in this Offering. But if the Investor not
an "accredited" investor, the amount they can invest is limited by law.
Under 17 CFR §230.501, a
regulation issued by the SEC, the term "accredited investor" means:
·
A natural person who has individual net worth, or joint net worth
with the person's spouse, that exceeds $1 million at the time of the purchase,
excluding the value of the primary residence of such person;
·
A natural person with income exceeding $200,000 in each of the
two most recent years or joint income with a spouse exceeding $300,000 for
those years and a reasonable expectation of the same income level in the
current year;
·
A trust with assets in excess of $5 million, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person;
·
A business in which all the equity owners are accredited
investors;
·
An employee benefit plan, within the meaning of the Employee
Retirement Income Security Act, if a bank, insurance company, or registered
investment adviser makes the investment decisions, or if the plan has total
assets in excess of $5 million;
Page 46
·
A bank, insurance company, registered investment company,
business development company, or small business investment company;
·
A charitable organization, corporation, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets exceeding $5 million; or
·
A director, executive officer, or general partner of the company
selling the securities, or any director, executive officer, or general partner
of a general partner of that issuer.
If the Investor falls within any
of those categories, then the Investor can invest any amount permitted on the
Platform. If the Investor does not fall within any of those categories, then
the most they can invest in this Offering is the greater of:
·
10% of their annual income; or
·
10% of their net worth.
These limits are imposed by law,
not by the Company.
The Company will determine
whether an Investor is accredited when he, she, or it creates an account on the
Platform.
We have
filed with the SEC an offering statement under the Securities Act on
Form 1-A regarding this Offering. This Offering Circular, which is part of
the offering statement, does not contain all the information set forth in the
offering statement and the exhibits related thereto filed with the SEC,
reference to which is hereby made. Upon the qualification of the offering
statement, we will be subject to the informational reporting requirements that
are applicable to Tier 2 companies whose securities are qualified pursuant to
Regulation A, and accordingly, we will file annual reports, semi-annual reports,
and other information with the SEC. The SEC maintains a website at www.sec.gov that
contains reports, information statements and other information regarding
issuers that file with the SEC.
The
information incorporated by reference herein is an important part of the
offering statement and this Offering Circular. The following documents
previously filed with the SEC are incorporated by reference into the offering
statement and this Offering Circular:
·
the Company's Annual Report for the fiscal year ended
December 31, 2024 on Form
1-K
You may
review these filings on our website and may also request a copy of these
filings at no cost, by contacting us at:
ENERGEA PORTFOLIO 3 AFRICA LP
52 Main Street
Chester, CT 06412
www.energea.com
(860)-316-7466
So long
as we remain subject to the periodic reporting requirements of Regulation A,
within 120 days after the end of each fiscal year we will file on the SEC's
EDGAR website an annual report on Form 1-K. The annual report will contain
audited financial statements and certain other financial and narrative
information that we are required to provide to investors.
We also
maintain a website at www.energea.com, where there may
be additional information about our business, but the contents of that site are
not incorporated by reference in or otherwise a part of this Offering Circular.
Page 47
Certain legal matters with
respect to the Class A Investor Shares will be passed upon by the law firm of
McCarter & English, LLP, Newark, New Jersey.
The Company's financial
statements for the fiscal years ended December 31, 2024 and December 31, 2023
incorporated by reference in this Offering Circular have been audited by
Whittlesey PC, an independent registered public accounting firm, as stated in its
report appearing herein. The financial statements have been included in
reliance upon that firm's report on its authority as an expert in accounting
and auditing.
The
financial statements of the Company can be found in:
·
"Item 7. Financial Statements" of the Company's Annual
Report on Form 1-K for the fiscal year ended December 31, 2024, which can be
found here.
which is
incorporated herein by reference. The Company will provide to each holder of
securities, including any beneficial owner, upon oral or written request, at no
cost to the requester, a copy of the financial statement information that is
incorporated herein by reference.
|
3.8% NITT
|
A
3.8% Net Investment Income Tax on certain investment income of individuals,
trusts, and estates under Section 1411 of the Internal Revenue Code.
|
|
Adjusted NOI
|
The net operating income of the Company after being adjusted so that
the IRR of the CAFD is equal to the Preferred Return rate of 7%
|
|
Advisers Act
|
Investment Advisers Act of 1940.
|
|
Ancillary Services
|
Support services like
operations, maintenance, and credit management provided to solar projects.
|
|
Authorizing Resolution
|
The
authorization adopted by the General Partner pursuant to the LP Agreement
that created the Class A Investor Shares.
|
|
BESS
|
Battery back-up systems.
|
|
Blue Sky Laws
|
State-level
laws governing investments.
|
|
Borrower
|
A party that repays the Company
for a Loan through principal and interest payments.
|
|
CAFD
|
Cash
available for distribution.
|
|
Carried Interest
|
The right of the General
Partner to receive distributions under the LP Agreement, over and above its
right to receive distributions in its capacity as an Investor.
|
|
CFC
|
Controlled
foreign corporations.
|
|
CGT
|
Capital gains tax
|
|
CIT
|
Corporate
Income Tax
|
|
Class A Investor Shares
|
The limited partnership
interests in the Company being offered to Investors in this Offering.
|
Page 48
|
Code
|
The
Internal Revenue Code of 1986, as amended (i.e., the Federal tax code).
|
|
Collateral Agreements
|
A collection of agreements and
instruments designed to secure obligations under a primary financing
arrangement between a borrower and a lender.
|
|
Company
|
Energea
Portfolio 3 Africa LP, a Delaware limited partnership, which is offering to
sell Class A Investor Shares in this Offering.
|
|
Company Investments
|
Cash-on-hand investments
generating returns, such as interest from savings accounts.
|
|
Construction Contract
|
Agreement
to build the project using third-party services.
|
|
Customer
|
Offtaker of electricity and
environmental commodities.
|
|
Deferred Fees
|
Fees
postponed by the General Partner due to cash flow considerations, to be
charged later at their discretion.
|
|
DERMS
|
Distributed Energy Resource
Management Systems.
|
|
Development Company
|
A
company focused on acquiring and/or developing solar power projects.
|
|
EAF
|
Energy Available Factor
|
|
Energea Global
|
Energea
Global LLC, a Delaware limited liability company, which is owned by Michael Silvestrini
and Chris Sattler and serves as the General Partner.
|
|
Energy Rate
|
The price per kWh
|
|
Estimated NOI
|
The
Net Operating Income estimated to be produced by the Company.
|
|
Fees
|
Compensation paid to the
General Partner.
|
|
FINRA
|
Financial
Industry Regulatory Authority, Inc.
|
|
Form 1-U
|
SEC form used to report
significant events or changes by companies under Regulation A.
|
|
General Partner
|
Energea
Global LLC, a Delaware limited liability company.
|
|
GILTI
|
General Intangible Low-Tax
Income, a federal U.S. tax on profits made by companies outside the United
States.
|
|
HGR
|
Hecate
Global Renewables
|
|
Holdco
|
A South African Limited
Liability Company we created to own and operate the Projects, and a wholly
owned subsidiary of the Company.
|
|
HSEC
|
Health,
Safety, Environment and Community
|
|
Interconnection
|
Connection to the electrical
grid.
|
|
Investment Agreements
|
Contracts
signed to purchase or reinvest in Class A Investor Shares.
|
|
Investment Committee
|
A multi-disciplinary committee
of experienced renewable energy executives of the General Partner which
decides which Projects the Company will invest in.
|
|
Investor
|
Anyone
who purchases Class A Investor Shares in this Offering.
|
|
Investor Shares
|
Combined Class A Investor
Shares and Reg D Shares held by Limited Partners, voting as a single class.
|
|
IRR
|
Internal
rate of return.
|
|
JOBS Act
|
The Jumpstart Our Business Startups Act of 2012
|
|
kWh
|
Kilowatt
hour
|
|
Limited Partners
|
Owners of Class A Investor Shares
|
|
LP Agreement
|
The
Company's Limited Partnership Agreement dated June 5, 2025.
|
Page 49
|
Loan
|
Money lent from the Company to
a Development Company.
|
|
Loan Agreement
|
A
deal where the Lender provides funds to the Borrower up to a specified limit
over a set period.
|
|
MTR
|
Minimum Technical Requirement
|
|
NAV
|
Net
Asset Value
|
|
NOI
|
Net Operating Income
|
|
NPV
|
Net
Present Value
|
|
OCGTs
|
Open-Cycle Gas Turbines
|
|
Offering
|
The
offering of Class A Investor Shares to the public pursuant to this Offering
Circular.
|
|
Offering Circular
|
The Offering Circular you are
reading right now, which includes information about the Company and the
Offering.
|
|
O&M
|
Operations
and Maintenance
|
|
Partners
|
The General Partner and the
Limited Partners, collectively.
|
|
Platform
|
The
General Partner's website: www.energea.com
|
|
Portfolio 2
|
Energea Portfolio 2 LP
|
|
Portfolio
3
|
Energea Portfolio 3 Africa LP
|
|
Portfolio 4
|
Energea Portfolio 4 USA LLC
|
|
Purchase and Sale Agreement
|
Contract
to buy Project rights from a developer.
|
|
Preferred Equity Investors
|
Holders of Class A and Reg D
Shares entitled to cash distributions after expenses.
|
|
Preferred Return
|
A 7%
per year preferred return to Preferred Equity Investors before the General
Partner earns a Carried Interest.
|
|
Prior Offering
|
Energea Portfolio 3 Africa LP's
initial offering qualified on August 2, 2021.
|
|
Project
|
A
solar power product acquired or developed by the Company.
|
|
Project Maintenance Contract
|
When the Holdco hires a third
party to perform the actual O&M services.
|
|
PQA
|
Post
Qualification Amendment
|
|
Redemption Plan
|
The redemption plan whereby
Investors may request redemption of their Class A Investor Shares following
60 days after purchase.
|
|
Redemption Price
|
The
price at which Redemption Requests will be processed, based on the current
price per Class A Investor Shares at the time the Redemption Request is made,
reduced by the aggregate sum of distributions, if any, with record dates
during the period between the Redemption Request date and the redemption
date, and subject to a discount based on the time the Redemption Request is
submitted.
|
Page 50
|
Redemption Request
|
A request for redemption
submitted through the Platform for up to $50,000 in Class A Investor Shares.
|
|
Reg D Investors
|
Accredited
investors participating in Reg D Offerings.
|
|
Reg D Offerings
|
Private securities offerings
under Rule 506(c), open only to accredited investors.
|
|
Reg D Shares
|
Shares
issued in Reg D Offerings.
|
|
Regulations
|
Regulations issued under the
Code by the Internal Revenue Service.
|
|
Regulation A
|
SEC exemption that allows
companies to raise up to $75 million annually from the public with fewer
disclosure requirements than a traditional IPO.
|
|
SARS
|
South African Revenue Service.
|
|
SEC
|
The U.S. Securities and Exchange
Commission.
|
|
Securities Act
|
The Securities Act of 1933.
|
|
Shares
|
Ownership
interest in the Company.
|
|
Site Access
|
The Company's legal right to enter a property to build and
maintain a solar project.
|
|
Solar Lease
|
Contract where a customer rents
a solar system and pays for its use.
|
|
Trust Agreement
|
A fiscal control structure where Energea Global sets up a
trust to collect revenue from a Borrower and oversee the repayment process.
|
|
USD
|
The currency of the United
States called dollars.
|
|
U.S. GAAP
|
United States Generally Accepted Accounting Principles.
|
|
U.S. Holder
|
A beneficial owner of Class A
Investor Shares that is a U.S. citizen or resident, a U.S. corporation, a
U.S. estate, or a U.S. trust as defined for federal income tax purposes.
|
|
VAT
|
Value-Added Tax
|
|
WHT
|
Withholding tax on interest
|
|
ZAR
|
South African rand (currency).
|
|
Exhibit No.
|
Description of Exhibit
|
|
2.1**
|
|
|
2.2**
|
|
|
2.3**
|
|
|
2.4**
|
|
|
2.5**
|
|
|
2.6**
|
|
|
3.1**
|
|
|
4.1**
|
|
|
4.2*
|
|
|
4.3*
|
|
|
4.4*
|
|
|
6.1**
|
|
|
6.2**
|
|
|
11.1**
|
|
|
11.2**
|
Consent
of McCarter & English (included in Exhibit 12)
|
|
12.1**
|
*Filed herewith
** Previously filed
Page 52
Pursuant to the requirements of
Regulation A, the issuer certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form 1-A and has duly
caused this offering statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Chester, State of Connecticut, on July
17, 2025.
Energea
Portfolio 3 Africa LP
By: Energea Global LLC
By /s/ MICHAEL SILVESTRINI
Name: Michael Silvestrini
Title: Co-Founder and Managing
Partner
This offering statement has been
signed by the following person in the capacities and on the date indicated.
By /s/
MICHAEL SILVESTRINI
Name: Mike Silvestrini
Title: Co-Founder and Managing
Partner of Energea Global LLC (Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Date: July 17, 2025
Page 53