Chai Energy, a special purpose vehicle (SPV), is preparing to raise about US$300million, roughly GH₵3.5billion, through an initial public offering (IPO) to acquire equity stakes in two operating independent power producers (IPPs), according to a source close to the deal and a transaction document seen by B&FT.

At that size, the offer will be the largest IPO in the Ghana Stock Exchange's (GSE) history.

It will be almost three times the GH₵1.15billion MTN Ghana raised in 2018 – which remains the bourse's largest primary share offer – and larger than the GH₵2.18billion raised by the three IPOs of First Atlantic Bank, ZEN Petroleum and Kasapreko combined.

The company has applied to the Securities and Exchange Commission (SEC) for approval, with the offer tentatively targeted for November, the source said.

The proposed investment platform is expected to give institutional and retail investors an opportunity to participate in the ownership of operating power assets, ensuring a greater share of returns generated by the domestic electricity market accrues to domestic investors.

"If completed at the indicated size, this offering could become the Ghana Stock Exchange's largest initial public offering – creating a potential new channel for mobilising domestic capital into the energy sector," said the source, who spoke on condition of anonymity owing to regulatory constraints.

Preference shares, dollar-indexed returns

The offer is expected to take the form of preference shares carrying dollar-indexed returns, giving investors exposure to power-sector earnings while linking their returns to the US dollar.

Chai Energy will not build new generation capacity. Its strategy is to buy into existing plants, including stakes that may become available as foreign sponsors exit their investments.

The case for this vehicle rests on ownership. Foreign investors are estimated to hold between 80 and 90 percent of the country's IPPs, which form part of an installed generation capacity of 5,260 megawatts, according to 2024 Energy Commission data.

Electricity consumers and taxpayers fund capacity charges under power purchase agreements (PPAs), yet much of the resulting equity return flows offshore. Dividends, shareholder loans, technical and management fees and debt service also add to foreign-currency outflows, according to the transaction document.

Opening the equity to pension funds, financial institutions and retail savers will allow a larger share of dividends and capital gains to stay with domestic investors, with some proceeds potentially reinvested in other energy projects.

A sector repairing its balance sheet

Investors will be buying into a sector whose finances have improved markedly over the past year but remain fragile. Returns on any IPP stake depend on payments that flow from the Electricity Company of Ghana (ECG) through the Cash Waterfall Mechanism (CWM) – and for years those payments have fallen well short of what was billed.

IPPs received only 40 to 42 percent of their invoices before recent reforms, Minister for Energy and Green Transition Dr. John Abdulai Jinapor said last week. Government now settles about 100 percent of monthly IPP invoices and allocations under the CWM have risen from GH₵6billion to nearly GH₵15billion, he said.

Government cleared about US$1.47billion in legacy energy-sector debts by end-2025, the Ministry of Finance said in January – with Karpowership, Cenpower, Sunon Asogli and Early Power among the IPPs paid.

Renegotiated agreements with nine IPPs repofiled about US$1.1billion in legacy debt for repayment between 2026 and 2028 and the minister put the state's savings from the renegotiations at US$250million.

The International Monetary Fund (IMF) estimates the sector's financing shortfall at about US$1.4billion for 2025 or 1.2 percent of Gross Domestic Product (GDP) – down from US$1.6billion in 2024 – and projects it will fall to about US$1.1billion this year.

Net payables to IPPs and fuel suppliers declined to US$1.7billion by March 2026 from US$2.1billion at end-2024, while ECG's arrears to the rest of the value chain peaked at US$3.3billion in second-quarter-2025.

The Fund attributes this persistent gap to high collection and distribution losses and costly generation contracts – and has hence urged the authorities to keep adjusting tariffs every quarter. The Public Utilities Regulatory Commission (PURC) cut electricity tariffs by 4.81 percent in April before raising them by 3.49 percent in July.

The renegotiations lowered some contract costs to the state, which may also bear on the earnings available to IPP shareholders. Steadier monthly payments, in contrast, reduce the risk of fresh arrears building up on the plants Chai Energy intends to buy into.

Capital-market context

The proposed offer comes as government seeks to mobilise domestic capital for infrastructure. Since January 2025, public capital markets have raised about GH₵6.79billion for businesses and institutions through equity and debt, according to official figures. Besides the three IPOs, the total includes CalBank's rights issue and private placement of GH₵1.16billion, eight corporate bond issues and two commercial paper transactions.

What will determine success

The benefits will depend on the final structure, valuation of the stakes, operating and payment performance of the underlying plants and depth of domestic demand for a US$300million issue. Dollar-indexed returns also mean the vehicle must earn enough from cedi-paid but dollar-linked PPA revenues to service its own obligations to shareholders.

Greater local ownership will keep a portion of investment income within the economy. It will not however eliminate foreign-currency payments arising from PPAs, offshore borrowing or imported fuel.