As one of the first STOs (security token offerings) in the hydrocarbon resource sector, Aziza Project LLC has had to navigate numerous regulatory hurdles. Throughout the evolution of the fund, a clear vision of powering and connecting southern Africa through localized, ethical oil and gas projects has driven things forward. The realization of its vision hinges on the successful execution of a differentiated and professional crypto offering, which is geared toward institutional investors.
The Aziza Coin is structured in such a way that the token will appeal readily to institutional buyers like hedge funds, who have gone from being a relatively minor player in ICOs to representing the lion’s share of ICO investment (http://ibn.fm/812j3) – a shift in the ICO market that is especially true, now that the sector has burnt off a lot of the speculative fervor. The reduced market volatility over the summer of 2018 brought in more institutional investors (http://ibn.fm/GqhXi), even as clear signs emerge that overall crypto adoption is increasing among both regular consumers and seasoned investors.
Essentially a tokenized equity, Aziza Coin’s initial asset is 20 percent ownership of Africa New Energies (ANE), which holds the rights to a massive 8,494-square-mile concession in Namibia that is nearly the size of New Hampshire. With a gross unrisked prospective resource of some 1.6 billion BOE (barrels of oil equivalent) and advanced exploration technologies (http://ibn.fm/QodAh) such as amplified geochemical imaging and the combination of hydrocarbon seepage analysis with passive seismic tomography, ANE has its sights set on becoming one of the world’s lowest cost finders of hydrocarbons. ANE estimates that its holistic multi-layer exploration approach could yield an above average discovery rate on wells drilled post discovery and is targeting dry-well drilling costs, which are half that of the average cost per foot in Texas.
The Aziza Coin offering, begun in October 2018, is seeking to raise $60 million for a 10-well drilling program on the concession. With 41 billion barrels of oil and 319 trillion cubic feet of gas undiscovered in sub-Saharan Africa (http://ibn.fm/Gb4mB) and an ongoing oil boom that has seen rig counts jump back up to 2015 levels, as sector majors and wildcatters alike continue snapping up explorations rights and signing deals, the iron is now ready to strike for Aziza’s innovative funding model.
The Aziza Project team has spent the last six months or more diligently crafting the ideal formulation and structure for its funding model. The project started out by interviewing some of the best ICO advisory groups in the game today for actionable intelligence, most of which recommended taking the easy route and simply doing a utility token. However, with the team’s commitment to structuring an offering that would reward token holders as the sole economic beneficiaries of the project and a CEO who is the former finance director for Unilever’s $25 billion-plus beauty and personal care division, Aziza decided to take the time and do it the right way, while also helping to carve a path to mainstream institutions and crypto investors for such offerings.
The Aziza Project began by pursuing an Isle of Man foundation, before running into legal and regulatory pitfalls that subsequently caused the team to pursue migration to other jurisdictions such as Switzerland, Gibraltar, Malta and the UK (where the structure would’ve been deemed a collective investment scheme, requiring costly approvals). After running aground with its UK plans, the team, well behind its initially road-mapped schedule, determined that it would be best to simply fully embrace U.S. securities laws. The team then set about resolving the tax implications for non-U.S. investors by turning to the Cayman Islands as a jurisdiction. As a Cayman investment fund, the sale could still take place in compliance with U.S. securities laws, but without the potential tax implications for non-U.S. investors.
The project decided on a Wall Street lawyer who understands the traditional securities space and set a forward trajectory focused on making the project attractive to high net worth and institutional investors, hedge funds and VC companies in the crypto space. The final hurdle was discovering an exemption to the Investment Companies Act of 1940 for funds investing solely in oil, gas or mineral extraction that allowed Aziza to up the potential investor pool from 100 to 2,000.
Acquiring the capital for drilling via asset-backed security token ICO is an innovative approach to hydrocarbon development and is the kind of rapid on-ramp approach that could really catch fire in Africa. Investors will likely also be attracted to features such as the absence of fees or administrative charges, and, because the Aziza Coin is a kind of borderless alternative to securities, it also possesses a distinct geographical advantage when it comes to enticing large investors from all over the world. Furthermore, the unique structure of the Aziza Project’s offering eliminates a lot of the intermediaries and middle men that could otherwise hamper liquidity and potential returns.
It seems like the Aziza Project could go from one asset to multiple assets as investors catch on and the initial Namibia concession moves forward, especially in Africa, where over 600 million people still live without power and there is substantial unmet need for localized energy production in undeveloped areas. Such localized projects could be just the ticket for offsetting diminishing foreign aid to Africa from industrialized countries, which is being supplanted by an emphasis on trade. This is particularly true when it comes to increasing the benefits to local populations and minimizing the harm from such hydrocarbon development (http://ibn.fm/JzvVQ), as localized projects may be better for Africa (http://ibn.fm/j0YtQ).
For more information, visit the company’s website at www.Aziza.io
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