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2.2% increase in quarterly dividend for FY 2022 

Mkt Cap £752m | Prem/(disc) 10.3% | Div yield 5.1%

Event

SDCL Energy Efficiency Income Trust has increased its dividend target by 2.2% for FY 2022 (March period end) to 5.62p. The company is currently on track to distribute 5.5p for the period to March 2021 and the uplift is in line with the progressive dividend policy. Cash flow generation from the portfolio has been robust since launch. Operating cash flows generated by the portfolio in the six-month period to September 2020 were £20.0m (5.3p per share), representing dividend cover of 1.9x on dividends declared for the period.

• Interim dividend: Q3 dividend in respect of the three month period ended 31 Dec 2020 of 1.375 pps (XD 11 March 2021).
• Guidance: “target an annual dividend of 5.62 pence per Ordinary Share for the 12 month period commencing 1 April 2021 and a progressive dividend thereafter. The annual dividend target will continue to be paid in equal quarterly instalments.”

Cerno Capital’s Fergus Shaw says that rather than investing in “blue sky” renewables, this trust uses existing technology to deliver cheaper, cleaner and more reliable energy.

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Acquisition activity

SEIT: Mkt Cap £748m | Prem/(disc) 9.8% | Div yield 5.0%

SDCL Energy Efficiency Income has completed the acquisition of a series of portfolios of on-site solar and energy storage projects in the US, together with a 50% interest in Onyx Renewable Partners (first announced in December). SEIT will initially pay $120m, with an incremental $30m expected to be deployed in the coming months as construction progresses on the solar projects. The projects include a 100% interest in four solar and storage portfolios totalling c.175 MW of operational, in-construction and development stage assets. The 50% interest in Onyx provides access to its longer-term pipeline, which is projected to exceed 500MW over the next 5 years. The acquisition was one of the projects identified prior to the recent capital raise and has been financed through cash reserves. Existing project debt finance facilities remain in place post-acquisition.

• Asset: “a series of portfolios of commercial and industrial (“C&I”) on-site solar and energy storage projects in the United States, together with a 50% interest in the platform that created them, Onyx Renewable Partners”
• Consideration: “US$120 million with an incremental US$30 million expected to be deployed in the coming months as construction progresses on solar projects”. The investment is expected to scale up over time as they continue the build out of Onyx’s pipeline.