Oversubscription: The placing of New Ordinary Shares pursuant to the existing Share Issuance Programme announced on 13/10/20 has received a strong level of support from investors and has been significantly oversubscribed.

Size increased: Taking into account the strength of the near-term acquisition pipeline, as well as further positive progress with the negotiations to acquire an established, operational and regulated energy network in a major Western European city, the Board has determined to increase the size of the Placing from gross proceeds of £80m to £105m by re-allocating New Ordinary Shares available under the Share Issuance Programme to the Placing. Accordingly, the Placing will result in the issue of 100m New Ordinary Shares at the Placing Price of 105p. As applications for the New Ordinary Shares have exceeded the gross proceeds accepted, a scaling back exercise has taken place. (Analyst: Max Haycock)

SDCL Energy Efficiency Income – £100m Acquisition of Stockholm gas distribution network

Acquisition: The Trust has agreed to acquire a 100% interest in Värtan Gas Stockholm AB (“VGSAB”), the ultimate owner of the established, operational and regulated gas distribution network for Stockholm, Sweden, involving an equity investment of c.£100m.

Biogas: The VGSAB group (the “Group”) owns and operates Stockholm’s regulated gas grid, the majority of which is sourced from locally produced biogas (c.70%). The Group supplies and distributes to over 58,000 residential, commercial, industrial, transportation and real estate customers in Stockholm. SEEIT intends to work towards increasing the proportion of green gas in the network to 100% over time. The Group’s revenues, which are primarily regulated, are predominantly based on fixed tariffs with relatively low sensitivity to customer demand or consumption.

Mkt Cap £452m | Prem/(disc) 9.1% | Div yield 5.2%

Event

SDCL Energy Efficiency Income Trust has agreed a £100m investment in Värtan Gas Stockholm AB, the owner of Stockholm’s regulated gas distribution network. The investment follows the announcement on Friday that the company raised £105m of additional equity (£80m target). 

Locally produced biogas provides 70% of the gas for the network and SEIT’s aim is to increase the proportion of green gas in the network to 100% over time. Värtan Gas Stockholm AB aims to reduce and reuse waste gases at the point of production (e.g. waste water treatment plants) and at the point of use. 

The revenues are primarily regulated and are mainly based on fixed tariffs with low sensitivity to customer demand of consumption. The manager is also aiming to drive revenue growth in opportunities such as serving new transport customers. The acquisition will be funded from existing cash resources and debt facilities. Värtan Gas Stockholm AB also has project debt of £26m. 

In addition to the £100m investment, the manager is in advanced negotiations to acquire £150m of assets including a portfolio of commercial and industrial on-site solar projects in the US and high efficiency combined heat and power projects for commercial, industrial and public sector buildings in the UK. 

SDCL Energy Efficiency’s placing raised £105m at 100p per share against its target of £80m. Even with the expanded target, the issue was significantly oversubscribed. The announcement on Friday said that there had been “further positive progress with the negotiations to acquire an established, operational and regulated energy network in a major Western European city“.

It turns out that the fund has now agreed to spend £100m to acquire a 100% interest in Värtan Gas Stockholm, the ultimate owner of the established, operational and regulated gas distribution network for Stockholm, Sweden.

Värtan Gas Stockholm owns and operates Stockholm’s regulated gas grid, the majority – about 70% – of which is sourced from locally produced biogas. The group supplies and distributes to over 58,000 residential, commercial, industrial, transportation and real estate customers in Stockholm. It helps to reduce pollution and greenhouse gas emissions by reducing and reusing waste gases both at the point of production, for example at municipal waste water treatment plants and, at the point of use, through the displacement of natural gas in buildings and diesel in transport. SDCL Energy Efficiency intends to work towards increasing the proportion of green gas in the network to 100% over time. This will help Stockholm and Sweden towards their goal of being carbon neutral by 2040.

Revenues are mostly regulated and are predominantly based on fixed tariffs with relatively low sensitivity to customer demand or consumption. The manager believes that, in addition to existing revenues, there are opportunities for growth, for example from serving new transport customers, as commercial and municipal vehicle fleets continue to switch to cleaner fuels, including biogas. In addition, there are opportunities to deliver new energy and infrastructure services to customers by developing the network and through vertical integration.

The investment is expected to meet and exceed SEEIT’s total returns targets and to further support its progressive dividend policy.

The deal will be funded using a £30m short term acquisition facility, that has been added to SEEIT’s current £40m revolving credit facility, and cash (including some of the cash raised last week). Värtan Gas’s existing project debt finance facilities, which are equivalent to about £26m, will remain in place.

SDCL Energy Efficiency Income Trust, a UK-listed investment company that invests exclusively in the energy efficiency sector, has agreed to acquire a 100% interest in Värtan Gas Stockholm AB (“VGSAB”), the ultimate owner of the established, operational and regulated gas distribution network for Stockholm, Sweden, involving an equity investment of approximately £100 million.

It is an essential infrastructure service that helps to reduce pollution and greenhouse gas emissions by reducing and reusing waste gases both at the point of production, for example at municipal waste water treatment plants and, at the point of use, through the displacement of natural gas in buildings and diesel in transport. SEEIT intends to work towards increasing the proportion of green gas in the network to 100% over time. The grid is an essential component of an integrated system, aligned with national and regional strategies to attain carbon neutrality by 2040.

The Group’s revenues, which are primarily regulated, are predominantly based on fixed tariffs with relatively low sensitivity to customer demand or consumption. The Investment Manager believes that, in addition to existing revenues, there are opportunities for growth, for example from serving new transport customers, as commercial and municipal vehicle fleets continue to switch to cleaner fuels, including biogas. In addition, there are opportunities to deliver new energy and infrastructure services to customers by developing the network and through vertical integration.

The investment is expected to meet and exceed SEEIT’s total returns targets and to further support its progressive dividend policy. The acquisition will be funded from existing cash reserves and debt facilities, which include the capital raised in the recent equity fundraising and a £30 million short term acquisition facility that has been added to SEEIT’s current £40 million revolving credit facility. VGSAB’s existing project debt finance facilities, which are equivalent to c.£26 million, will remain in place.

Completion of the acquisition is expected in the coming weeks, after satisfaction of certain customary conditions and consents.

CEP Staff, 19 October 2020

SDCL Energy Efficiency Income Trust plc (SEEIT), managed by Sustainable Development Capital LLP, has raised £105 million in an expanded issuance of new ordinary shares, owing to the ‘strong support’ demonstrated by investors.

Find article here (paywalled): https://cleanenergypipeline.com/news/seeit-raises-105-million-acquires-swedish-green-gas-network/

Sophie Mellor, 19 October 2020

LSE-listed SDCL Energy Efficiency Income Trust (SEEIT) has acquired Swedish gas distribution firm Värtan Gas Stockholm

Full article here (paywalled): https://ijglobal.com/articles/150738/seeit-acquires-swedish-gas-distributor

Paul McGowan, 19th Oct 2020

(Alliance News) – SDCL Energy Efficiency Income Trust PLC said Monday it has agreed to buy 100% interest in Vartan Gas Stockholm AB, the ultimate owner of the gas distribution network for Stockholm, Sweden.

SDCL said the deal will cost about GBP100 million. The acquisition will be funded from existing cash reserves and debt facilities, which include the capital raised in its recent GBP105 million equity fundraising and a GBP30 million short term acquisition facility that has been added to SDCL’s current GBP40 million revolving credit facility.

Vartan owns and operates Stockholm’s regulated gas grid, the majority of which is sourced from locally produced biogas.

“The group supplies and distributes to over 58,000 residential, commercial, industrial, transportation and real estate customers in Stockholm,” SDCL added.

It continued: “It is an essential infrastructure service that helps to reduce pollution and greenhouse gas emissions by reducing and reusing waste gases both at the point of production, for example at municipal waste water treatment plants and, at the point of use, through the displacement of natural gas in buildings and diesel in transport.”

SDCL said it hopes to increase the proportion of green gas in the network to 100% “over time”. The grid is an “essential component of an integrated system”, SDCL said, and is aligned with national and regional strategies to attain carbon neutrality by 2040.

SDCL said Vartan’s revenue, which are primarily regulated, are predominantly based on fixed tariffs with “relatively low sensitivity to customer demand or consumption”.

“The investment manager believes that, in addition to existing revenues, there are opportunities for growth, for example from serving new transport customers, as commercial and municipal vehicle fleets continue to switch to cleaner fuels, including biogas,” SDCL said.

“In addition, there are opportunities to deliver new energy and infrastructure services to customers by developing the network and through vertical integration.”

SDCL believes the investment will meet and exceed its total returns targets and further support its progressive dividend policy.

The deal is expected to complete in the coming weeks.

Shares in SDCL Energy Efficiency Income Trust were 0.3% higher in London on Monday at 106.30 pence each.

SDCL Energy Efficiency Income Trust (SEEIT), the first UK-listed investment company of its kind to invest exclusively in the energy efficiency sector, has agreed to acquire a 100 per cent interest in Värtan Gas Stockholm AB (VGSAB), the ultimate owner of the established, operational and regulated gas distribution network for Stockholm, Sweden, involving an equity investment of approximately GBP100 million.

VGSAB is an essential infrastructure service that helps to reduce pollution and greenhouse gas emissions by reducing and reusing waste gases both at the point of production, for example at municipal waste water treatment plants and, at the point of use, through the displacement of natural gas in buildings and diesel in transport. SEEIT intends to work towards increasing the proportion of green gas in the network to 100 per cent over time. The grid is an essential component of an integrated system, aligned with national and regional strategies to attain carbon neutrality by 2040.

The Group’s revenues, which are primarily regulated, are predominantly based on fixed tariffs with relatively low sensitivity to customer demand or consumption. The Investment Manager believes that, in addition to existing revenues, there are opportunities for growth, for example from serving new transport customers, as commercial and municipal vehicle fleets continue to switch to cleaner fuels, including biogas. In addition, there are opportunities to deliver new energy and infrastructure services to customers by developing the network and through vertical integration.

The investment is expected to meet and exceed SEEIT’s total returns targets and to further support its progressive dividend policy.

The acquisition will be funded from existing cash reserves and debt facilities, which include the capital raised in the recent equity fundraising and a GBP30 million short term acquisition facility that has been added to SEEIT’s current GBP40 million revolving credit facility. VGSAB’s existing project debt finance facilities, which are equivalent to cGBP26 million, will remain in place.

Completion of the acquisition is expected in the coming weeks, after satisfaction of certain customary conditions and consents.

Commenting on the acquisition, Jonathan Maxwell, CEO and Founder of Sustainable Development Capital, says: “SEEIT is making an investment in an important infrastructure asset for the City of Stockholm. It provides an attractive opportunity for SEEIT to invest in an established energy network that helps with greenhouse gas emission reductions and for SEEIT to help make it greener. The operational investment offers the opportunity for an attractive level of income and for significant growth over the medium to long term. We are pleased to agree this investment immediately following our successful fund-raising.”

PRESS RELEASE

SDCL Energy Efficiency Income Trust (SEEIT) has agreed to pay £100 million ($129 million) to acquire a 100 percent interest in Vartan Gas Stockholm AB (VGSAB), the owner of the established, operational and regulated gas distribution network for Stockholm, Sweden.

The VGSAB group owns and operates Stockholm’s regulated gas grid, 70 percent of which is sourced from locally produced biogas. The group supplies and distributes to more than 58,000 residential, commercial, industrial, transportation and real estate customers in Stockholm.

It is an essential infrastructure service that helps to reduce pollution and greenhouse-gas emissions by reducing and reusing waste gases both at the point of production — for example at municipal wastewater treatment plants — and at the point of use, through the displacement of natural gas in buildings and diesel in transport.

SEEIT intends to work toward increasing the proportion of green gas in the network to 100 percent, over time. The grid is an essential component of an integrated system, aligned with national and regional strategies to attain carbon neutrality by 2040.

The group’s revenues, which are primarily regulated, are predominantly based on fixed tariffs with relatively low sensitivity to customer demand or consumption. The investment manager believes that, in addition to existing revenues, there are opportunities for growth and opportunities to deliver new energy and infrastructure services to customers by developing the network and through vertical integration.

The acquisition will be funded from existing cash reserves and debt facilities, which include the capital raised in the recent equity fundraising and a £30 million ($38 million) short-term acquisition facility that has been added to SEEIT’s current £40 million ($51 million) revolving credit facility. VGSAB’s existing project debt finance facilities, which are equivalent to £26 million ($33 million), will remain in place.

“SEEIT is making an investment in an important infrastructure asset for the City of Stockholm,” said Jonathan Maxwell, CEO and founder of Sustainable Development Capital. “It provides an attractive opportunity for SEEIT to invest in an established energy network that helps with greenhouse gas emission reductions and for SEEIT to help make it greener.”

SEEIT is the first U.K. listed company of its kind to invest exclusively in the energy-efficiency sector. Since the IPO, SEEIT has now made nine investments and commitments in a diversified portfolio of distributed generation and energy-efficiency projects totaling £500 million ($645 million).The projects are primarily located in the United Kingdom, Europe and North America, and they include inter alia, a portfolio of cogeneration assets in Spain; a portfolio of recycled energy and cogeneration projects in the United States; and, most recently, investments and commitments in operational and construction assets in the United Kingdom and Singapore.