BY IPE STAFF 19 OCTOBER 2020

SDCL Energy Efficiency Income Trust is buying Swedish regulated gas distribution network company Värtan Gas Stockholm for £100m (€109m).

The UK-listed investment firm said the acquisition will be funded from existing cash reserves and debt facilities, which include the capital raised in the recent equity fundraising and a £30m short term acquisition facility that has been added to SDCL’s current £40m revolving credit facility.

Värtan Gas 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.

Jonathan Maxwell, CEO and founder of SDCL’s investment manager Sustainable Development Capital, said: “SDCL is making an investment in an important infrastructure asset for the City of Stockholm. It provides an attractive opportunity for SDCL 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.”

By Sam Kerr 19 Oct 2020

SDCL Energy Efficiency Income Trust (SEEIT), the UK listed energy efficiency investor, is buying Swedish regulated gas distribution network Värtan Gas Stockholm, with the acquisitive firm already completing an increased £105m equity sale and small debt raise to part finance the purchase.

Last week SEEIT set out to raise £80m for the acquisition of “an established, operational and regulated energy network in a major Western European city”.

The acquisition turned out to be Värtan Gas Stockholm.

The Swedish firm owns and operates Stockholm’s regulated gas grid, around 70% of which is sourced from locally produced biogas, and supplies and distributes to over 58,000 customers in Stockholm.

The capital raise was opened on Tuesday, October 13, and closed on Friday, October 16. Jefferies was sole global coordinator in the deal.

The company was inundated with investor interest over the three days of bookbuild and as such decided to grow the offering to £105m.

The decision to grow the offering is the latest sign of huge investor demand for any EMC transaction with an M&A angle.

“There are a lot of capital raises left to come, and while rescue rights issues are a big part of the pipeline, anything with a growth or acquisition angle is still proving to be very popular among shareholders,” said a senior ECM syndicate banker.

The new shares were sold at a fixed price of £1.05 a share a 5.4% discount to SEEIT’s closing price on October 12 but a 4% premium to its net asset value.

Not only was the deal popular because of the use of proceeds, the offering was also attractive for yield hunting investors.

SEEIT is targeting a dividend target of 5.5p per share for the financial year ending March 31, 2021, which represents a dividend yield of 5.2% for investors who took part in the capital raise.

Companies that still aim to pay out a regular dividend have been hugely popular in equity capital markets this year because of the huge number of FTSE companies that have either suspended or delayed dividend payments to shareholders.

The VGS deal will be funded from existing cash reserves and debt facilities, which include the capital raised in last week’s equity fundraising as well as a £30m short term acquisition facility that has been added to SEEIT’s current £40m revolving credit facility.

VGS’s existing project debt finance facilities, which are equivalent to around £26m, will remain in place.

“We are grateful for the strong support we have received from both new and existing investors. Given the strength of investor demand and the progress we have made with our near-term acquisition pipeline, we have increased the amount raised to £105m from £80m,” said Tony Roper, chairman of SDCL Energy Efficiency  Income Trust last week

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A sub-sector in energy efficiency funds has emerged with Triple Point Energy Efficiency Infrastructure Company (TEEC) raising £100m and confirming it will list on the London Stock Exchange on Monday.

The new investment trust will sit alongside SDCL Energy Efficiency Income Trust (SEIT) which raised the same amount in December 2018 when it became the first investment company to specialise in running projects that save companies energy bills and cut their carbon emissions.

Not to be outdone by its new rival, yesterday the now £452m SEIT announced its third share issue since launch. It wants to raise £80m for its pipeline of new investments and is offering with new shares at 105p, a 4% premium to the last reported net asset value on 31 March and a 5.4% discount to their closing price on Monday.

Although Triple Point failed to hit its upper target of £200m it will be relieved to have achieved half that given the current stock market uncertainty and the fact that increasingly trusts below £100m fail to attract wealth managers which are the sector’s biggest buyers.

Like SEIT, TEEC is primarily an income fund, aiming to generate a 5.5% dividend yield on its 100p share price in its first year, as part of an annual total return to shareholders of 7-8%.

The successful flotation of another ‘alternative income’ fund contrasts with the Tellworth UK smaller companies trust which had to postpone its launch this month after failing to attract £100m, extending a trend of recent years which has seen infrastructure, debt and specialist property trusts attract much more money than conventional equity funds.

A total of 100m TEEC shares will start trading in London on Monday after the initial public offer (IPO) organised by RBC Capital Markets, Winterflood Securities and Akur Capital.

Although fund manager Triple Point is best known for its Social Housing (SOHO) real estate investment trust,  currently seeking to raise £70m in a fund raising, it has a ten-year record of investing in energy efficiency where it currently manages over £1.5bn in combined heat and power (CHP) projects, hydroelectricity, solar power and reserve peaking plants, areas where the new trust currently has a list of nearly £300m of eligible investments it could make.

For his part SEIT fund manager Jonathan Maxwell said he had over £100m of investments on which he was in exclusive talks and a further £150m at an advanced stage of due diligence.

Chairman Tony Roper said: ‘This proposed capital raise builds on the strong momentum SEIT has achieved over the last two years. Energy efficiency is critically important in global efforts to address the climate emergency and has become an increasing focus for investors. The proceeds of this placing will allow SEIT to continue to invest in this important and growing market whilst also delivering additional scale and diversification to shareholders.’

Investors who buy shares in the placing will be entitled to receive the next quarterly dividend declared in November. SEIT has a dividend target of 5.5p per share for the financial year to 31 March 2021, which offers a dividend yield of 5.2% at the 105p placing price.

Stifel analyst Max Haycock was surprised at the timing of the equity issue a month before half-year results that would have up-to-date financial information. ‘This is SDCL’s third equity issue in a year and the clear message is don’t buy the shares in the market on a high premium when there could be an equity issue around the corner. The shares traded at 111p yesterday [Monday] and the equity issue is at 105p. This habit of frequent equity issuance may temper the premium going forward.

The shares are half a penny up at 106.5p this morning.

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• Placing: SDCL Energy Efficiency Income is seeking to raise £80m through the issue of 76.2m new ordinary shares at 105.0p. The issue price represents a 5.4% discount to last night’s closing price of 111p and an 8.1% premium to the 31 March NAV, after adjusting for two interim dividends totalling 3.8p paid since March. The proceeds will be used to fund further acquisitions from the manager’s pipeline of investment opportunities, of which more than £100m of opportunities are under exclusivity and a further £150m is at advanced stages of due diligence. The manager expects 30 September asset valuations to be similar to those at 31 March, given the portfolio has performed in line with expectations since March. New shares form the placing will be entitled to receive the third quarter dividend which is expected to be declared in November.
• Background: SDCL Energy Efficiency Income last raised capital in June with a £110m placing that was upscaled from an initial target of £60m to meet investor demand. Since this point the company has committed £50m to electric vehicle charging infrastructure in the UK, in addition to acquiring a portfolio of CHP projects for an initial £5m and an energy efficiency project in Singapore for £2m. The fund has grown through a series of placings since it launched with IPO proceeds of £100m in December 2018. As a result, it now has a market cap of £473m. Energy efficiency and storage remains an in vogue sector with investors, particularly those with a sustainability focus. We note that Triple Point recently announced its intention to raise £200m for the IPO of a new investment company, Triple Point Energy Efficiency Infrastructure, which will invest in a diversified portfolio of energy efficiency assets in the UK that have a positive environmental impact and facilitate the transition to a low carbon economy.

Posted on Tuesday, 13 October 2020 10:02

SDCL Energy Efficiency Income Trust (SEEIT) is raising GBP 80.00 million under an existing share issue programme announced in June. The UK-closed-ended investment company is selling 76.20 million new stocks at 105.00 pence apiece, representing a 4.0 per cent premium to its net asset value of 101.00 pence, as at 31st March 2020. It noted the price is also a discount of 5.4 per cent to the close of 111.00 pence yesterday, being the last trading day prior to this announcement. Chairman Tony Roper said: “This proposed capital raise builds on the strong momentum SEEIT has achieved over the last two years. “Energy efficiency is critically important in global efforts to address the climate emergency and has become an increasing focus for investors. “The proceeds of this placing will allow SEEIT to continue to invest in this important and growing market whilst also delivering additional scale and diversification to shareholders.” Chief executive Jonathan Maxwell stated money raised will fund investments and new acquisitions. He added SEEIT already has its eye on opportunities that are either under exclusivity or at an advanced stage of negotiation and due diligence. As at 31st March 2020, the company had a portfolio of 26 assets – across technology, geography and credit counterparty – with an aggregate value of GBP 320.00 million. Since the end of March and a GBP 110.00 million capital increase in June 2020, SEEIT has acquired, or committed to buying, GBP 57.00 million-worth of assets. This includes ultra-fast electric vehicles charging stations in the UK; combined heat and power assets installed at various hotels in the country; and energy efficiency projects in Singapore. Zephyr, the M&A database published by Bureau van Dijk, shows 993 capital increases by UK-based companies have been announced in 2020 to date. SEEIT’s latest cash call currently ranks 98th by value.

SDCL Energy Efficiency Income Trust plc (SEEIT), managed by Sustainable Development Capital LLP, intends on raising £80 million through an issue of new ordinary shares at a price of 105.0 pence per ordinary shares.

Full article here: https://cleanenergypipeline.com/news/seeit-floats-80-million-capital-raise/

Energy efficiency investor SDCL Energy Efficiency Income Trust launched a share placing to raise £80 million to fund investment opportunities.

New shares in the company were being offered at 105p per share, representing a 5.4% discount to its closing price on Monday.

The company said it was pursuing opportunities including investments under exclusivity with an aggregate equity value of over £100 million.

These included an established operational European regulated energy network in a major Western European city, and a pipeline of follow-on investments from the company’s existing portfolio.

SDCL Energy Efficiency also cited investments at an advanced stages of due diligence, or in bilateral negotiation , with an aggregate equity value of over £150 million.

These included a portfolio of commercial and industrial on-site solar projects in the US and further investment in combined heat and power projects in the UK.

At 9:40am: [LON:SEIT] share price was -4.5p at 106.5p