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Balance sheet clean up in renewables trusts space
Several renewables investment trusts could issue a flood of new shares over the coming months, speculate analysts, after a blitz of project funding.
Greencoat Renewables (GRP), Greencoat UK Wind (UKW) and NextEnergy (NESF) are in the frame, while Foresight Solar (FSFL) is expected to refinance circa £70m of existing debt facilities by the end of June.
‘We have reviewed commitment and leverage levels and conclude that given the increasing levels of leverage, a number of the funds are likely to be looking to issue equity in the first half of 2019,’ says the investment trust team at broker Stifel.
More than £700m has been lavished on various solar and wind farm sites across the UK, Ireland and Sweden since the end of September 2018. That has left the balance sheets of some trusts stretched, prompting an anticipated spell of deleveraging.
While this would in theory cap share price returns in the short term Stifel believes it could also provide investors with discount access to an otherwise booming clean energy industry.
Popular industry trusts John Laing Environmental Assets (JLEN) and The Renewables Infrastructure Group (TRIG) have already fired the starting gun on the process having slashed debt to zero late last year.