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Octopus seeks £250m for new green infrastructure trust
Demonstrating the buoyant state of the infrastructure market, Octopus Renewables Infrastructure Trust is seeking to raise up to £250m through a placing, offer for subscription and intermediaries offer and list on London’s Main Market on 10 December.
Infrastructure and renewable energy trusts’ enduring popularity with investors is reflected in premiums to net asset value (NAV) and they continue to tap the markets for fresh funds to deploy, with climate change concerns an increasing priority for governments and the public alike.
Against this backdrop, this new trust will seek to provide an attractive and sustainable level of income, with an element of capital growth.
It plans to invest in a geographically and technologically diversified spread of renewable energy assets in Europe and Australia. The focus is on onshore wind farms and photovoltaic solar (solar PV) parks, although the fund will also consider clean energy-related assets.
Importantly, this new trust is targeting higher NAV growth by investing in already operating, in construction and construction ready assets. Investment manager Octopus has identified a pipeline of roughly £2.8bn of assets, with low correlation to the wider stock market, that could be suitable for acquisition.
One of the fund’s key differentiators is the expertise of Octopus Renewables, a 70-strong team of pros with over £3bn of energy assets under management.
Octopus, the company behind household supplier Octopus Energy, is targeting a net total shareholder return of 7% to 8% per annum over the medium to long term with the new trust, with an initial annualised dividend yield of 3% of the IPO price, rising to 5% in 2021 and progressive thereafter, with dividends paid quarterly.
Matt Setchell, co-head of Octopus Renewables, says that ‘Given the effects of global climate change which are increasing visible, it is clear that the decisions we make now with our investments, will impact future generations. This fund is an opportunity to contribute to positive change.’
Octopus Renewables is therefore ‘looking to accelerate the transition to a future powered by renewable energy by unlocking investment into climate saving assets. As our track record demonstrates, we are committed to delivering strong shareholder returns while investing in something meaningful.’
INFRASTRUCTURE FUNDS RAISING CASH
Companies that have recently raised fresh funds include The Renewables Infrastructure Group (TRIG), which recently raised £227.6m, 3I Infrastructure (3IN), which pulled in £222.8m and SDCL Energy Efficiency Income (SEIT), which attracted an additional £100m of funding. Elsewhere, HICL Infrastructure (HICL) wants to raise a further £100m and Greencoat Renewables (GRP) is also issuing more shares to finance further acquisitions.