Offshore wind disposal & capital allocation update
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1 August 2024
The Renewables Infrastructure Group Limited
"TRIG" or "the Company", a London-listed investment company advised by InfraRed Capital Partners ("InfraRed") as Investment Manager and Renewable Energy Systems ("RES") as Operations Manager.
Disposal of 15.2% stake in Gode offshore wind farm and commencement of share buyback programme
· Sale of 15.2% stake in Gode offshore wind farm for €100m at a 9% premium to carrying value
· Disposals agreed during the past 12 months together total £210m of proceeds across four transactions at an average 11% premium to carrying value
· Continued disciplined approach to capital allocation, enabling both reduction in floating rate borrowings and commencement of £50m buyback programme
Disposal of 15.2% stake in Gode offshore wind farm
TRIG announces the sale of a 15.2% equity interest in the 330MW Gode offshore wind farm in Germany for a consideration of €100m to funds managed by Equitix Investment Management Ltd, subject to clearances and consents. The sale is at a 9% premium to the valuation of the wind farm as at 31 December 2023. TRIG will continue to own a 9.8% stake in the wind farm.
Once completed, TRIG's disposals over the past 12 months, as part of the Managers' active approach to portfolio management, will have raised a total of £210m at an average 11% premium to carrying value.
Capital allocation update and share buyback programme
In February 2024 as part of the 2023 Annual Results, the TRIG Board announced that it was prioritising the use of retained cash and proceeds from asset sales to reduce TRIG's floating rate borrowings under the Company's Revolving Credit Facility ("RCF") to c. £150m during 2024.
Drawings under the RCF as at 30 June 2024 were £334m. Proceeds from the sales of Pallas onshore wind farm (announced on 12 March 2024) and the 15.2% equity interest in Gode are expected to be received in H2 2024 and would reduce TRIG's RCF borrowings to c. £195m.
Given the significant progress made in respect of TRIG's capital allocation priorities and the attractive investment opportunity presented by TRIG's shares trading at a significant discount to the Company's Net Asset Value, the Board has allocated up to £50m to a 12-month share buyback programme that will commence following the release of the 2024 Interim Results.
Based on current cash flow projections, divestments agreed to date, and assuming that c. £25m of the buyback programme is completed in 2024, RCF drawings would reduce from £364m at 31 December 2023 to c.£220m at 31 December 2024. The Investment Manager is progressing additional disposals as well as portfolio-level financing opportunities to enable the reduction of RCF drawings further, and to create greater capacity for future investment activities.
Richard Morse, Chair said:
"The disposals secured by the Managers both enhance TRIG's NAV and create headroom for future growth. As part of our commitment to prudent capital allocation, the Managers continue to appraise attractive investment opportunities, which include share buybacks, and progress selective disposals.
"Considering the Company's strong balance sheet and with the share price trading at a significant discount to the Company's NAV, TRIG's shares represent a compelling investment opportunity. The Board has therefore decided to commence a £50m share buyback programme, providing shareholders with immediate NAV per share accretion."
Minesh Shah, InfraRed said:
"We are pleased with the partial sale of our stake in Gode at a healthy premium to the most recent valuation. Over the past 12 months, we have successfully sold stakes in seven assets for a total of £210m. These sales were agreed at an average 11% premium above the assets' respective valuations, which continues to underscore the disconnect between private and public market valuations for renewables infrastructure."
Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Minesh Shah
Phil George
Mohammed Zaheer
Brunswick +44 (0) 20 7404 5959 / TRIG@brunswickgroup.com
Mara James
Investec Bank Plc +44 (0) 20 7597 4000
Lucy Lewis
Tom Skinner
BNP Paribas +44 (0) 20 7595 9444
Virginia Khoo
Carwyn Evans
Notes
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading London-listed renewable energy infrastructure investment company. The Company seeks to provide shareholders with an attractive long-term, income-based return with a positive correlation to inflation by focusing on strong cash generation across a diversified portfolio of predominantly operating projects.
TRIG is invested in a portfolio of wind, solar and battery storage projects across six countries in Europe with aggregate net generating capacity of 2.8GW; enough renewable power for 1.9 million homes and to avoid 2.3 million tonnes of carbon emissions per annum. TRIG is seeking further suitable investment opportunities which fit its stated Investment Policy.
Further details can be found on TRIG's website at www.trig-ltd.com.
Investment Manager
InfraRed Capital Partners is an international infrastructure investment manager, with more than 190 professionals operating worldwide from offices in London, New York, Sydney, Seoul and Madrid. Over the past 25 years, InfraRed has established itself as a highly successful developer and custodian of infrastructure assets that play a vital role in supporting communities. InfraRed manages US$13bn of equity capital1 for investors around the globe, in listed and private funds across both income and capital gain strategies.
A long-term sustainability-led mindset is integral to how InfraRed operates as it aims to achieve lasting, positive impacts and deliver on its vision of Creating Better Futures. InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and has achieved the highest possible PRI rating2 for its infrastructure business for seven consecutive assessments, having secured a 5-star rating for the 2023 period3. It is also a member of the Net Zero Asset Manager's Initiative and is a TCFD supporter.
InfraRed is part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. InfraRed represents the infrastructure equity arm of SLC Management, which also incorporates BentallGreenOak, a global real estate investment management adviser, and Crescent Capital, a global alternative credit investment asset manager.
Further details can be found on InfraRed's website at www.ircp.com.
1. Uses 5-year average FX as at 31st March 2024 of GBP/USD of 1.2839; EUR/USD 1.1179. EUM is USD 12.927m .
2. Principles for Responsible Investment ("PRI") ratings are based on following a set of Principles, including incorporating ESG issues into investment analysis, decision-making processes and ownership policies. More information is available at https://www.unpri.org/about-the-pri.
3. In the 2023 Principles for Responsible Investment ("PRI") assessment, InfraRed achieved a 5 star rating for the Policy Governance and Strategy and Infrastructure and a 4 star rating for the newly created Confidence Building Measures. Please find InfraRed's report available for download on our website here: https://www.ircp.com/sustainability/
Operations Manager
TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's largest independent renewable energy company.
RES is the world's largest independent renewable energy company, working across 24 countries and active in wind, solar, energy storage, biomass, hydro, green hydrogen, transmission, and distribution. An industry innovator for over 40 years, RES has delivered more than 24GW of renewable energy projects across the globe and plans to bring more than 22GW of new capacity online in the next five years.
As a service provider, RES has the skills and experience in asset management, operations and maintenance (O&M), and spare parts - supporting 41GW of renewable assets across 1,300 sites. RES brings to the market a range of purposeful, practical technology-based products and digital solutions designed to maximise investment and deployment of renewable energy. RES is the power behind a clean energy future where everyone has access to affordable zero carbon energy bringing together global experience, passion, and the innovation of its 4,500 people to transform the way energy is generated, stored and supplied.
Further details can be found on the website at www.res-group.com.
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