Proposed Change to Investment Policy and Placing
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.
This announcement has been determined to contain inside information for the purposes of the market abuse regulation (EU) No.596/2014.
This announcement is an advertisement and not a prospectus. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in the SIP Prospectus (as defined herein). This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction in which the same would be unlawful. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
Investec Bank plc (Investec), which is authorised in the United Kingdom by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, and Liberum Capital Limited (Liberum and together with Investec, the Joint Bookrunners), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, are acting exclusively for the Company in connection with the matters described in this announcement and are not acting for or advising any other person, or treating any other person as their respective client, in relation thereto and will not be responsible for providing the regulatory protection afforded to their respective clients or advice to any other person in relation to the matters contained herein. This does not exclude any responsibilities or liabilities of either of the Joint Bookrunners under Financial Services and Markets Act 2000 (FSMA) or the regulatory regime established thereunder.
The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by InfraRed Capital Partners Limited solely for the purposes of section 21(2)(b) of FSMA.
The Renewables Infrastructure Group Limited (the "Company" or "TRIG")
Proposed change in Investment Policy and publication of Circular and Supplementary Prospectus in connection therewith and further issue of equity
27 September 2019
In the Company's interim report for the six months ended 30 June 2019, the Chairman stated that the Board was keeping the non-UK investment limit in the Company's Investment Policy under review, given the significant developments in the renewables market in the UK and mainland Europe as the asset class has evolved since the Company launched in 2013. The Board of TRIG announces that it has today published a circular (the Circular) convening a general meeting to be held on 17 October 2019 (the Extraordinary General Meeting) in order to seek shareholder approval for a proposed change to the Company's Investment Policy which would increase the current 50 per cent. limit on investment in Europe (ex UK) to 65 per cent. of portfolio value, in all cases, measured at the time of investment (the Proposal).
In addition, the Company announces that it is proposing to issue further New Ordinary Shares under the Company's Share Issuance Programme (the Issue). The Company put in place a share issuance programme on 7 March 2019 pursuant to which, over a 12 month period, the Company is able to issue up to 450 million New Ordinary Shares (the Share Issuance Programme), 265 million of which have been issued. The Issue will be a Placing Only Issue for the purposes of the Share Issue Programme and will be made pursuant to the Share Issuance Programme prospectus comprising the summary, registration document and securities note published on 7 March 2019, as supplemented by a first supplementary prospectus dated 7 August 2019 in respect of publication of the Company's Interim Report for the six months ended 30 June 2019 and also by the supplementary prospectus to be published today, 27 September 2019 in respect of the proposed change to the Company's investment policy (the Second Supplementary Prospectus, and together with the summary, registration document, securities note and the first supplementary prospectus, the SIP Prospectus).
PROPOSED CHANGE OF INVESTMENT POLICY
Developments in European renewables
In the UK, new utility scale solar developments ceased being eligible for support in the form of renewable obligation certificates (ROCs) from March 2015, whilst new onshore wind energy projects ceased being eligible for ROCs from May 2016. The ROC scheme closed for all technologies in March 2017. A replacement support mechanism was introduced, called the Contract for Difference regime (CfD), in which, after limited initial Government support, new onshore wind and solar projects have not generally been able to participate.
As a consequence, going forward, under current policy the substantial majority of future subsidy-based renewables developments in the UK are likely to be in offshore wind, with the UK expected to add a further 15GW1 of offshore wind by 2030 by way of a small number of increasingly large wind farms. The size of offshore projects in the UK means that the Company's investments are likely to comprise minority interests; and given the limited deal flow in onshore wind and solar in the UK, when such projects do come to the secondary market, they may attract scarcity premia.
At the same time, mainland European renewables markets have continued to evolve. In the Northern European markets in which TRIG has invested, a number of countries (such as France, Ireland and Germany) still have robust support regimes for onshore wind and solar projects and deal flow remains significant. Elsewhere in mainland Europe, falling capital costs, favourable weather conditions and the availability of land space to allow large-scale renewables projects, have resulted in renewable energy assets being developed at attractive risk adjusted returns without recourse to subsidies. This can be evidenced by TRIG's recent acquisitions of onshore wind projects in Scandinavia and by the development of solar projects in Iberia.
The cumulative effect of these factors is that the UK is expected to see more than 20GW2 of growth to 2030, predominantly in offshore wind, while mainland European markets are expected to see more than 100GW3 of renewables development, including more than 20GW2 of solar expected to be developed in Iberia and significant volumes of onshore wind across Northern Europe.
At the time of the Company's IPO, the market for renewables was entirely subsidised and it was envisaged that UK ROCs would remain the bedrock of the portfolio. However, with the policy changes in the UK set out above, and the rapid evolution of subsidy-free projects in mainland Europe, the Investment Manager is now able to combine, on a portfolio basis, European projects with subsidies (such as Feed-in Tariffs and CfDs) with unsubsidised European projects to achieve returns at least in line with UK ROC projects, whilst maintaining key sensitivities at consistent levels on a portfolio basis.
Proposed change
As at 30 June 2019, 45 per cent. of Portfolio Value was attributable to mainland European assets4. The Company has a strong and active pipeline comprising several investment opportunities in the UK and Europe - with more opportunities currently available in Europe compared to the UK. The current Investment Policy limit of not more than 50 per cent. of Portfolio Value in investments outside the UK (calculated at the time of investment) is increasingly an impediment to the Investment Manager's ability to source investments with the best risk-adjusted returns and construct a balanced and diversified portfolio for the Company.
____________
1 Source: WindEurope
2 Source: Bloomberg New Energy Finance and Wind Europe
3 Source: based on Bloomberg New Energy Finance and government projections
4 Measured on a committed investment basis
With a broader range and plentiful supply of projects available in mainland Europe, and the benefits of increased diversification for the portfolio that come from exposure to different weather patterns, power markets and regulatory regimes, the Board, having consulted with Shareholders, believes that it is now appropriate to seek Shareholder approval to amend the Investment Policy such that the limit on investing no more than 50 per cent. of the Portfolio Value outside of the UK is increased to no more than 65 per cent. of Portfolio Value.
The Company will continue to invest only in European countries where the Directors, the Investment Manager and Operations Manager believe that there is a stable renewable energy framework in place. Northern European countries (notably France, Ireland, Germany and Scandinavia) will remain a focus of new investment for the Company, alongside the UK. In addition, the Investment Manager and Operations Manager will take advantage of the evolving investment landscape to consider investment opportunities in other parts of mainland Europe, including subsidy-free solar in Iberia. The UK will remain a substantial part of the Company's portfolio (under the proposed amendment, at least 35 per cent. of Portfolio Value, calculated at the time of investment, will be invested in the UK).
Hedging
In order to continue with the prudent approach to managing foreign currency risk on non-Sterling investments employed by the Investment Manager, the Company intends to maintain its policy of hedging 50 to 60 per cent. of the balance sheet value of non-sterling investments, which include income hedges.
Extraordinary General Meeting
The Proposal is conditional on the approval of Shareholders of an ordinary resolution to be put to the Extraordinary General Meeting, which has been convened for 4.00 p.m. on Thursday, 17 October 2019. The Notice convening the Extraordinary General Meeting is set out in Part IV of the Circular.
PROPOSED ISSUE OF EQUITY
The Company is proposing to issue further New Ordinary Shares by way of non-pre-emptive placing under its Share Issuance Programme (of which 185 million New Ordinary Shares remain available).
The Company currently has drawings under its revolving acquisition facility with Royal Bank of Scotland plc, National Australia Bank Limited and ING Bank N.V (the Revolving Acquisition Facility) of approximately £80 million following acquisitions made earlier in the year.
The Board believes that it is in the interests of the Company and Shareholders as a whole to issue further Ordinary Shares to reduce the amount currently drawn under the Revolving Acquisition Facility. In addition, the Company has a strong pipeline of potential investment opportunities. Further attractive onshore and offshore investment opportunities are currently under consideration for the Company's portfolio, in the UK as well as in France and Germany, some of which are at an advanced stage of negotiation and are expected to complete in the near term. The Company also has investment commitments to of approximately £140m to complete construction of the Erstrask and Solwaybank wind farms which is due during 2020.
The net proceeds of the Issue will be applied in repaying amounts drawn under the Revolving Acquisition Facility and the acquisition of further investments.
The New Ordinary Shares will be issued at a price of 123p per share. This represents a discount of 6.0 per cent. to the mid-market closing share price of 130.9p on 26 September 2019 and a premium of 7.0 per cent. to the last reported NAV of 115.0p (as at 30 June 2019).
The New Ordinary Shares issued pursuant to the Issue will be issued on the terms and conditions set out in Appendix 1 (Terms and Conditions of the Initial Placing and each Placing Only Issue) to the securities note dated 7 March 2019 which forms part of the SIP Prospectus but as if any references therein to Canaccord Genuity were to Investec Bank plc.
Application for Admission
Application will be made to the Financial Conduct Authority for admission of the New Ordinary Shares to the premium segment of the Official List and to London Stock Exchange plc for admission to trading of the New Ordinary Shares on its main market for listed securities (the Main Market), (together, Admission). It is expected that Admission will become effective, and that dealings in the New Ordinary Shares on the Main Market will commence, on or around 7 October 2019.
Expected Timetable
|
Latest time and date for receipt of orders bids in the bookbuild |
10.30 a.m. on Thursday, 3 October |
|
Announcement of results of the Issue |
Thursday, 3 October |
|
New Ordinary Shares issued to investors on a T+2 basis |
Thursday, 3 October |
|
Admission and commencement of dealings in New Ordinary Shares |
Monday, 7 October |
Publication of Circular and Second Supplementary Prospectus
The Circular and Second Supplementary Prospectus will shortly be available for viewing on the Company's website at www.trig-ltd.com and on the National Storage Mechanism at www.morningstar.co.uk/uk/NSM
Capitalised terms shall have the meanings attributed to them in the SIP Prospectus unless otherwise defined in this announcement.
LEI: 213800N06Q7Q7HMOMT20
Enquiries:
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Richard Crawford
Phil George
Mohammed Zaheer
Francesca Collins
Investec Bank plc +44 (0) 20 7597 4000
Lucy Lewis
Denis Flanagan
Tom Skinner
Liberum Capital Limited +44 (0) 20 3100 2000
Chris Clarke
Gillian Martin
Louis Davies
Tulchan Communications +44 (0) 20 7353 4200
Martin Pengelley
Notes
At TRIG, our purpose is to generate sustainable returns for shareholders from a diversified portfolio of renewables infrastructure that contribute towards a zero-carbon future. The Company is a leading investor in renewables infrastructure, owning over 1.5GW of generating capacity in wind, solar and energy storage infrastructure in the UK, France, Ireland, Sweden and Germany, with a portfolio value in excess of £1.7bn.
The Company aims to provide its investors with long-term, stable dividends and to retain the portfolio's capital through re-investment of surplus cash flows after payment of dividends. TRIG has declared over £300m in dividends since its IPO in 2013. Total shareholder return during this period, measured on dividends paid plus increase in net asset value, has been in excess of 8% on an annualised basis.
The Company is jointly Managed by the Investment Manager, InfraRed Capital Partners, and the Operations Manager, Renewable Energy Systems. Both Managers are industry leading organisations with a combined track record of 62 years of expertise in infrastructure investment and operations. The Managers are overseen by an independent board of Non-executive directors, providing scrutiny over the Company's strategy, operations and investment decisions.
Important Information
The New Ordinary Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act), or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, exercised, resold, transferred or delivered, directly or indirectly, in or into the United States or to or for the account or benefit of any U.S. Person (within the meaning of Regulation S under the U.S. Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction in the United States. In addition, the Company has not been, and will not be, registered under the United States Investment Company Act of 1940, as amended, (the U.S. Investment Company Act), nor will InfraRed Capital Partners Limited be registered as an investment adviser under the United States Investment Advisers Act of 1940, as amended (the U.S. Investment Advisers Act), and investors will not be entitled to the benefits of the U.S. Investment Company Act or the U.S. Investment Advisers Act.
This Announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for New Ordinary Shares in any jurisdiction including, without limitation, the United States, Australia, Canada, Japan or South Africa or any other jurisdiction in which such offer or solicitation is or may be unlawful (an Excluded Territory). This Announcement and the information contained therein are not for publication or distribution, directly or indirectly, to persons in an Excluded Territory unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.
No application to market the New Ordinary Shares has been made by the Company under the relevant private placement regimes in any member state of the EEA other than in the United Kingdom, the Republic of Ireland, Sweden and the Netherlands. No marketing of New Ordinary Shares in any member state of the EEA other than the United Kingdom, the Republic of Ireland, Sweden and the Netherlands will be undertaken by the Company save to the extent that such marketing is permitted by the AIFM Directive as implemented in the Relevant Member State.
The distribution of this Announcement, and/or the issue of New Ordinary Shares in certain jurisdictions may be restricted by law and/or regulation. No action has been taken by the Company, the Joint Bookrunners or any of their respective affiliates as defined in Rule 501(b) under the U.S. Securities Act (as applicable in the context used, Affiliates) that would permit an offer of the New Ordinary Shares or possession or distribution of this Announcement or any other publicity material relating to the New Ordinary Shares in any jurisdiction where action for that purpose is required (other than the United Kingdom, the Republic of Ireland, Sweden and the Netherlands). Persons receiving this Announcement are required to inform themselves about and to observe any such restrictions.
The Joint Bookrunners, each of which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, are acting for the Company and for no one else in connection with the Issue and the other matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Joint Bookrunners or for providing advice in relation to the Issue, or any other matters referred to herein.
Information for Distributors
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (MiFID II); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures, in the UK being the FCA's Product Intervention and Governance Sourcebook (PROD) (together the MiFID II Product Governance Requirements), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any ''manufacturer'' (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that such New Ordinary Shares are: (i) compatible with an end target market of (a) retail investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom and (b) investors who meet the criteria of professional clients and eligible counterparties each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II for each type of investor (the Target Market Assessment).
Notwithstanding the Target Market Assessment, distributors should note that: the price of the New Ordinary Shares may decline and investors could lose all or part of their investment; the New Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the New Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risk of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Joint Bookrunners will only contact prospective investors through the Issue who meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Ordinary Shares.
Each distributor is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and determining appropriate distribution channels.
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