New IPO from Downing Renewables and Infrastructure
Downing Renewables & Infrastructure Trust has published an intention to float announcement. It is looking to raise up to £200m via a placing, an offer for subscription and an intermediaries offer of new shares at 100p each. The sponsor, financial adviser and sole bookrunner is N+1 Singer.
The trust will aim to provide investors with an attractive and sustainable level of income returns, with an element of capital growth, by investing in a diversified portfolio of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe.
The trust is targeting an NAV total return of 6.5% to 7.5% a year over the medium to long term. The target dividend yield (based on the 100p launch price) for the calendar year to 31 December 2021 is 3%, rising to a target of 5% for the calendar year to 31 December 2022, with a progressive dividend policy thereafter. Dividends will be paid quarterly.
The money would be invested in a portfolio of renewable energy generating assets including wind, solar, hydro and geothermal along with other infrastructure assets in the UK, Ireland and Northern Europe. The manager, Downing, has managed 116 investments into solar parks, wind farms and hydroelectric plants since 2010.
£30m has been committed to the launch by Downing LLP, Downing managed funds and existing Downing clients.
There is a seed portfolio of £50m comprising of c.96 MWp of operational UK solar PV projects (13 ground-mounted sites located across mainland Great Britain totalling c.73 MWp, 28 commercial rooftop installations totalling c.10 MWp; and 7 residential rooftop portfolios in Northern Ireland totalling c.13MWp). These have an average operating track record of six years, generating EBITDA of £9.9 million in the year to 31 March 2020. They say “If acquired, it is expected that this portfolio will contribute significantly to the target dividend yield for the calendar year to 31 December 2021“.
In addition, the manager has identified a pipeline of assets with a value in excess of £1.5bn. Downing has secured exclusivity or is in advanced discussions to secure exclusivity in relation to assets with a total equity value of approximately £70m in the wind and hydro sectors in Sweden and Norway. The manager and the board expect that the net proceeds of the issue would be substantially invested or committed within 12 months of Admission.
We’ll look out for the prospectus, which will have details of how to apply and will lay out the risks involved with an investment in the trust, and let you know when it is available. Access to the deal will be restricted to certain countries.