This week saw two companies announce their intentions to float: Blackfinch Renewable European Income (BRET) with a fundraising target of £300m and Responsible Housing REIT which is looking to raise up to £250m.
This follows eight other investment trusts across a broad range of sectors and mandates that have already launched this year, five of which were in Q2 alone. This number would have been higher had UK Residential REIT and Liontrust ESG Trust not failed to gain enough interest and consequently pull their respective IPOs.
Either way, the numbers suggest confidence and interest has returned and the launch of the investment trust is back in vogue. 2020 and 2019 each saw just eight new trusts launched and we still have four months of the current year to go. Could we see the number rise into double digits?
The last time the investment trust world witnessed this level was in 2018, which saw a bumper 23 IPOs, including the likes of Merian Chrysalis (now Chrysalis), SDCL Energy Efficiency Income and who can forget Smithson, which raised a record-breaking £823m in September that year?
2018 also saw the return of the more conventional mandate after years of specialist launches, with new names in the North America sector as well as UK, Japanese and global smaller companies.
The following two years reverted to more alternative products, with renewable energy infrastructure coming through as the most popular choice.
Interestingly, this has continued into 2021 with three IPOs having already taken place within the sector (VH Global Sustainable Energy Opportunities, Aquila Energy Efficiency and HydrogenOne Capital Growth), and possibly another should Blackfinch Renewable European Income be successful.
Of course any investment trust trying to launch will rave about its industry, what it plans to invest in and why you should be a part of its fundraising, but BRET’s announcement was particularly confident for a product that has to follow nine other launches in the same sector over the past two and a half years.
You could argue that its European focus isn’t exactly unique either, with Aquila European Renewables Income and Greencoat Renewables among its potential soon-to-be peers.
But BRET already has seed assets worth around £232m under option for acquisition and a huge pipeline in excess of £500m has already been identified across wind, solar, hydro, hydrogen and other assets.
This, along with the surge in launches in the space in recent years, simply tells us that the world is indeed changing and that tackling climate change is finally at the top of our agendas.
BRET said the renewable energy sector is at a “critical inflexion point where substantial investment is required” and that the trust is in prime position to take advantage of this “green revolution”.
Unfortunately, even the most astute of us don’t see how urgent something might be until it’s right in front of our faces. But hopefully the recent launches (and possibly more) combined with increasing conversations and a greater level of self-awareness means we’re certainly taking note now and heading in the right direction.
QD view – Something in the water