Atrato Onsite Energy eyes £150m IPO

A new closed-ended investment company established to invest in a diversified portfolio of onsite renewable energy assets, Atrato Onsite Energy (which plans to trade under the ticker ROOF), has announced its intention to launch an initial public offering, targeting gross issue proceeds of £150m. This will be through the issuance of new ordinary shares by way of a Placing, Offer for Subscription and Intermediaries Offer and will apply for those shares to be admitted to the Official List of the Financial Conduct Authority and to trading on the premium segment of the London Stock Exchange’s main market.

The company is targeting an annualised dividend of 5p per share for the first and second financial years following the IPO and will seek to grow the dividend progressively thereafter. It will target an annual total return of 8-10% in the first financial year following the IPO and over the medium term.

Alvarium Securities Limited is acting as Global Co-Ordinator, Sole Bookrunner, and Intermediaries Offer Adviser.

Key information

ROOF’s investment objectives are to:

• deliver capital growth together with long-term, secure and progressive income for investors with limited exposure to wholesale power prices;
• contribute to the UK’s net zero transition; and
• integrate ESG best practice with a focus on adding new renewable energy capacity and onsite clean energy solutions.

These systems will be commercialised through long-term, indexed power purchase agreements with the occupiers of the industrial and commercial properties on which the assets are installed. The generation of green energy directly at the point of use brings economic savings, avoids grid losses, provides traceability of supply, enables the creation of additional renewable energy capacity and reduces greenhouse gas emissions. ROOF will seek to achieve its investment objectives by primarily investing in behind-the-meter solar photovoltaic  generation systems and associated infrastructure, predominantly located on the roofs of commercial buildings.

Highlights

• Differentiated strategy dedicated to onsite energy: The only investment company focussed on onsite green energy generation, providing new renewable energy capacity with 100% carbon traceability to industrial and commercial counterparties.
• Low power price sensitivity: Significantly lower exposure to wholesale power prices versus peers, providing investors with a secure and progressive dividend (annualised 5 pence per share in the first financial year following IPO) underpinned by long-term, fixed price power purchase agreements with indexed uplifts.
• Capital growth: Delivered through origination premiums (driven by creating new project opportunities) and through the application of conservative leverage to reduce the project-level cost of capital (targeting average leverage of <40% of gross asset value).
• Extensive pipeline of potential acquisition opportunities: Totalling over £300m, of which £50m is under exclusivity with Atrato Partners, with the IPO target net initial proceeds expected to be deployed and/or committed within 12 months from IPO.
• Committed to being an ESG leader: The portfolio is projected to save 50,000 tonnes of CO2 equivalent per annum. Expected to qualify for the London Stock Exchange’s Green Economy Mark from IPO, recognising that the company will derive 50% or more of its annual revenues from products and services that contribute to the global green economy.
• Experienced board and investment adviser: Board of three independent non-executive directors, chaired by Juliet Davenport OBE, founder of Good Energy. ROOF is externally managed, with Atrato as investment adviser. Atrato’s experienced, dedicated team has c. 50 years of combined renewable energy experience and has worked on over 300 solar rooftop installations. The team brings an extensive network of senior corporate relationships, driving privileged access to deal flow.
• Net zero emissions target by 2050: The UK has committed to a national “net zero” emissions target, aiming to reduce greenhouse gas emissions by at least 100% of 1990 levels by 2050, with a recently proposed interim target of a 78% reduction by 2035. By 2050 all generation is projected to come from low carbon capacity technologies.
• Electricity demand forecast to double: The UK is forecast to need twice as much electricity in 2050 versus 2019, driven by the requirement to decarbonise primary energy consumption such as heating, which makes up more than a third of total UK greenhouse gas emissions, and transport, which accounted for 27% in 2019.
• Solar is a key part of the solution: The forecast growth in electricity demand and requirement to reduce greenhouse gas emissions means that new low or zero carbon sources of power generation are essential.
• Corporate sustainability goals: Corporates are under pressure to achieve sustainability goals and the use of zero carbon electricity is a fundamental contributor to their emissions reductions. 45% of the FTSE 100 have committed to net zero or carbon neutrality and many have targets ahead of the UK’s national timeframes.
• Traceability of supply: Unlike other methods of renewable energy procurement, such as green-badged supply via public power grids, onsite generation delivers full traceability of the carbon footprint of electricity actually consumed, thereby avoiding concerns around “green-washing”.

Juliet Davenport OBE, Chair of Atrato Onsite Energy, said: “The UK’s binding net zero emissions target in 2050 and the resulting future demand for green energy means that additional generation from low carbon sources such as rooftop solar is growing. The Company will play a leading role in providing new green power capacity, delivering businesses a dedicated clean energy supply at a low fixed cost.

Gurpreet Gujral CFA, Managing Director, Atrato added: “Rooftop solar PV, and other onsite energy generation assets, have a number of unique and attractive features. These include allowing corporates to directly reduce their carbon footprint whilst reducing their energy bills. They can also provide investors with a stable income stream with limited exposure to the wholesale energy market.

“We are excited to launch the first listed investment company with a dedicated onsite energy generation strategy. We look forward to deploying the net proceeds of the IPO into an identified pipeline of acquisition opportunities, totalling over £300 million, within 12 months from IPO. In the first financial year, the Company aims to deliver an annualised dividend of 5 pence per share, part of a target total return of 8-10%.”