Ecofin US Renewables Infrastructure Trust plans to raise new capital by way of a placing of new ordinary shares at a price of $1.015 per share. The company has fully deployed its IPO proceeds and has drawn down $9.1m under its revolving credit facility. In addition to the placing, there will be an offer of new shares through Peel Hunt’s retail capital markets ‘REX’ portal to provide retail investors in the United Kingdom with an opportunity to participate in the fundraising [which is great news – it is important to maintain a level playing field for all types of investors]. The REX retail offer is available in the United Kingdom through the financial intermediaries listed on the company’s website.
Up to 24,920,692 new ordinary shares in total will be available, representing approximately 19.95 of the existing issued share capital.
The Issue Price represents a discount of approximately 5.1% to the closing share price of $1.07 on 9 May 2022 and a premium of approximately 4.0% to the recently reported unaudited cum-income net asset value of $0.9764 per share as at 31 March 2022, sufficient to cover the anticipated costs of the issue.
Participants in the REX Retail Offer may elect to subscribe for new ordinary shares in Sterling at a price calculated based on the Sterling to US Dollar spot exchange rate published by Bloomberg at 1 p.m. on 19 May 2022.
The trust was launched on 22 December 2020 and within ten months of the IPO, the investment manager had fully committed the net proceeds into a portfolio of carefully selected middle market renewable assets which benefit from 100 per cent contracted long-term power purchase agreements (PPAs) with investment grade quality counterparties. The portfolio is diversified and currently consists of seven solar investments and one wind investment across six states, with a weighted average PPA term of approximately 17 years.
The net proceeds from the Issue are expected to be partially used towards the repayment of the revolving credit facility and to fund certain attractive investment opportunities in the pipeline including two imminent investment opportunities totalling $51m, which are currently committed or close to execution:
- A $40m committed incremental investment in a portfolio of ten construction stage solar assets in which the company is already invested (the “Echo Solar Portfolio”), benefitting from 25 year PPAs with investment grade quality utilities. In addition to this investment, tax equity financing from third parties for the portfolio is at an advanced stage of negotiation; to the extent that such negotiations do not complete, alternative tax equity counterparties would be sought and/or alternative project finance arranged in the normal course of business; and
- $11m to acquire a 13MW construction-stage commercial solar investment in Maine which is currently close to execution subject to finalisation of agreements. The project has been sourced off market and has a 25 year PPA with a creditworthy corporate purchaser.
The broader potential deal pipeline remains in excess of $3bn, with over $1bn of opportunities expected to transact in the coming six months. The manager is actively pursuing three further wind opportunities totalling $116m and one operating solar and storage opportunity totalling $50m, all with the potential to close in the near term. These advanced stage opportunities have long-term revenue contracts with creditworthy utility or commercial purchasers and, if executed upon, would further diversify the portfolio.
Since its IPO, the company has declared dividends in its first financial period of 3.2 cents per share in total, which exceeded its dividend target in respect of that period of 2 to 3 cents. In addition, on 28 April 2022, the company announced its first quarterly dividend for the period from 1 January 2022 to 31 March 2022 of 1.4 cents, in line with the dividend target range for 2022 of 5.25 to 5.75 cents. The new shares will be entitled to receive the quarterly dividend for the period from 1 January 2022 to 31 March 2022.
Expected Timetable
Placing/REX retail offer open 10 May 2022
Latest time and date for commitments 1 p.m. on 19 May 2022
Results announced 20 May 2022
Admission and dealings in new ordinary shares commence 8 a.m. on 24 May 2022
RNEW : Ecofin US Renewables launches fundraise