Harmony Energy Income Trust is proposing to raise capital via a placing of new C Shares at 100p per share to fund its pipeline of 2-hour duration battery energy storage systems.
The company was launched on 9 November 2021 raising £210m (before expenses), and now has net assets of about £244m. The current portfolio comprises of six 2-hour duration battery projects totalling 312.5MW, all of which are under construction. The first project, Pillswood (98 MW/196 MWh) is due to commence commercial operations in November 2022. On commencement of operations Pillswood is expected to be the largest operational battery storage project in the UK (by MWh);
Since IPO, the NAV has grown by 18.2% to 116.2p per share. The company is targeting a dividend of 8p a year from 2023, and a total return of 10% a year based on the IPO share price of 100p. The first dividend has been paid – 1p per share in July 2022 – and the next 1p is expected to be paid in December 2022.
Harmony Energy Income has exclusivity to a significant pipeline of ‘off-market’, well advanced projects via a right of first refusal over a 687.5MW of pipeline of additional 2-hour duration projects, all of which are under the control of Harmony Energy Limited and which have grid connection offers accepted.
The capital raise would enable the company to exercise its right of first refusal to acquire some or all of the next three projects to be “shovel ready” from the pipeline. These total 181.9MW/363.8MWh. These have target grid energisation dates in Q4 2023, Q1 2024 and Q3 2024 respectively and will need funding imminently to meet those target energisation dates;
Conversion of the C Shares into ordinary shares is expected to take place within approximately three months of closing the placing and following acquisition of the relevant projects. After this the new ordinary shares will rank pari passu with the existing ordinary shares for the target dividend of 8p per share in 2023.
Certain senior principals of Harmony Energy, the investment adviser and their associates have confirmed that they will collectively subscribe for new C Shares equating to £1m.
Norman Crighton, chair of Harmony Energy Income Trust plc, said: “Having fully committed the funds raised immediately following IPO, the investment adviser has continued to progress the company’s portfolio projects in line with the planned roll-out. The company successfully secured debt with NatWest plc and acquired its sixth project. The next three projects will shortly be ready for acquisition, against a strong backdrop for BESS (battery energy storage systems), both in terms of the need for energy storage and the revenue profile. Whilst recognising the current challenging economic and market backdrop, we believe it to be beneficial for the company, with our shareholders’ support, to take advantage of its exclusive rights over Harmony Energy’s pipeline as envisaged at IPO and continue to build on the positive momentum.”
HEIT : Harmony Energy Income hoping to issue C shares