SDCL Energy Efficiency says that it recognises that recent market volatility has resulted in its share price trading below its most recently published NAV per share [7.5% at close of play last night, better than the 15% it was at last Thursday night, when we were making the slides for the weekly show, but unusual for a fund that has tended to trade on a significant premium since launch – apart from a brief period in the market panic of March 2020.]
Yesterday, members of the board, individuals at the investment manager and associates thereof purchased a total of 104,343 shares in the market. Now they remind us that:
- with energy cost increases today being a major driver of inflation, energy efficiency has become more valuable than ever. The trust’s portfolio of projects provides essential energy services to essential industry, benefitting from robust operational capabilities to generate clean energy and savings at a time of substantial stress and shortages in the grid;
- the company has a robust liquidity position, with cash on its balance sheet and available undrawn credit facilities, and under its medium-term gearing target of 35 per cent of NAV;
- the trust’s existing debt at the portfolio level is predominantly fixed interest and therefore not materially exposed to movements in interest rates over the medium-term;
- less than 20% of net assets are in pounds [it’s sad that it has become necessary to boast about how little UK exposure you have – but here we are] and the company applies active foreign exchange management through currency hedges to protect against impacts to NAV from material movements in foreign exchange rates; and
- SDCL Energy Efficiency benefits from having predominantly long term contracted cash flows, more than half of which are inflation linked.
Jonathan Maxwell, CEO of Sustainable Development Capital LLP (the manager), said: “There are times, particularly during periods of market volatility, when market prices and value can diverge significantly, compared either to prevailing net asset values on the one hand, or to future prospects on the other. Energy efficiency has never been more valuable as a source of cost and carbon emission reductions as well as energy security. Against this market background and outlook, members of the board and individuals at the investment manager have taken the opportunity to acquire shares in the market“.
In addition, the trust confirms that it has completed the acquisition of a 100% interest in United Utilities Renewable Energy Ltd (UU Solar), a portfolio of on-site, predominantly solar PV operational projects totalling 69 MW across 70 sites in the Northwest of England, for a cash consideration of approximately £100m. The assets provide renewable energy generated on-site directly to the end-user, United Utilities Water, the regulated water and wastewater business of United Utilities Group. The acquisition has been funded from existing cash reserves.
SEIT : Key personnel at SDCL taking advantage of share price weakness