Downing Renewables & Infrastructure (DORE) has announced that, in response to the discount to NAV the trust has been trading at recently, the board intends to commence buying back shares in the market where it believes this to be in shareholders’ interests. Both the board and manager think that the prevailing discount materially undervalues both DORE’s portfolio and prospects and that share repurchases are an attractive opportunity to increase the trust’s investment exposure to its existing portfolio at rates of return well in excess of the relevant discount rates.
Focused on NAV accretive opportunities
DORE’s board says that, in repurchasing shares, it will give regard to both the levels of NAV accretion offered as well as the dividend cover (all things being equal, share repurchases will increase both dividend cover and revenue reserves per share for remaining holders, while repurchasing shares at a discount will also increase the NAV per share for remaining holders).
The board will balance these considerations against the benefits for shareholders of retaining capital “to access the attractive pipeline of investment opportunities that the Company enjoys”. Pipeline opportunities span the hydropower, battery, solar, wind, electricity distribution and grid ancillary services sectors and, should they be realised, would significantly increase diversification in DORE’s portfolio.
Repurchases will utilise existing authorisations
DORE says that any share buybacks will be carried out under the existing shareholder authorisations granted at the last Annual General Meeting. DORE says that it is satisfied any inside information which the Directors or the Company may have during the current closed period, prior to the Annual Report being released, has previously been notified to a Regulated Information Service (including the net asset value and net asset value per share as at 31 December 2022 of £218.9 million and 118.6 pence respectively, published on 16 March 2023). As such, DORE considers that it is not prohibited from repurchasing its own securities, or issuing new securities, during the current closed period.