Following the announcement on 22 December 2023 of an approach from Octopus Renewables Infrastructure Trust (ORIT – click here to see our coverage of this) and then subsequently that its board was looking at possible combinations with other investment trusts, Aquila European Renewables (AERI) has said that, following consultation with its shareholders, it has received feedback that 25% of shareholders (enough to block a potential shareholder vote on a combination with another fund) have indicated they are not supportive of AERI being merged with another listed investment company. AERI’s board says that, alongside this feedback, it has taken into account the discount to NAV that the listed investment company renewables sector is currently trading on and believes that at this time, combining AERI with another listed investment company is not value enhancing when weighed against the other potential options open to it. The board is also mindful of the additional financial costs that it would incur in running the current Section 110 Review to its conclusion and, in light of this, it has decided to terminate the Section 110 Review. In light of market conditions and shareholder feedback, the board and its advisers continue to progress the review of broader options including:
- a wind-down of the company with an orderly realisation of its assets over a period of time;
- a potential sale of some or all of the assets of the company for cash; and
- the potential continuation of the company in its present form in accordance with its current investment policy delivered by Aquila Capital Investmentgesellschaft, AERI’s investment adviser.
AERI’s board says that it expects to provide a further update before the end of the second quarter of 2024 and, notwithstanding the outcome of the ongoing review of broader options, it is aware of its commitment to hold a continuation vote at a shareholder meeting expected to be held in September 2024.
[QD comment: The fact that sufficient shareholders would prefer for AERI to remain independent for now does not come as much surprise to us, especially given the exorbitant cost of some of these deals. As we said back in December, when ORIT announced its approach to AERI, AERI is a good size and, as its portfolio matures, its discount should continue to narrow and it may be able to expand once more. Beyond ORIT, we do not know which other two funds approached AERI about a potential merger but, given AERI’s focus on European assets, we’re still inclined to think that shareholders would be well-served by it remaining a standalone fund at the current time.]