Octopus Renewables Infrastructure Trust has released results for the 12 months ended 31 December 2024. The NAV total return for the year was 2.5%, but the share price fell from 90p to 68p. The dividend rose by 4% to 6.02p, in line with UK inflation (CPI). The target dividend for FY 2025 is up by 2.5% to 6.17p.
Some highlights:
- Generation grew by +7%, revenue by +12% and EBITDA by +16%
- In February, the company completed the acquisition of four newly constructed solar farms in Ireland (Ballymacarney) totalling 199 MW
- Acquisition of fifth newly constructed 42 MW solar farm site, Harlockstown, completed in October
- Crossdykes 46 MW wind farm in Scotland entered into a PPA with Sky UK, set to commence April 2025
- £10m share buyback announced in June as part of ongoing capital allocation strategy (£8.7m deployed as at 25 March 2025), subsequently extended by a further £20m
- €7m invested in a funding round for developer Simply Blue, taking ORIT’s stake to c.20%
- Swedish onshore wind farm, Ljungbyholm, sold to institutional investor for approximately €74m, crystallising an IRR of 11.3% over the lifetime of ORIT’s ownership
- Total proceeds from capital recycling £161m
- Revolving credit facility (RCF) maturity extended to June 2028 and size reduced from £270.8m to £150m, saving c.£850k p.a.
- Signed a new £100m five-year term loan facility
- £98.5m of the RCF repaid, reducing the all-in borrowing rate to 5.25% from c.6.5%.
- Total gearing to be brought below 40% of GAV by the end of 2025
- A commitment to further asset sales of at least £80m by the end of 2025; together with making selected accretive investments
- Commitment to assess the existing portfolio and investment strategy and conduct a review of current fee arrangements
- Additional €3.4m invested into Nordic Generation (Norgen), a specialist developer focused on the Finnish wind and solar market; deal restructured to provide ORIT with a direct 30% stake in Norgen
- A further £1.5m invested into BLC Energy Limited, a UK development business focused on creating new ground-mounted solar PV and co-located battery storage assets
December 2024 marked five years since the trust’s IPO. The chair said “As a board we remain acutely aware that shareholder returns over the five-year period (-12.8%) have been disappointing. Notwithstanding this, as we turn into our sixth year we believe that we offer something differentiated in our broad diversification, developer and construction portfolio, and active approach to investing in renewable energy infrastructure. Against a backdrop of investors currently favouring other asset classes, such as government bonds, we know we need to evolve and innovate to remain an attractive proposition. While UK interest rates have started to come down, we are not passively waiting for a change in market conditions to solely provide tailwinds for the company.
Looking forward, the fundamentals of the company remain strong. NAV total return over the five-year period has been 31.9%, or 5.6% annualised, and while a little shy of our target it is a solid return for a fund that has been maturing. We have an experienced and quality manager in Octopus Energy Generation, and a portfolio that we believe will deliver growth over the longer term. To this end, the board is working closely with the investment manager to optimise existing assets and identify opportunities aligned with the company’s investment objective to generate further growth, whilst also maintaining a progressive fully covered dividend. Furthermore, the board and executive team will continue to talk and listen to our shareholders with a view to fully understanding their perspectives. We are resolute in doing what we can to shift the perception of your company in the market and will take the necessary action that we believe is in the best interests of shareholders.”
[To my mind, the interesting bit about ORIT is its investments in businesses such as Simply Blue, Norgen, and BLC Energy. The more that the sector can do to support the investment needed to achieve net zero (and profit from that), the better. All discounts in this sector are too wide in my view.]
ORIT : Octopus Renewables wants to evolve and innovate
