The Renewables Infrastructure Group (TRIG) has taken a big first step in achieving its 12-month £400m disposal target with the £155m sale of its 17.5% stake in the Beatrice offshore wind farm.
TRIG will use the proceeds to reduce the £240m drawn on its credit facility as the £1.7bn investment company prioritises the return of capital to shareholders, while reserving the right to invest in high-return opportunities.
Priced at 4% below net asset value (NAV), the transaction again highlights the undervaluation of TRIG shares which stand on a 29% to NAV. It comes It comes two weeks before the company faces its first continuation vote at the annual general meeting on 30 June.
Analysts flagged the disposal of Beatrice, 588MW wind farm 13km off the north-east coast of Scotland, as likely when TRIG set its disposal target in May.
The buyer is Equitix, the infrastructure fund manager, which already owns 17.5%, having invested in Beatrice at the same time as TRIG in January 2021. They bought 35% of the wind farm from Copenhagen Infrastructure Partners.
InfraRed Capital fund manager Minesh Shah said the deal, which should complete by the end of the year, “demonstrates the continued attraction of TRIG’s renewables investments to private market investors, which we are also seeing in other processes”. He said further divestments were underway.
The removal of TRIG’s share of Beatrice’s debt will reduce the investment company’s project-level borrowings by around £220m, cutting group debt of £2.1bn at 31 March by £375m. This will leave total long-term debt at 39% of enterprise value.
The company has purchased £112m of shares under the £150m buyback programme launched last August, but temporarily suspended when TRIG and stablemate HICL Infrastructure (HICL) attempted a merger that shareholders in the latter blocked.
TRIG shares were unchanged at 74p. Including the 10%-yielder’s dividends, shareholders have suffered a total 18% loss over five years as interest rates have risen and forecast power prices fallen.
Our view
Richard Williams, senior analyst at QuotedData, said: “It is good to see TRIG getting on with its £400m capital realisation programme. The sale of its stake in Beatrice (a top five portfolio asset) means that it has made real progress on this. Paying off expensive debt is sensible and we look forward to seeing how the remainder of the realisation programme plays out.”
Stay a step ahead. Our daily newsletter brings you the latest on investment trusts and active ETFs. Subscribe here.
