Shares in Gresham House Energy Storage (GRID) spiked at the close of trading yesterday after PrimeStone Capital, a UK activist investor claiming to hold a 7% stake, urged the battery fund to put itself up for sale.
In an open letter to the chair and board of the £506m investment trust, PrimeStone said a formal sale of its battery storage assets could unlock an intrinsic value of more than 140p per share, “against a share price languishing around 80p”.
GRID shares jumped from 84.5p to 89p at a discount of around 22% to net asset value (NAV).
Launched in late 2018, GRID shares peaked at 472p in September 2022 before plunging to a 40.6p low in April 2024.
Primestone, which said it was an investor in GRID rival Harmony Energy Income before its sale last year, acknowledged the “considerable operational progress” the company and Gresham House fund manager Ben Guest had made. However, it said that the continued underperformance of GRID’s share price despite the strength of its three-year growth plan needed to be “urgently addressed”.
The company, which was founded by ex-Carlyle Group private equity partners Jean-Pierre Millet, Benoit Colas and Franck Falezan, said it had “numerous meetings and exchanges” with Gresham House and GRID’s advisers.
“You had reasonably hoped that strong delivery by management, secured pipeline and financing, partnership with first-class institutions and clearly communicated prospects would boost the share price. They have not. The absence of share price reaction leaves only one option: the outright sale of GRID,” the firm stated.
In response, GRID acknowledged the “constructive tone of PrimeStone’s engagement” and said it would consult further with shareholders and respond in due course.
Our view
Matthew Read, senior analyst at QuotedData, said: “PrimeStone’s intervention with GRID should not come as a surprise. It is not attacking the manager. Quite the opposite: its letter acknowledges the considerable operational progress GRID has made. Nevertheless, we have argued for some time that the public market is failing to recognise the value of operational BESS assets and renewable energy infrastructure more generally. These assets are changing hands in private markets at valuations that bear little resemblance to where listed funds are trading. From that viewpoint, it is hard to fault Primestone’s logic.
“However, there is nothing to stop a bidder approaching GRID at any time, it doesn’t need to formally put itself up for sale first. Since things seem to be going GRID’s way, why rush to cash in this investment?”
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