Investment trust insider on Triple Point Energy Transition – James Carthew: Small TENT’s big discount, high yield looks unfair
Last week I talked to the management team of Triple Point Energy Transition (TENT). The investment trust is less than three years old, but investors seem to have lost patience with progress and the shares trade 39% below net asset value (NAV), the second-widest discount of any listed renewable energy fund after HydrogenOne Capital Growth (HGEN), which has deflated to an extremely wide 53% discount.
I last wrote about TENT in January 2022 when it was called Triple Point Energy Efficiency and had a different mandate. Having launched in October 2020 when it raised £98m of a £200m target to invest in projects that improved energy efficiency, it gave an impression of struggling to find suitable investments to fit the brief but was at least in a better position than Aquila Energy Efficiency (AEET) in deploying its money.
AEET’s troubles no doubt affected TENT as the shares moved to a modest discount early last year. The trust continued to make new investments, but in areas such as battery storage, and in June 2022 it announced that it would adopt a new name and a broader remit. The increased flexibility to invest across the energy transition sector, hold both debt and equity, and invest in mainland Europe as well as the UK, gave Triple Point more flexibility and rubber-stamped some of the investments already made outside a narrow definition of energy efficiency. Shareholders voted through the proposals unanimously in August 2022.
Jonathan Hick, TENT’s lead manager, says his team’s job is to identify areas of mispriced risk within the energy transition sector. For that reason, the closed-end fund eschews more popular areas such as onshore wind and solar and looks for overlooked areas offering higher rates of return.
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