Shares in Gore Street Energy Storage (GSF) have jumped 6% after the £247m battery fund said it would hike dividends to return more capital to shareholders.
In a strategy update, the investment company’s new chair Angus Gordon Lennox said GSF would lift its quarterly dividends to 1.75p per share a quarter with proceeds from asset sales beefing up cashflow.
The move, coming after GSF disappointed shareholders in December with a 0.69p dividend instead of the 0.75p it had guided to, pleased the market. The share price rose 2.9p to 51.5p on a 13.7% yield, narrowing their wide 47% discount to net asset value.
Winterflood analyst Ashley Young said the rise in the pay-out was “quite material, as it represents nearly half (43%) of the current market capitalisation being returned to shareholders by way of dividends over a three-year basis”.
The return of capital is backed by an expanded disposal programme that builds on the German Cremzow asset and pre-construction assets that had already been put up for sale. The company is targeting proceeds of £25m in this financial year, rising to £75m in both 2027/28 and 2028/29.
Some of this money will be reinvested into “selective accretive investments”. This will include assessing which of its battery projects could have their duration increased to raise their revenue and valuation before they too are put on the market.
The board has also removed a 2% exit payment from the contract of Gore Street Investment Management if the fund manager is replaced. This follows the scrapping of a performance fee last year and the move to split the investment management fee calculation between net asset value and the company’s market value.
Lennox, the company’s new chair, said GSIM was “currently best placed to implement the new strategy, with significant asset-specific knowledge and experience.”
“The board will monitor progress against defined KPIs [key performance indicators] for augmentations and disposals, and is ready to take further action should it be deemed necessary,” he added.
In the past year the shares have struggled to pull out of a two-year decline that saw them plunge from a peak of 123p in September 2022. The company has been under pressure from activists RM Funds and Saba leading to the replacement of the board under Lennox last year. The announcement of the lower-than-expected dividend in December came with a 12.4% drop in NAV in the six months to 30 September.
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