Investment trust insider on energy efficiency – James Carthew: Aquila launch shows energy efficiency income building up steam
Last week saw the fifth successful investment company flotation of 2021 with the launch of Aquila Energy Efficiency Trust (AEET). The £100m the initial public offer (IPO) raised was less than its £150m target, but matched the money taken by Triple Point Energy Efficiency Infrastructure (TEEC) last October.
Together with the now much larger £785m SDCL Energy Efficiency Income (SEIT), which also raised £100m when it launched in December 2018, they make up a small but potentially significant sub-sector of renewable energy.
As usual, the attention-grabbing element of the investment proposal is a decent level of income that should not be correlated with equity markets. In the Aquila fund’s case, the target is 3.5p on the 100p launch price for 2022 and 5p for 2023. The total return target, once fully invested, is between 7.5% and 9.5% a year over the medium term.
Aquila’s dividend and return targets are fairly similar to Triple Point’s, which has just published its first set of accounts covering the period from launch to 31 March 2021. It is still investing its IPO proceeds but says it has a lot of deals lined up. Triple Point’s board already feels confident enough to have increased its dividend target for the year ended 31 March 2022 to 5.5p from 5.0p.
Three-year-old SDCL paid a 5.5p dividend for the year ended 31 March 2021. I would expect it to increase this again when it announces its results shortly.
Like its sister fund, Aquila European Renewables Income (AERI), the geographic focus of the Aquila fund is Europe including the UK. That differentiates it from…
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