Investment trust insider on Round Hill Music – James Carthew: RHM beats SONG on royalties disclosure
The new year’s initial public offer (IPO) market has got off to a roaring start. We already have our first successful new issue, in the form of VH Global Sustainable Energy Opportunities (GSEO). The now 17 investment companies in the renewable energy infrastructure sector may soon be joined by NextEnergy Renewables, which is looking for £300m. Prospectuses and intention to float announcements are coming thick and fast.
GSEO raked in £242.6m, less than the £400m that it was after, but a good start, nonetheless. It said that it had £273m of projects lined up to be deployed within three months of its IPO. On that basis, it might not be long before it is looking for more money from investors.
For the majority of these IPOs, the main attraction is the income they will generate. It is important, therefore, to be able to get the flotation proceeds invested and earning money as quickly as possible. Ecofin US Renewables Infrastructure (RNEW) recently announced that, just a month after its IPO, around half of the money it had raised had been invested.
Downing Renewables and Infrastructure (DORE) has been busy announcing deals too. I think that both should be looking to raise more money as soon as they can. Right now, they are a bit on the small side and it will be important to achieve critical mass in what is becoming quite a big sector.
Another recent new issue, Round Hill Music Royalty Fund (RHM) already seems to be just about fully invested. At launch, it had a near-term pipeline valued at $363m, but raised $282m (£206m) of its $375m target at IPO on 11 November 2020. It has the ability to gear, or borrow, up to 25% of net asset value (NAV), but even with this it still would have been just shy of the amount needed to buy the entire pipeline. Fortunately, it was able to top up its cash pile with a placing of $46.6m worth of shares on 16 December.
Now RHM has put that money to work…. read more here