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Investment Trust Insider on SDCL Energy Efficiency Income

Investment trust insider on North American Income Trust

Investment Trust Insider on SDCL Energy Efficiency Income – James Carthew: cashing in on corporate energy saving

Continuing my look at recent new issues, this week I turn to SDCL Energy Efficiency Income (SEIT) whose initial public offer (IPO) rather snuck up on me at the end of last year.

The company published an intention to float on 22 November, the same day as its prospectus, and by 7 December it had, with very little fanfare, raised £100 million. While this was less than its £150 million target, it wasn’t a bad result for a fund with an entirely new investment proposition.

As with most recent new investment companies, it offers a decent yield from assets that aren’t correlated with equity markets. It is targeting a yield on the issue price of 5% in year one and 5.5% in year two, and overall returns of 7-8% a year.

The UK is doing fairly well when it comes to shifting its power production away from fossil fuels and towards renewable energy. Where we are falling down is in reducing the amount of power and heat that we waste. The drive to remedy this situation creates room for the launch of funds such as SEIT.

The investment trust invests in projects that improve energy efficiency. As well as energy saving technology, such as LED lighting, these include small power generation plants that deliver electricity and heat at the point of consumption, avoiding wastage associated with the transmission of power over long distances.

Shortly after listing, it spent £87 million buying a seed portfolio of nine projects and, perhaps, the best way to understand this trust is to have a look at a few of these.

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