Kathleen Gallagher, Citywire Investment Trust Insider, 22 Dec 2023:
Octopus Renewables Infrastructure (ORIT) is determined to bring its net asset value to £1bn through a merger with Aquila European Renewable (AERI) but the board of the latter appears to need some convincing.
ORIT, which has a £604m portfolio, said there is ‘compelling logic’ to create one of the largest diversified renewable energy trusts through a combination of the two trusts, which will have a gross asset value of £1.6bn and a net asset value (NAV) of £1bn.
The ORIT board said it had approached the AERI board multiple times throughout the year, including in March and May ahead of Aquila’s general meeting and continuation vote, with the latest attempt in November…
Aquila’s board noted the announcement and said it ‘continues to explore a number of different initiatives to address the issues facing the sector and to secure recognition in the company’s share price of the real underlying value of the company’s portfolio’.
The details
The Octopus board anticipate the deal would see ORIT, whose shares are trading at a 16.3% discount, and AERI, whose shares are at a 29.3% discount, combine on a formula asset value to formula asset value basis…
However, not all analysts were convinced. Matthew Read from QuotedData said the company ‘is a good size and has a decent track record of performance, so it should be able to expand again once markets settle’.
‘Given their different focuses, we’re yet to be convinced that merging these different strategies into one fund makes sense at the current time,’ he continued. ‘We think that AERI’s board is right to consider a broader range of options if it thinks that one of these could ultimately lead to greater value for its shareholders than the ORIT offer that is currently on the table. AERI’s board will also need to consider the interests of all of its shareholders and not just those that ORIT has approached.’
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