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Further investment in Primary Energy

Posted on: January 4th, 2021 by Ghazaleh.Ghodrati

SEEIT is pleased to announce that it has acquired an additional 15% interest in Primary Energy, a portfolio of recycled energy and cogeneration projects located in Indiana, USA, from a consortium led by Fortistar LLC (”Fortistar”) for an equity cash consideration of approximately $36 million.

SEEIT acquired an initial 50% interest in Primary Energy in February 2020. Following this acquisition, SEEIT’s interest in Primary Energy is now 65%. SEEIT has also agreed terms under which it could increase its stake and further enhance returns for shareholders.

The 298MW portfolio consists of five operating projects which generate low-cost, efficient energy with substantial environmental benefits via three recycled energy projects, one natural gas combined heat and power project and a 50% interest in an industrial process efficiency project.

The portfolio projects are located within the Indiana Harbor Works and involve two of the most efficient and advanced steel mills in the United States. Four of the five projects relate to steel mills that are now owned by Cleveland-Cliffs Inc. (”Cleveland-Cliffs”) following its acquisition of ArcelorMittal USA, making Cleveland-Cliffs the largest flat-rolled steel producer as well as the largest iron ore pellet producer in North America. One of the five projects services Midwest Steel, a subsidiary of United States Steel Corporation. The projects are fully integrated into the steel mill facilities, including fuel handling and emissions control equipment and systems that are critical for the operations of the facilities.

The acquisition is funded from existing cash reserves. Primary Energy’s existing project debt finance facilities, which are equivalent to c.$186 million, will remain in place.

Commenting on the acquisition, Jonathan Maxwell, CEO of Sustainable Development Capital LLP, said: “We are pleased that SEEIT is increasing its stake in Primary Energy, which provides critical and cost-effective low carbon energy services to key industrial sites. Industrial energy efficiency is a key focus for SEEIT and is a major source of greenhouse gas emission reductions as well as productivity gains. The investment follows a period of substantial growth and diversification in SEEIT’s investment portfolio and is made within the context of an improved market background and outlook”.

Link to RNS

Acquisition of Solar and Storage Projects in the United States

Posted on: December 24th, 2020 by Ghazaleh.Ghodrati

SEEIT is pleased to announce that it has agreed to acquire a series of portfolios of commercial and industrial (“C&I”) on-site solar and energy storage projects in the United States, together with a 50% interest in the platform that has created them, Onyx Renewable Partners (“Onyx”) from funds managed by Blackstone (”Blackstone”) for a consideration of approximately $150 million. Blackstone will remain a 50% partner in Onyx.

SEEIT will acquire a 100% interest in four portfolios totalling over 175 MW, which provide renewable energy generated on-site directly to the end-user, and a 50% interest in Onyx’s follow-on pipeline, which is projected to exceed 500MW over the next 5 years. The four portfolios comprise over 200 operational, construction and development stage rooftop, carport and ‘private wire’ ground mounted solar PV projects, located in 18 US states. Clients include municipalities, universities, schools, hospitals, military housing providers, utilities and corporates.

The operational projects are contracted under long-term power purchase agreements with predominantly investment grade C&I counterparties. At present c.27% of the portfolio (by installed MWs) are operational or near operational, with the remainder expected to become fully operational over the next 12 to 18 months. All projects benefit from robust contracts as to construction and operations with experienced EPC and O&M subcontractors.

Onyx has a highly experienced and dedicated project development and asset management team based in New York. It will develop and manage further C&I on-site solar and energy storage projects in the United States, which SEEIT will have a right of first refusal to purchase at a pre-agreed rate of return. The investment provides SEEIT with a substantial initial portfolio and a scalable pipeline of opportunities in a major growth market. It also has strong diversification benefits with investments being made in portfolios of projects, including smaller projects under 5 MW as well as larger projects of 5 to 15+ MW.

The Onyx projects are well aligned to SEEIT’s investment policy as they increase the supply of renewable energy generated on-site and help to reduce greenhouse gas emissions arising from the supply, distribution and consumption of energy. They deliver cheaper, cleaner and more reliable energy solutions directly to the end user. The investment will help SEEIT to achieve its total returns targets – offering the opportunity for capital growth from the pipeline as well as income – and to support its progressive dividend policy.

The acquisition will be funded from existing cash reserves and debt facilities. Onyx’s existing project debt finance facilities, which are equivalent to c.£27 million at acquisition, will remain in place.

Completion of the acquisition is expected in the coming weeks, after satisfaction of certain customary conditions and consents.

Commenting on the acquisition, Jonathan Maxwell, CEO of Sustainable Development Capital LLP, said: “We are delighted to further diversify the SEEIT portfolio through the acquisition of these on-site solar and storage projects and to partner with Blackstone in one of the largest sustainable energy initiatives of its kind in the United States. The projects will make a meaningful impact to reduce the carbon footprint of commercial and industrial clients across the United States by providing cheaper, cleaner and more reliable energy directly at the point of use and is strongly aligned with SEEIT’s investment policy and objectives, as well as the global climate policy agenda.”

Link to RNS

Environmental Finance: ESG news round-up: SEEIT

Posted on: October 14th, 2020 by Ghazaleh.Ghodrati

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CityWire: Energy Efficiency: Triple Point happy to take £100m at launch as SDCL seeks fresh funds

Posted on: October 14th, 2020 by Ghazaleh.Ghodrati

A sub-sector in energy efficiency funds has emerged with Triple Point Energy Efficiency Infrastructure Company (TEEC) raising £100m and confirming it will list on the London Stock Exchange on Monday.

The new investment trust will sit alongside SDCL Energy Efficiency Income Trust (SEIT) which raised the same amount in December 2018 when it became the first investment company to specialise in running projects that save companies energy bills and cut their carbon emissions.

Not to be outdone by its new rival, yesterday the now £452m SEIT announced its third share issue since launch. It wants to raise £80m for its pipeline of new investments and is offering with new shares at 105p, a 4% premium to the last reported net asset value on 31 March and a 5.4% discount to their closing price on Monday.

Although Triple Point failed to hit its upper target of £200m it will be relieved to have achieved half that given the current stock market uncertainty and the fact that increasingly trusts below £100m fail to attract wealth managers which are the sector’s biggest buyers.

Like SEIT, TEEC is primarily an income fund, aiming to generate a 5.5% dividend yield on its 100p share price in its first year, as part of an annual total return to shareholders of 7-8%.

The successful flotation of another ‘alternative income’ fund contrasts with the Tellworth UK smaller companies trust which had to postpone its launch this month after failing to attract £100m, extending a trend of recent years which has seen infrastructure, debt and specialist property trusts attract much more money than conventional equity funds.

A total of 100m TEEC shares will start trading in London on Monday after the initial public offer (IPO) organised by RBC Capital Markets, Winterflood Securities and Akur Capital.

Although fund manager Triple Point is best known for its Social Housing (SOHO) real estate investment trust, currently seeking to raise £70m in a fund raising, it has a ten-year record of investing in energy efficiency where it currently manages over £1.5bn in combined heat and power (CHP) projects, hydroelectricity, solar power and reserve peaking plants, areas where the new trust currently has a list of nearly £300m of eligible investments it could make.

For his part SEIT fund manager Jonathan Maxwell said he had over £100m of investments on which he was in exclusive talks and a further £150m at an advanced stage of due diligence.

Chairman Tony Roper said: ‘This proposed capital raise builds on the strong momentum SEIT has achieved over the last two years. Energy efficiency is critically important in global efforts to address the climate emergency and has become an increasing focus for investors. The proceeds of this placing will allow SEIT to continue to invest in this important and growing market whilst also delivering additional scale and diversification to shareholders.’

Investors who buy shares in the placing will be entitled to receive the next quarterly dividend declared in November. SEIT has a dividend target of 5.5p per share for the financial year to 31 March 2021, which offers a dividend yield of 5.2% at the 105p placing price.

Stifel analyst Max Haycock was surprised at the timing of the equity issue a month before half-year results that would have up-to-date financial information. ‘This is SDCL’s third equity issue in a year and the clear message is don’t buy the shares in the market on a high premium when there could be an equity issue around the corner. The shares traded at 111p yesterday [Monday] and the equity issue is at 105p. This habit of frequent equity issuance may temper the premium going forward.

The shares are half a penny up at 106.5p this morning.

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