TIDMSEIT
RNS Number : 4116E
SDCL Energy Efficiency Income Tst
28 February 2020
28 February 2020
SDCL Energy Efficiency Income Trust plc
("SEEIT" or the "Company")
Proposed Change in Investment Policy and Publication of
Circular
Further to the Investment Update announced on 11 February 2020,
the Board of SEEIT announces that it has today published a circular
(the "Circular") convening a general meeting to be held on 18 March
2020 (the "Extraordinary General Meeting") in order to seek
shareholder approval for a proposed change to the Company's
Investment Policy which would remove the 25% minimum exposure limit
to UK based Energy Efficiency Equipment investments which was
adopted at the time of the Company's IPO (the "Proposal").
PROPOSED CHANGE TO INVESTMENT POLICY
Current Investment Portfolio and Rationale
The Company aims to assemble a high quality portfolio with
diversification across different energy efficiency technologies by
entering into a number of contractual agreements with a wide range
of counterparties.
Following the acquisition of the Seed Portfolio following the
Company's initial public offering in December 2018 (the "IPO"),
SEEIT has made five further acquisitions and currently has a
portfolio consisting of investments in 27 Energy Efficiency
Projects and committed investment opportunities. SEEIT remains well
diversified by project size, contract length, underlying technology
and counterparty exposure.
As at 5 February 2020, the geographical distribution of the
Company's Portfolio is approximately as follows: (a) 36 per cent of
Gross Asset Value is in respect of Energy Efficiency Equipment
located in the UK (encompassing other assets including cash at
bank); (b) 28 per cent of Gross Asset Value is in respect of Energy
Efficiency Equipment located in the United States; and (c) 36 per
cent of Gross Asset Value is in respect of Energy Efficiency
Equipment located in continental Europe.
As stated in the Company's investment objective and policy, the
Company initially focussed its attention on investments in the UK
but anticipated that it would make investments in continental
Europe, North America and, potentially, the Asia Pacific
region.
The current portfolio includes substantial investment within the
UK, where the whole of the Seed Portfolio is based. However, as
expected at the time of the IPO, the Company has broadened its
geographical exposure through the acquisition of four significant
portfolios in continental Europe and North America.
Proposed Change
The Board and the Investment Manager expect that the Company
will continue to retain significant exposure to UK based
investments over the medium to long term. However, taking account
of the size and quality of the acquisition pipeline in North
America and Continental Europe in particular, the Board intends to
seek shareholder approval to remove the 25% minimum exposure limit
to UK based investments, as set out in the Circular published
today. The removal of the limit would ensure that the Company can
benefit from additional flexibility when sourcing and investing in
projects with attractive risk-adjusted returns across multiple
jurisdictions. The Board believes this increased flexibility to be
in the best interests of shareholders.
The Company's investment objective and policy will continue to
maintain specific restrictions in relation to any Energy Efficiency
Project representing no more than 20% of the GAV of the Company and
the Company's maximum exposure to any counterparty not exceeding
20% of the GAV. These restrictions ensure that, irrespective of the
project's geography, the Company continues to benefit from a highly
diverse portfolio of assets.
Hedging
Notwithstanding any change to the exposure limits, the Company
remains focussed on its Sterling based dividend targets and NAV and
is therefore committed to having appropriate hedging arrangements
in place for its portfolio.
The objective of the Company's hedging strategy is to protect
the value of both income and capital elements of the portfolio from
a material impact on NAV arising from movements in foreign exchange
rates, and to provide stability and predictability of Sterling cash
flows.
This is achieved on an income basis by hedging forecast
investment income from non-Sterling Energy Efficiency Projects for
up to 24 months through foreign exchange forward sales. On a
capital basis, this is achieved by hedging a significant portion of
the portfolio value through rolling foreign exchange forward sales.
The Investment Manager will also seek to utilise corporate debt
facilities in the local currency to reduce foreign exchange
exposure.
As part of the Company's hedging strategy the Investment Manager
will regularly review non-Sterling exposure in the portfolio and
adjust the level of hedging accordingly.
The Company expects to continue to implement this currency
hedging strategy irrespective of any change to the investment
policy restrictions, and to date the impact of movements in foreign
exchange rates on the Company has been negligible.
Extraordinary General Meeting
The Proposal is conditional on the approval of Shareholders of
an ordinary resolution to be put to the Extraordinary General
Meeting, which has been convened for 10.00 a.m. on Wednesday, 18
March 2020. The Notice convening the Extraordinary General Meeting
is set out at the end of the Circular.
PUBLICATION OF CIRCULAR AND EXPECTED TIMETABLE
The Circular will shortly be available for viewing on the
Company's website at http://www.sdcleeit.com/ and on the National
Storage Mechanism at http://www.morningstar.co.uk/uk/nsm .
Expected Timetable of Events
Latest time and date for receipt of Forms 10.00 a.m. on 16 March
of Proxy for the Extraordinary General 2020
Meeting*
Extraordinary General Meeting 10.00 a.m. on 18 March
2020
Announcement of the result of the Extraordinary 18 March 2020
General Meeting
Each of the times and dates in the expected timetable of events
may be extended or brought forward without further notice. If
any of the above times and/or dates change, the revised time(s)
and/or date(s) will be notified to Shareholders by an announcement
through a RIS provider. All references to times are to London
times.
*Please note that the latest time for receipt of the Forms of
Proxy in respect of the Extraordinary General Meeting is forty-eight
hours (excluding weekends) prior to the time allotted for the
meeting.
Capitalised terms shall have the meanings attributed to them in
SEEIT's IPO Prospectus dated 22 November 2018 or in the Circular,
unless otherwise defined in this announcement.
Dealing codes
Ticker SEIT
ISIN for the Ordinary Shares GB00BGHVZM47
SEDOL for the Ordinary Shares BGHVZM4
For Further Information
Sustainable Development Capital T: +44 (0) 20 7287 7700
LLP
Jonathan Maxwell
Eugene Kinghorn
Keith Driver
Jefferies International Limited T: +44 (0) 20 7029 8000
Gary Gould
Tom Yeadon
Tom Hovanessian
TB Cardew T: +44 (0) 20 7930 0777
Ed Orlebar M: +44 (0) 7738 724 630
Lucas Bramwell E: seeit@tbcardew.com
About the Company
SDCL Energy Efficiency Income Trust plc is the first listed
company of its kind to invest exclusively in the energy efficiency
sector. Examples of the projects in the portfolio include combined
cooling/heating and power plants, as well as Energy Efficiency
Projects in the UK and the US. Since acquisition of its seed
portfolio following its IPO, the Company has announced further
investments in a number of diversified portfolio of energy
efficiency assets, including a portfolio of rooftop solar
photovoltaic projects for Tesco in the UK and a portfolio of
cogeneration assets in north east United States, which were
identified as pipeline projects in its IPO prospectus, as well as
an additional investment in a portfolio of energy efficiency loans
in the United States, a portfolio of cogeneration assets in Spain
and a portfolio of recycled energy and cogeneration projects in the
United States .
The Company's total assets are currently allocated across the
UK, Europe and North America in broadly equal proportions.
The Company aims to deliver shareholders value through its
investments in a diversified portfolio of Energy Efficiency
Projects which are driven by the opportunity to deliver lower cost,
cleaner and more reliable energy solutions to end users of
energy.
The Company is targeting an attractive total return for
shareholders of 7-8 per cent. per annum (net of fees and expenses
and by reference to the initial issue price of GBP1.00 per Ordinary
Share), with a stable dividend income, capital preservation and the
opportunity for capital growth. The Company is targeting a dividend
of 5.0p per share in respect of the current financial year to 31
March 2020 and 5.5p per share in respect of the next financial year
to 31 March 2021. SEEIT's last published NAV was 99.0p per share as
at 30 September 2019.
Further information can be found on the Company's website at
www.sdcleeit.com.
Investment Manager
The Company's investment manager is Sustainable Development
Capital LLP ("SDCL" or the "Investment Manager"), an investment
firm established in 2007, with a proven track record of investment
in energy efficiency and decentralised generation projects in the
UK, Continental Europe, North America and Asia.
SDCL is headquartered in London and the group also operates
worldwide from offices in New York, Dublin and Singapore. SDCL is
authorised and regulated in the UK by the Financial Conduct
Authority.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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