Gresham House Energy Storage (GRID ) is looking to raise £150m as battery funds continue to flourish this year with power markets volatile and a renewed focus on energy security. 

The issuance of new shares at 145p will fund the acquisition of a pipeline of 747 megawatts (MW) of battery energy storage system projects. These will all be in the UK and Ireland, but the fund is also starting to look further afield for the first time.

The placing price represents a 5.8% discount to Tuesday’s closing share price of 154p and is equal to the upper end of the guided portfolio value for the end of June, when net asset value (NAV) is expected to be 140p-145p per share.

GRID’s shares closed nearly 4% down on Wednesday in response to the offer, having held firm the day before as chancellor Rishi Sunak’s plans for an energy windfall tax that could hit renewables generators – set to be clarified in a statement today – were first reported. Despite benefitting from increased volatility on the grid, battery storage funds are not expected to be affected.

With no intermediaries offer, private investors will not be able to participate directly in the placing, which is positioned as more of a ‘tap’ issue for institutional buyers and wealth managers. 

The results are due this week and new shares set to start trading on 31 May.

In addition to the existing pipeline, the manager of the £674m portfolio Ben Guest is assembling a new pipeline in the UK, Ireland, Spain and Australia: those would eventually mark the fund’s first overseas buys outside the Republic of Ireland. 

‘We plan to significantly increase GRID’s portfolio over the next two years by adding a further 10 projects totalling 747MW, including some of the industry’s largest batteries to date. The proceeds from this initial placing will support that future growth and help the company continue to drive strong returns for shareholders,’ Guest (pictured below) said.

Year to date, the 4.5%-yielder’s underlying portfolio has returned 15.4% and the shares 21%, thumping equity markets and the FTSE All-Share’s -0.4% by comparison. 

Since its initial public offering (IPO) in November 2018, the closed-end fund has delivered a share price total return of 83.3% – more than 60% better than the UK stock market.

GRID’s near-term pipeline 

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Project	Location	Capacity (MW)	Battery duration (hours)	Target commissioning date
Stairfoot	North Yorkshire	40	1	Q2 2022
York	North Yorkshire	50	1	Q4 2022
Bradford West	West Yorkshire	87	2	Q1 2023
Elland 1	West Yorkshire	50	2	Q1 2023
Elland 2	West Yorkshire	100	2	Q3 2023
Monet’s Garden	North Yorkshire	50	2	Q2 2023
Lister Drive	Merseyside	50	2	Q2 2023
Bradford West 2	West Yorkshire	100	2	H2 2023
Monvalet	Rep. of Ireland	180	1	H1 2024
Shilton Lane	Scotland	40	1	H1 2024
Total/Average		747	1.6

Source: Gresham House Energy Storage Fund

Stifel analyst Sachin Saggar said the raise was ‘not unexpected and appears to be occurring at a flat premium’ to the manager forecast NAV. He added it was ‘interesting to note that of the 747MW pipeline 437MW relates to two-hour batteries’ that will be largely commissioned in the first half of next year. 

These longer duration batteries – a focus of GRID’s new rival Harmony Energy Income (HEIT ) – are more costly but have the potential to generate higher revenues, according to the analyst. 

The raise continues the flurry of activity across GRID’s energy storage peer group.

Established rival Gore Street Energy Storage (GSF ), which floated in May 2018, raised £150m last month in a ‘significantly oversubscribed’ issue. The £577m trust managed by Alex O’Cinneide is using the proceeds to acquire a pipeline of investments of approximately 1.3GW, comprising 900MW in the UK, 375MW in North America and 100MW in Europe.

Harmony, the £242m new entrant that listed in November last year, recently announced a bumper first quarter, with an NAV increase of 8.9% to £228.7m, or 108.9p per share, up 8.9p over the three months from the end of January.

Bluefield delays

Bluefield Solar Income fund (BSIF ) extended its own shares issue on Tuesday in response to uncertainty over the windfall tax news. 

The £645m closed-end fund proposed issuing new shares at 130p two weeks ago, but announced it would extend the issue timetable in response to Sunak’s windfall plans, allowing ‘investors to consider the topics raised by the press speculation’. The placing will now close next Tuesday.

The renewable infrastructure trust managed by James Armstrong is one of several that have been diversifying into energy storage assets, recently acquiring two 40MW battery storage projects from Green Hedge Energy UK for approximately £4.5m.