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TRIG issuing shares at big premium to ‘stale’ NAV

20 May 2020

Renewables Infrastructure Group (TRIG), a popular alternative income investment company, is attempting to raise around £50m in a share issue priced at up to 9% over its net asset value (NAV).

The Renewables Infrastructure Group (TRIG ) is attempting to raise around £50m in a share issue priced at up to 9% over net asset value (NAV).

Although it is good practice for investment companies to issue new shares at a small premium over NAV to boost the stakes of existing shareholders and avoid them paying the costs of a fund-raising, it is unusual for the premium to be so high.

The ‘tap’ issue, announced yesterday, will enable the £2bn wind and solar power fund to replenish its bank overdraft and meet the £35m cost of construction projects this year and next. 

It is priced at 120p, a 5.8% discount below the closing price of its shares on Monday and a 4.3% premium to its 31 December NAV per share of 115p.

However, that end-of-year NAV is very much out of date after the company last month cautioned that falling long-term power price forecasts, which have cast a shadow over the renewables fund sector this year, had probably lopped 4.5% from the value of its portfolio.

Stifel analyst Iain Scouller said it was ‘a bit surprising that it is doing this when the NAV at 31 December is stale and the next one at 30 June is not due to be published until early August’.

‘It did indicate in a trading statement a few weeks ago that the NAV could have fallen by around 5% from the 115p reported at 31 December. Therefore at a price of 120p, the issue is being done at a fairly high 9% premium to this potential NAV of around 110p.’

The shares fell 4.8%, or 6p, to 121p yesterday, just above the issue price, but have added 1.9p to 123.1p this morning. 

TRIG has grown rapidly in the past seven years through fund raisings as environmental and income-seeking investors have sought out the 5.6% yielder. The Guernsey investment company raised £227.6m in October with the issue of 185m shares at 123p. 

The latest share issue comes after TRIG used up its available funds investing in German North Sea offshore wind farm Merkur with a Dutch pension fund, putting money into a French wind farm Fujin last year and, earlier this year, buying the Blary Hill wind farm in Scotland, swelling its portfolio of over 70 wind, solar, and battery storage investments. 

In an announcement, TRIG said ‘asset availability’ remains strong and ‘progress at the company’s three construction projects remains materially on-track, notwithstanding the Covid-19 pandemic’. 

‘In light of the attractive pipeline of suitable investment opportunities that InfraRed, the company’s investment manager, is continuing to evaluate for the company, the board believes that is an appropriate point at which to seek to raise money through the issue of new ordinary shares,’ it said. 

Although TRIG did not say how much it wanted to raise, Numis Securities analyst Priyesh Parmar said having renewed its ‘10% tap issuance capacity’ at the last AGM it would be able to issue up to 163.7m shares, ‘although this would generate considerably more proceeds than is needed to repay the £50m expected to be drawn on the revolving credit facility by third quarter 2020’. 

The results of the issue will be announced tomorrow with the new shares starting trading on the stock exchange next Tuesday.


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