The government’s capacity to back innovative investment companies is in question after the relisting of a fund in which the Foreign Office is the biggest shareholder left taxpayers open to an 83%, or £20m, loss. 

Asian Energy Impact Trust (AEIT ), formerly known as the Thomas Lloyd Energy Impact Trust, returned to the stock market this week on Budget day after its shares were suspended 11 months ago when the board discovered spiralling costs at the infrastructure fund’s construction project in India. 

Suspended at 84p, trading in the sterling shares (AEIP) reopened on Wednesday at 23.5p and have fallen to 13.6p today. That has slashed its market value from around £148m at suspension to £27m. The AEIT dollar share class has fallen a similar amount.

It means the Foreign Office, which subscribed for £24.5m of shares as a cornerstone investor in the December 2021 initial public offer (IPO), has seen its stake crumble to £4.3m.

The shares first listed at 77p and $1 respectively and currently stand on discounts of over 60% to their last published net asset values of 50 cents and 41.3p at 30 September. This is a sign of the serious doubts the market has over the portfolio. 

The decision for the Foreign Office to invest was part of a programme under then chancellor Rishi Sunak to help developing countries build sustainable infrastructure.

Its near-death experience underlines the perils of investing in emerging market infrastructure, which broker Deutsche Numis has previously called a ‘graveyard’ for investors.

The resumption in trading marks the end of a long period of limbo for shareholders, who can now sell the stock. Alongside the government, hedge fund manager Brevan Howard held a 17% stake, according to Refinitiv data, and ThomasLloyd, the Swiss fund manager sacked by the board last summer, held 12%.

However, its long-term future is highly uncertain or what investors will get back if the company winds down.

Last summer, after shareholders voted against the fund’s continuation, the board, chaired by Sue Inglis, launched a strategic review with the help of temporary transition manager Octopus Energy Generation. Inglis is due to report back next month. 

This week the board applied to the Financial Conduct Authority for the relisting following publication of the trust’s key information document (KID), having published the delayed 2022 annual and 2023 half-year reports in January.

The trust’s suspension last April was forced when the company was unable to finalise the 2022 accounts while it sought to clarify the position of a 200-megawatt project being built by its Delhi-based platform SolarArise.

ThomasLloyd was later sacked following accusations that it had misled the board over construction costs, according to allegations by a whistleblower allegations.

The renamed company has proceeded with construction of the ‘RUMS’ solar project believing that was the least value destructive option for shareholders, having extended a $20m (£16.3m) loan to Delhi-based SolarArise late last year.

Octopus has warned the project is likely to incur losses of more than the previous £13m estimate, given construction is unlikely to be completed by the end of this month. 

A stock exchange notice earlier in the week said the trust’s cash balance sat at $41.2m at the end of December after it invested a further $19.8m in SolarArise. However, it also highlighted problems with its other solar assets in India, Phillipines and Vietnam.