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viewSDCL Energy Efficiency Investments

SDCL Energy Effcncy. - Proposed Placing to Fund Acquisition Pipeline

RNS Number : 5496P
SDCL Energy Efficiency Income Tst
11 October 2019
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, TO US PERSONS OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS, ANY OFFER FOR SALE OR SUBSCRIPTION OF, OR SOLICITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR, ANY SHARES IN THE COMPANY OR SECURITIES IN ANY OTHER ENTITY, IN ANY JURISDICTION, INCLUDING THE UNITED STATES, NOR SHALL IT, OR ANY PART OF IT, OR THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR INVESTMENT DECISION WHATSOEVER, IN ANY JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A RECOMMENDATION REGARDING ANY SECURITIES. ANY INVESTMENT DECISION MUST BE MADE EXCLUSIVELY ON THE BASIS OF THE PROSPECTUS PUBLISHED BY THE COMPANY ON 22 NOVEMBER 2018 IN CONNECTION, INTER ALIA, WITH ITS SHARE ISSUANCE PROGRAMME (THE "PROSPECTUS").

 

THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION.

 

11 October 2019

 

 

SDCL Energy Efficiency Income Trust plc  

(the "Company") 

 

Proposed Placing of New Ordinary Shares to Fund Acquisition Pipeline
 

The Board of Directors (the "Board") announces a proposed non pre-emptive placing of new Ordinary Shares in the capital of the Company (the "Placing Shares") under its existing Share Issuance Programme to institutional investors (the "Placing"), at a price of 103.0 pence per Placing Share (the "Placing Price").

 

In addition, the Company today announces that the unaudited estimated NAV as at 30 September 2019 ("eNAV") was approximately £169.5 million, equivalent to 99.0 pence per Ordinary Share.

 

The Placing Price represents a discount of approximately 6.4 per cent. to the closing price of 110.0 pence per Ordinary Share at the close of business on 10 October 2019 and a premium of approximately 4.0 per cent. to the eNAV per Ordinary Share as at 30 September 2019. The size of the Placing will be determined once the bookbuild process has completed.

 

The Company has announced a number of significant acquisitions since its admission on 11 December 2018. Most recently, on 20 September 2019 the Company announced it had exchanged contracts for the acquisition of a cogeneration portfolio in Spain for €64 million, expected to complete in the current quarter.

 

The Company's target gearing is up to 35 per cent., with gearing of up to 50 per cent. of NAV available on a short-term basis to finance acquisitions. Following completion of this latest acquisition, the Company's net debt position on a look-through consolidated basis is expected to be approximately £77 million, equivalent to approximately 45 per cent. of the Company's eNAV as at 30 September 2019.

 

The Company continues to have a strong pipeline of energy efficiency investment opportunities and intends to use the net proceeds of the Placing to assist in funding the acquisition of certain identified project assets. Prospective acquisitions include a portfolio of energy efficiency projects in Continental Europe and portfolios of on-site energy and energy efficiency projects in the United States.

 

The Placing Shares, when issued, will rank pari passu with the existing Ordinary Shares including the right to receive all dividends and other distributions declared, made or paid after the date of issue.

 

The Company expects to declare an interim dividend of 2.5 pence per share in respect of the six-month period to 30 September 2019 in November 2019. For the avoidance of doubt, investors who participate in the Placing, and continue to hold their Placing Shares as at the relevant record date, will be entitled to receive this dividend.

 

The Placing is being launched immediately following this announcement and will close at 3:00 p.m. BST on 17 October 2019. Jefferies International Limited ("Jefferies") is acting as sole bookrunner in connection with the Placing.

 

Expected Timetable

 

Placing opens


11 October 2019

Latest time and date for receipt of Placing commitments


3:00 p.m. BST on 17 October 2019

Announcement of the results of the Placing


18 October 2019

Admission of the Ordinary Shares to the Official List and to trading on the London Stock Exchange's main market for listed securities


As soon as practicable after 8.00 a.m. BST on 21 October 2019

Crediting of CREST stock accounts


21 October 2019

 

The Company, in consultation with Jefferies, reserves the right to close the Placing early. In such event, the Company will notify investors by the publication of a notice through a Regulatory Information Service.

 

 

Background to the Placing

 

On 22 November 2018, the Company published a prospectus in connection with a Share Issuance Programme for up to 500 million Shares (the "Prospectus") and on 11 December 2018 the Company announced its admission to the London Stock Exchange in respect of 100 million Ordinary Shares (the "IPO").

 

Following the Company's IPO, the Company acquired a seed portfolio comprising nine Energy Efficiency Projects for a total cash consideration of £57 million. In addition, the Company entered into three contracted investment opportunities with identified Counterparties totalling c.£30 million, which have not yet been drawn down.

 

On 7 March 2019, the Company announced its first acquisition in the United States comprising a 71% interest in a high-quality Combined Heat and Power portfolio of eight operating projects for a total cash consideration of $5 million.

 

On 16 April 2019, the Company announced the result of its successful placing of a further 71.3 million new Ordinary Shares, raising gross proceeds of £72.0 million to fund its pipeline of acquisition opportunities.

 

On 19 June 2019, the Company announced its second project investment since IPO, comprising a portfolio of rooftop solar photovoltaic projects in the United Kingdom with Tesco plc. The initial batch of solar projects is c.1 megawatt of a first phase of c.5 megawatts with additional solar projects scheduled under a framework agreement.

 

On 9 September 2019, the Company announced its investment in a portfolio of energy efficiency loans in the United States for $22 million, structured as a portfolio of secured senior and subordinated loans, into a widely diversified portfolio of contracts.

 

As noted above, on 20 September 2019 the Company announced it had exchanged contracts for the acquisition of a cogeneration portfolio in Spain for €64 million, expected to complete in the current quarter. Following completion of this latest acquisition, the Company will be near-fully invested.

 

Dividend policy

 

In accordance with its dividend policy, the Company is targeting an annual dividend yield of 5.0 per cent. by reference to the initial issue price of £1.00 per Ordinary Share for the year ending 31 March 2020, rising to 5.5 per cent. in the year ending 31 March 2021, and a growing yield thereafter.

 

An initial interim dividend in respect of the period from admission on 11 December 2018 to 31 March 2019 of 1.0 pence per Ordinary Share was declared in May 2019 and paid on 28 June 2019.

 

As noted above, an interim dividend of 2.5 pence per share in respect of the six month period to 30 September 2019 is expected to be declared in November 2019.

 

Dividends are expected to be fully covered by adjusted earnings of the Company.

 

Details of the Placing

 

The Company intends to issue a fixed number of Placing Shares which will comprise the third tranche of the Company's Share Issuance Programme of up to 500 million new Ordinary Shares, following its issue of 100 million Ordinary Shares at IPO and a further 71,287,129 shares in relation to the Company's placing in April 2019.

 

The Placing is conditional inter alia, on the Placing Shares being admitted to listing on the premium listing segment of the Official List of the UK Financial Conduct Authority (the "FCA"), and to trading on the main market for listed securities of the London Stock Exchange plc (the "London Stock Exchange") (together, "Admission").

 

The Placing is subject to the terms and conditions set out in the Prospectus dated 22 November 2018.

 

Jefferies will today commence a bookbuild process in respect of the Placing at the Placing Price. The Placing will be non pre-emptive pursuant to the terms set out in the Prospectus and the book will open with immediate effect following this Announcement and is expected to close no later than 3:00 p.m. BST on 17 October 2019 but may be closed earlier or later at the absolute discretion of Jefferies and the Company. Details of the number of Placing Shares to be issued pursuant to the Placing will be determined by the Company (following consultation with Jefferies) and will be announced as soon as practicable after the close of the Placing. The Placing Shares will be allocated at the discretion of Jefferies in consultation with the Company.

 

Application will be made for Admission of the Placing Shares. Subject to Admission becoming effective, it is expected that settlement of subscriptions by placees in respect of the Placing Shares and trading in the Placing Shares will commence at 8.00 a.m. on 21 October 2019, or such later time and/or date as may be announced by the Company after the close of the Placing.

 

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood each of this Announcement and the Prospectus in its entirety and to be making such offer on the terms and subject to the conditions in this Announcement, and to be providing the representations, warranties and acknowledgements contained in the Prospectus.

 

Your attention is drawn to the detailed terms and conditions of the Share Issuance Programme set out in the Prospectus.

 

Terms used in this announcement shall, unless the context otherwise requires, bear the meanings given to them in the Prospectus which can be found on the Company's website at www.sdcleeit.com.

 

Dealing codes

 

Ticker

SEIT

ISIN for the Ordinary Shares

GB00BGHVZM47

SEDOL for the Ordinary Shares

BGHVZM4

 

 

For Further Information

 

Sustainable Development Capital LLP

Jonathan Maxwell

Miles Alexander

Keith Driver

 

T: +44 (0) 20 7287 7700

 

Jefferies International Limited

Gary Gould

Tom Hovanessian

 

T: +44 (0) 20 7029 8000

 

TB Cardew

Ed Orlebar

Lucas Bramwell

T: +44 (0) 20 7930 0777

M: +44 (0) 7738 724 630

E: seeit@tbcardew.com

 

 

About the Company

 

SDCL Energy Efficiency Income Trust plc (the "Company") 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 at IPO, the Company has announced investment in a 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 and a portfolio of cogeneration assets in Spain.

 

The Company aims to deliver shareholders value through its investment 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 £1.00 per Ordinary Share), with a stable dividend income, capital preservation and the opportunity for capital growth.

 

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"), 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.

 

 

DISCLAIMERS

 

This announcement is not an offer to sell or a solicitation of any offer to buy the Shares in the Company in the United States, Australia, Canada, New Zealand or the Republic of South Africa, Japan, or in any other jurisdiction where such offer or sale would be unlawful.

 

This communication is not for publication or distribution, directly or indirectly, in or into the United States of America. This communication is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

 

The Company has not been and will not be registered under the US Investment Company Act of 1940 (the "Investment Company Act") and, as such, holders of the Shares will not be entitled to the benefits of the Investment Company Act.  No offer, sale, resale, pledge, delivery, distribution or transfer of the Shares may be made except under circumstances that will not result in the Company being required to register as an investment company under the Investment Company Act. 

 

This communication is only addressed to, and directed at, persons in member states of the European Economic Area (other than the United Kingdom) who are "qualified investors" within the meaning of Article 2(e) of the Prospectus Regulation ("Qualified Investors").  For the purposes of this provision, the expression "Prospectus Regulation" means Regulation (EU) 2017/1129. In addition, in the United Kingdom, this communication is being distributed only to, and is directed only at, Qualified Investors: (i) who have professional experience in matters relating to investments who fall within the definition of "investment professional" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (ii) who are high net worth companies, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order, and (iii) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons").  Any investment or investment activity to which this communication relates is available only to and will only be engaged in with such persons. This communication must not be acted on or relied on in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors.

 

The merits or suitability of any securities must be independently determined by the recipient on the basis of its own investigation and evaluation of the proposed investment trust. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities.

 

This announcement may not be used in making any investment decision.  This announcement does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment.  This announcement does not constitute and may not be construed as an offer to sell, or an invitation to purchase or otherwise acquire, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this announcement (including, without limitation, any illustrative modelling information contained herein), or its completeness.

 

Nothing in this announcement constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient.

 

The information and opinions contained in this announcement are provided as at the date of the document and are subject to change and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability or duty (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, SDCL, Jefferies or any of their affiliates or by any of their respective officers, employees or agents in relation to it. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this announcement or on its completeness, accuracy or fairness. The document has not been approved by any competent regulatory or supervisory authority.

 

The Company has a limited trading history. Potential investors should be aware that any investment in the Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. The returns set out in this document are targets only. There is no guarantee that any returns set out in this document can be achieved or can be continued if achieved, nor that the Company will make any distributions whatsoever. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the returns set out in this document. Potential investors should read the section entitled ''Risk Factors'' of the Prospectus when considering an investment in the Company.

 

The information in this announcement may include forward-looking statements, which are based on the current expectations and projections about future events and in certain cases can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereon) or other variations thereon or comparable terminology. These forward-looking statements, as well as those included in any related materials, are subject to risks, uncertainties and assumptions about the Company, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions.  In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. 

 

Each of the Company, SDCL, Jefferies and their affiliates and their respective officers, employees and agents expressly disclaim any and all liability which may be based on this announcement and any errors therein or omissions therefrom.

 

No representation or warranty is given to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any.  Any views contained herein are based on financial, economic, market and other conditions prevailing as at the date of this announcement.  The information contained in this announcement will not be updated.

 

This announcement does not constitute or form part of, and should not be construed as, any offer or invitation or inducement for sale, transfer or subscription of, or any solicitation of any offer or invitation to buy or subscribe for or to underwrite, any share in the Company or to engage in investment activity (as defined by the Financial Services and Markets Act 2000) in any jurisdiction nor shall it, or any part of it, or the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction.  This announcement does not constitute a recommendation regarding any securities.

 

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Company's Shares or passed upon or endorsed the merits of the offering of the Company's Shares or the adequacy or accuracy of this announcement.

 

Prospective investors should take note that the Company's Shares may not be acquired by: (i) investors using assets of: (A) an "employee benefit plan" as defined in Section 3(3) of US Employee Retirement Income Security Act of 1974, as amended ("ERISA") that is subject to Title I of ERISA; (B) a "plan" as defined in Section 4975 of the US Internal Revenue Code of 1986, as amended (the "US Tax Code"), including an individual retirement account or other arrangement that is subject to Section 4975 of the US Tax Code; or (C) an entity which is deemed to hold the assets of any of the foregoing types of plans, accounts or arrangements that is subject to Title I of ERISA or Section 4975 of the US Tax Code; or (ii) a governmental, church, non-US or other employee benefit plan that is subject to any federal, state, local or non-US law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the US Tax Code.

 

Jefferies is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Jefferies is acting for the Company and no one else in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Jefferies or for affording advice in relation to any transaction or arrangement referred to in this announcement. This announcement does not constitute any form of financial opinion or recommendation on the part of Jefferies or any of its affiliates and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.

 

In accordance with the Packaged Retail and Insurance-based Investment Products Regulation (EU) No 1286/2014, the Key Information Document relating to the Company is available to investors at www.sdcleeit.com.


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.
 
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