Greencoat UK Wind PLC (LSE:UKW)’s purchase of a stake in the London Array offshore wind farm marks a sizable investment for the company at a surprising time, analysts say, setting all eyes on this week’s interims.
Following Greencoat’s unveiling of the deal on Monday morning, Stifel turned to the fund’s half-year results, which are due on Thursday.
Having reassured that the purchase of 25% of the Kent-based windfarm for £444mln would translate to continued shareholder returns, Stifel tipped Greencoat could give more detail later this week.
Further financial details, including the deal’s effect on the shares' discount rate, could be given, alongside a more elaborate investment case.
Based on Friday’s 145p closing price, Greencoat is trading on a 13% discount to the company’s net asset value as of March 31, Stifel noted, “which offers some value”.
How the new deal affects this remains to be seen though, the investment bank continued, with the purchase set to made through debt.
The acquisition of a stake in the 630MW, 175 turbine-strong farm is estimated to up Greencoat’s debt to net asset value ratio from 39% to 50%, though cash generated during the first half may well see this offset, Stifel said.
Greencoat shares rose on Monday following the news, climbing 0.8% to 146.6p.