IN­VEST­MENT TRUSTS

SDCL En­ergy Ef­fi­ciency In­come Trust is hop­ing to float on 11 De­cem­ber

Shares - - CONTENTS - By Tom Sieber Deputy Ed­i­tor

SEEIT eyes ‘third wave’ of in­fras­truc­ture in­vest­ment trusts

There is a grow­ing ap­petite among in­vestors for as­sets whose re­turns are rel­a­tively un­cor­re­lated to the wider mar­ket given the re­cent volatil­ity in stocks.

The team be­hind up­com­ing in­vest­ment trust float SDCL En­ergy Ef­fi­ciency In­come Trust,

or SEEIT for short, are cer­tainly hop­ing to cap­i­talise on this sit­u­a­tion as they look to raise £150m to in­vest in a se­ries of en­ergy ef­fi­ciency projects.

The in­vest­ment trust will act as the fi­nancier for in­fras­truc­ture in­vest­ments and sub­con­tract the in­stal­la­tion work to third par­ties.

The trust will be man­aged by Sus­tain­able Devel­op­ment Cap­i­tal (SDCL), an in­vest­ment firm with ex­per­tise and ex­pe­ri­ence in the en­ergy ef­fi­ciency space. It has a tar­get to de­liver a to­tal re­turn of be­tween 7% and 8% a year with an ini­tial div­i­dend of 5% ris­ing to 5.5% in the year to March 2021. The shares are ex­pected to start trad­ing on 11 De­cem­ber.

Founder and chief ex­ec­u­tive of SDCL Jonathan Maxwell tells

Shares that SEEIT is the first of a third wave of in­fras­truc­ture linked ve­hi­cles af­ter the larger, gen­er­alised in­fras­truc­ture plays like HICL (HICL) and the re­new­able en­ergy in­vestors like Green­coat UK Wind (UKW).

He says the propo­si­tion tack­les four big chal­lenges in the en­ergy mar­ket, namely se­cu­rity, car­bon emis­sions, cost and the pres­sures on sup­ply.

The seed port­fo­lio is pri­mar­ily made up of op­er­a­tional as­sets or con­tracts agreed with high qual­ity clients, di­ver­si­fied by con­tract length, tech­nol­ogy and sec­tor.

This in­cludes nine en­ergy ef­fi­ciency projects val­ued at £57m, and three con­tracted in­vest­ment com­mit­ments with iden­ti­fied cus­tomers to­talling £30m, which have not yet been drawn down. A £500m pipe­line has also been iden­ti­fied. Around half of the projects are con­tracted for more than 10 years and 94% more than five years.

The projects are di­ver­si­fied by sec­tor, with 59% in in­dus­trial ap­pli­ca­tions, 21% in the bank­ing sec­tor and the re­main­der across var­i­ous other sec­tors in­clud­ing health­care and park­ing.

Maxwell be­lieves the com­pany might be fully in­vested more rapidly than the six-to-ninemonth time­frame which has been out­lined in the trust’s launch doc­u­ments.

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