Greencoat Renewables (GRP) has unveiled a bold new five-year strategy to unlock shareholder value from its portfolio. The sustainable energy investment trust’s new strategy will combine asset recycling, balance-sheet deleveraging and expansion into green digital infrastructure, including data centres, to reverse investor’s negative take on the trust.
It also plans a €100 million share buyback programme by 2030.
Over the past five years, Greencoat Renewables’ stock has diverged dramatically from net assets performance. That has stretching its NAV discount to over 30%, miles wider than its 6.2% average, based on Trustnet data. Annualised total return (share price plus dividends) since 2021 stands at -3.8% a year, according to Morningstar data, versus NAV’s 6% a year.
Major strategy shake-up
To reverse this, Greencoat Renewables outlined plans for €300 million to €400 million in asset disposals over the next 18 months, with proceeds earmarked for debt reduction and capital recycling. Management expects the programme to help lower gearing to around 45% by 2027, from 110% currently, strengthening the balance sheet while maintaining shareholder returns.
As part of the strategy, the firm also announced a €100 million share buyback, alongside €300 million to €350 million in dividends over the period.
Greencoat expects its operating portfolio to generate €500 million to €600 million in organic free cash flow over the next five years. Combined with planned disposals and capital recycling, total cash generated across the strategy could reach about €1.3 billion, according to company estimates.
Power output and storage
A key pillar of the plan is the hybridisation of existing renewable assets. The trust intends to invest €150 million to €200 million in co-located battery storage and solar capacity, targeting an unlevered internal rate of return above 13%.
The hybridisation programme includes 175MW of battery energy storage systems across 10 sites and 160MW of solar capacity across six assets, allowing the company to improve power output flexibility and capture higher wholesale prices.
Beyond traditional renewables, Greencoat is also moving into energy-linked digital infrastructure through a new joint venture with SCSL Global Energy Infrastructure, a newish fund that has endured its own performance issues. The platform will focus on developing energy-ready sites for data centres in Ireland, a market experiencing rapid demand growth due to artificial intelligence and cloud computing.
The partnership has already secured its first project at Drogheda Energy Park, a 36MW consented site with potential for expansion. Greencoat said the platform targets returns of more than three times the initial cash investment.
Looking further ahead, the trust plans a second phase of portfolio recycling between 2027 and 2030, potentially generating €300 million to €400 million in additional proceeds by selling merchant assets and reinvesting into contracted renewable projects at earlier development stages.
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