The Renewables Infrastructure Group (TRIG) is the latest clean energy fund taking bold steps to bring in a wide discount to net asset value (NAV).
Ahead of its continuation vote (30 June), ‘TRIG’ has bumped up its asset disposals target by £300 million to £400 million. The proceeds will help the fund prioritise share buybacks, tackle a stubbornly wide NAV discount and reduce borrowings.
TRIG has been in the spotlight since a rebellion by shareholders in InfraRed Capital Partners stablemate HICL Infrastructure (HICL) scuppered a £5.3 billion merger with TRIG last year. Critics argued the deal was motivated by InfraRed’s desire to retain TRIG’s assets and avoid the fund having to hold a continuation vote which it might lose.
Board ‘must go further’
In a strategy update, chairman Richard Morse explained: ‘The medium-term growth opportunity for TRIG is compelling for those shareholders looking to benefit from resilient income and capital growth, backed by visible cash flows from a high quality portfolio of wind, solar, and battery storage.
‘Whilst we maintain a high conviction in TRIG’s investment case, it is clear that we must go further in our actions to manage the company’s persistent share price discount.’
Incremental £300 million
TRIG said it intends to raise £400 million from asset disposals and optimising the portfolio’s structural gearing in the next 12 months. This figure includes the £100 million of disposals within TRIG’s 2025 targets and a further £300 million.
TRIG added that no new third party investments will be made. Furthermore, if the continuation vote passes, management fees will be based on market cap rather than NAV. That equates to a 19% reduction in fees.
Dividend targets reaffirmed
The dividend is a key attraction for shareholders, who welcomed TRIG’s reaffirmed cash flow and dividend targets.
The fund is targeting a flat 7.55p dividend for 2026. That implies a near-11% yield at the current share price. In addition, TRIG plans to resume dividend growth when the board ‘considers it prudent to do so’.
Analyst views
QuotedData’s Matthew Read said the announcement represents ‘a sensible and pragmatic response’ to the current environment.
Read pointed out recent sales processes across the renewables sector have shown that ‘now is not an especially attractive point in the cycle for large-scale disposals. Against that backdrop, TRIG’s strategy of selectively recycling capital over time, rather than pursuing wholesale asset sales, appears well judged.’
Winterflood’s Ashley Thomas said some shareholders may be disappointed that there hasn’t been a more radical change in strategy. Thomas also noted the board will need to ‘continue to demonstrate how it can allocate capital in a value accretive manner ahead of and beyond the critical 30 June continuation vote.’
Read the press release here: https://www.trig-ltd.com/investors/
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