TIDMORIT TIDMAERS
RNS Number : 6948X
Octopus Renewables Infra Trust PLC
22 December 2023
22 December 2023
LEI: 213800B81BFJKWM2JV13
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Octopus Renewables Infrastructure Trust plc
("ORIT" or the "Company")
Proposed Combination with Aquila European Renewables plc
Since the Company's IPO on the London Stock Exchange ("LSE") in
December 2019, ORIT has successfully pursued a strategy of
investing in renewable energy assets across the UK and Europe,
raising aggregate equity capital of GBP574 million and achieving
net asset value ("NAV") total return of 28 per cent. to date(1)
.
The Board of ORIT believes there is now a compelling logic to
create one of the largest LSE listed diversified renewable energy
investment trusts, through the combination of ORIT and Aquila
European Renewables plc ("AERI") (the "Proposed Combination"). The
Proposed Combination would be effected by way of a scheme of
reconstruction pursuant to section 110 of the Insolvency Act 1986
(the "Section 110 Scheme"). The Board of ORIT believes there is a
strong rationale for shareholders of both companies, and that the
Proposed Combination could deliver the following benefits:
-- A further diversified portfolio of European renewable energy
assets, with a combined portfolio net asset value ("NAV") of almost
GBP1 billion and gross asset value ("GAV") of c.GBP1.6 billion(2)
;
-- Complementary portfolios offering increased geographic
diversification, with almost no overlap between the two;
-- Greater technological diversification, with the combined
portfolio including onshore wind, offshore wind, solar PV, hydro,
green hydrogen, battery and developers (including floating offshore
wind);
-- Substantial portfolio of operating assets combined with
exposure to construction and development expected to support NAV
growth;
-- Opportunities to extend ORIT's current capital recycling programme;
-- Exposure to ORIT's growing and attractive dividend, with a
targeted increase for FY 2023 of 10.5 per cent. in-line with
inflation (CPI) and a progressive dividend policy(3) ;
-- Creation of one of the largest, LSE-listed diversified
renewable energy investment trusts, a FTSE 250 constituent with a
combined market capitalisation of c.GBP745 million(4) and expected
to offer greater secondary market liquidity;
-- Scope to access global equity and debt capital markets more efficiently;
-- Portfolio management carried out by ORIT's investment
manager, Octopus Energy Generation, a specialist renewable energy
fund management team of over 120 professionals; and
-- Access to a significant pipeline of projects sourced by Octopus Energy Generation.
The Board of ORIT has sought on several occasions during 2023 to
engage with the Board of AERI, with a view to effecting a
combination of ORIT and AERI. Approaches were initially made in
March and May 2023 ahead of AERI's 2023 annual general meeting and
continuation vote, and most recently in November 2023. Over that
period, there was no material engagement from AERI on the Proposed
Combination, having delayed a substantive response to ORIT's
November approach into 2024.
Against this backdrop and the strong rationale for the Proposed
Combination, over the past few days, ORIT has consulted with a
number of AERI shareholders, receiving support for the Boards of
ORIT and AERI to enter substantive discussions regarding the
Proposed Combination. Since the shareholder consultation, ORIT has
again contacted the Board of AERI to seek to progress discussions
regarding the Proposed Combination and looks forward to further
expected interaction over the coming weeks.
Further details
As at 21 December 2023, ORIT's shares traded at a 16.3 per cent.
discount to its last reported NAV and AERI's shares traded at a
29.3 per cent. discount to its last reported NAV(5) . The Board of
ORIT anticipates that the terms of the Proposed Combination would
be set on a FAV(6) for FAV basis, to be agreed between ORIT and
AERI.
If heads of terms are agreed with AERI, implementation of the
Proposed Combination through the Section 110 Scheme would require
approval by each company's shareholders, resulting in the voluntary
liquidation of AERI and the rollover of its assets into ORIT in
exchange for the issue of new shares of ORIT to holders of AERI
shares. Octopus Energy Generation will act as the investment
manager to the enlarged company.
In accordance with customary practice for schemes of
reconstruction pursuant to section 110 of the Insolvency Act 1986
involving investment companies, the City Code on Takeovers and
Mergers is not expected to apply to the Proposed Combination via
the Section 110 Scheme.
It is emphasised that there can be no certainty that engagement
will progress, that heads of terms will be agreed or whether the
Proposed Combination will take place at all. Should heads of terms
for the Proposed Combination be agreed, further details and a
proposed timetable of the Section 110 Scheme will be announced.
Agreement of heads of terms for the Proposed Combination will be
subject, inter alia, to the Board of ORIT and Octopus Energy
Generation completing further due diligence on AERI and its
portfolio.
The person responsible for making this announcement is Nadezda
Weissert of Apex Listed Companies Services (UK) Limited, the
Company Secretary.
Notes:
1. As at close on 21 December 2023. Total returns in sterling, including dividends reinvested.
2. Unaudited net asset values of ORIT and AERI as at 30
September 2023 of GBP604.6 million and EUR389.6 million
respectively. Unaudited gross asset values of ORIT and AERI as at
30 September 2023 of GBP1.1 billion and EUR587.2 million
respectively.
3. Target dividend for the current financial year ending 31
December 2023 (FY 2023) of 5.79p per ordinary share, of which 4.34
pence per ordinary share has been declared and paid to date via
three quarterly interim dividends. The dividend target stated in
this announcement is a target only and not a profit forecast. There
can be no assurance that this target will be met, or that the
Company will make any distributions at all and it should not be
taken as an indication of the Company's expected future results.
The Company's actual returns will depend upon a number of factors,
including but not limited to the Company's net income and level of
ongoing charges. Accordingly, potential investors should not place
any reliance on this target and should decide for themselves
whether or not the target dividend is reasonable or achievable.
Investors should note that references in this announcement to
"dividends" and "distributions" are intended to cover both dividend
income and income which is designated as an interest distribution
for UK tax purposes and therefore subject to the interest streaming
regime applicable to investment trusts.
4. Combined market capitalisation based on individual market
capitalisations of ORIT and AERI as at close on 21 December
2023.
5. Derived from ORIT's closing ordinary share price of 89.6
pence on 21 December 2023 and ORIT's unaudited NAV per ordinary
share as at 30 September 2023 (107.02 pence) and AERI's Euro
denominated closing ordinary share price (AERI LN) of 72.5 cents on
21 December 2023 and AERI's unaudited NAV per ordinary share as at
30 September 2023 (102.61 cents).
6. "FAV" denotes Formula Asset Value, being NAV following
adjustments to be agreed between ORIT and AERI.
For further information please contact:
Octopus Energy Generation (Investment Manager) Via Buchanan
Chris Gaydon, David Bird
Peel Hunt (Financial Adviser and Broker)
Liz Yong, Luke Simpson, Huw Jeremy (Investment
Banking)
Michael Nicholson, Ed Lowe, Ed Beazley (M&A) 020 7418 8900
Buchanan (Financial PR)
Charles Ryland, George Beale, Sam Adams 020 7466 5000
Apex Listed Companies Services (UK) Limited
(Company Secretary) 020 3327 9720
Notes to editors
About Octopus Renewables Infrastructure Trust
Octopus Renewables Infrastructure Trust ("ORIT") is a
premium-listed, closed-ended investment company incorporated in
England and Wales focused on providing investors with an attractive
and sustainable level of income returns, with an element of capital
growth, by investing in a diversified portfolio of renewable energy
assets in Europe and Australia. As an impact fund, ORIT is helping
accelerate the transition to net zero by investing in green energy,
whilst also contributing to a broader set of UN Sustainable
Development Goals through its impact initiatives. ORIT's investment
manager is Octopus Energy Generation.
Further details can be found at
www.octopusrenewablesinfrastructure.com
About Octopus Energy Generation
Octopus Energy Generation is driving the renewable energy agenda
by building green power for the future. Its specialist renewable
energy fund management team invests in renewable energy assets and
broader projects helping the energy transition, across operational,
construction and development stages. The team was set up in 2010
based on the belief that investors can play a vital role in
accelerating the shift to a future powered by renewable energy. It
has a 13-year track record with approximately GBP6.0 billion of
assets under management (AUM) (as of September 2023) across 16
countries and total 3.3GW. These renewable projects generate enough
green energy to power 2.4 million homes every year, the equivalent
of taking over 1.2 million petrol cars off the road. Octopus Energy
Generation is the trading name of Octopus Renewables Limited.
Further details can be found at
www.octopusenergygeneration.com
Other notices
Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated
by the Financial Conduct Authority in the UK, is acting exclusively
for ORIT and no one else in connection with the matters described
in this announcement and will not be responsible to anyone other
than ORIT for providing the protections afforded to clients of Peel
Hunt nor for providing advice in connection with the matters
referred to herein. Neither Peel Hunt nor any of its subsidiaries,
branches or affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Peel Hunt in connection with this announcement, any
statement contained herein or otherwise.
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