Downing Renewables & Infrastructure Trust (DORE) is intending to raise £200 million through an initial public offering (IPO) to invest in a portfolio of renewables including solar PV.
It is expecting to secure an option to acquire a seed portfolio of up to £50 million comprising of c.96MWp of operational UK solar PV projects with an average operating track record of six years.
So far it has secured up to £30 million of cornerstone investment, with Downing LLP and Downing managed funds intending to invest c.£20m and a further £10m of commitments secured under a letter of intent from existing Downing clients.
The full portfolio of renewables is to also include wind, hydro and geothermal, with DORE looking to ensure it is diversified by technology and geography in a bid to increase the stability of revenues and reduce seasonal variability. It is also looking to diversify the portfolio by project stage, allowing it to enhance returns by investing in assets that are in construction or are construction-ready.
Tom Williams, head of energy and infrastructure at Downing LLP, said the company had chosen to diversify the portfolio in this way to “we reduce our dependency on any one renewable energy resource, any single jurisdiction and any one set of policies and regulations. Diversification introduces a natural hedge by reducing the impact of seasonal variability and increases the stability of revenues both throughout the year and year-to-year”.
The portfolio will be spread across the UK, Ireland and Northern Europe, with a pipeline of assets with a value of over £1.5 billion having been identified.
The company is to target a net asset value (NAV) total return of 6.5% – 7.5% p.a. over the medium to long term, with DORE looking to qualify for the London Stock Exchange’s Green Economy Mark at Admission, which recognises companies that derive 50% or more of their total annual revenues from products and services that contribute to the global green economy.
“We have a proven track record of investing in core renewable energy assets and have delivered an unlevered weighted-average gross IRR of 9% over the past ten years,” Williams said.
“This is now supported by our in-house data-led asset management approach which not only ensures efficient real-time asset reporting but maximises performance and enables us to optimise value over the long-term.”