Downing Renewables & Infrastructure Trust PLC (DORE) has announced plans for an initial public offering to raise up to £200 million to invest in a diversified renewables portfolio including wind, solar, hydro and geothermal along with other infrastructure assets in the UK, Ireland and Northern Europe.
It said it has identified and expects to secure an option to acquire a seed portfolio for up to £50m comprising of around 96 MW of operational UK solar PV projects with an average operating track record of six years, generating EBITDA of £9.9 million in the year to 31 March 2020.
In addition, it has identified a significant pipeline of assets with a value in excess of £1.5 billion. Downing is in advanced discussions to secure exclusivity in relation to assets with a total equity value of approximately £70 million in the wind and hydro sectors in Sweden and Norway.
The proposal will see the company admit its shares to trading on the London Stock Exchange’s main market and it said it had already secured up to £30 million of cornerstone investment from Downing LLP, Downing managed funds and existing clients.
Head of Energy and Infrastructure at Downing LLP Tom Williams said: “DORE will focus on delivering sustainable income streams and capital growth by investing in a portfolio of renewable energy and infrastructure assets diversified not only by technology but by geography, project stage and revenue.”
It said this would allow the company to enhance returns by investing in assets that are in construction or are construction-ready. “By constructing a truly differentiated portfolio in this way, we reduce our dependency on any one renewable energy resource, any single jurisdiction and any one set of policies and regulations,” Williams added.
“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.”
Downing, the Company’s Investment Manager, has managed 116 investments into solar parks, wind farms and hydroelectric plants since 2010, delivering an unlevered weighted-average gross IRR of 9% as at 30 June 2020.
The company said active asset management was fundamental to the investment strategy, and its asset management team will be involved throughout the construction period and will oversee key stakeholders to ensure assets are built to the highest standard.