NextEnergy Solar fund announces IPO
NextEnergy Solar Fund Limiteda newly incorporated Guernsey company focused on operational solar photovoltaic assets located in the UK, has announced its intention to launch an initial public offering.
The Company is targeting a raise of £150 million by way of a placing and an offer for subscription of Ordinary Shares. The Company will seek to provide investors with a sustainable and attractive dividend that increases in line with RPI over the long term and an element of capital growth through the re-investment of net cash generated in excess of the target dividend.
Applications will be made to the Financial Conduct Authority (the "FCA") for the Ordinary Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for such Ordinary Shares to be admitted to trading on the London Stock Exchange's Main Market for listed securities and to the Guernsey Financial Services Commission for the Company to be declared a registered closed-ended investment scheme.
It is expected that a prospectus will be published, and that the placing and the offer for subscription will open, in February 2014 and that the IPO will close and trading in the Ordinary Shares will commence in March 2014. Cantor Fitzgerald Europe is acting as financial adviser and lead bookrunner and Shore Capital is acting as sponsor and joint bookrunner, in relation to the IPO.
The UK Government has declared solar PV a key technology in meeting its binding EU target commitment of generating 15 per cent. of its energy needs by 2020 from renewable sources. The NEC Group estimates an investment requirement of c. £11.5 billion to reach the UK Government's mid-range scenario for solar PV deployment by 2020.
The Company is targeting an RPI-linked annual dividend of 6.25 pence per Ordinary Share with a target first year dividend of 4 pence per Ordinary Share, and aggregate returns to investors over the long term that equate to an unlevered IRR of between seven and nine per cent. after fees and expenses, based on the issue price of 100 pence.1
The UK regulatory framework for solar energy is designed to encourage significant investment and Renewable Obligation Certificates provide predictable, long-term subsidised revenues linked to RPI.
Commenting on the announcement, Michael Bonte-Friedheim, CEO of Next Energy Capital Limited, said, "The UK solar market has come of age as an investment proposition, offering long-term stable returns with RPI linkage while helping the UK achieve its renewable energy targets.
The NEC Group is a leading solar specialist, managing and monitoring over 1,100 solar power plants with an estimated asset value of £3.1 billion. Having been operating in the UK since the NEC Group was founded in 2007, we are strongly committed to the UK solar market and are ideally placed to help exploit the market opportunity for investors.
We will utilise our experience in developing and constructing PV plants and our unique in-house asset management capabilities to maximise the operating, technical and financial performance over the long term. For investors, this will help drive dividends and capital growth.
Furthermore, given the pipeline of opportunities we are securing, we will be able to deploy the proceeds from the IPO within a short period after Admission and subsequently expect to grow the asset base."
Kevin Lyon, Non-Executive Chairman of the Company said, "We believe that the Company offers a highly attractive opportunity for investors seeking yield and inflation protection.
The Company specifically chose to concentrate on one technology and one country only, which coupled with the team's professional approach and specialist expertise in solar and in the UK will deliver superior risk-weighted returns to investors.
We are fortunate to be working with the NEC Group, which as a leading asset manager in the solar industry gives the Company a significant competitive advantage in the sourcing and development of investment opportunities in solar PV, as well as their ongoing management and operation."
