Octopus Renewables Infrastructure Trust (ORIT) has proposed combining with Aquila European Renewables to create one of the largest LSE-listed diversified renewable energy investment trusts.
“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”),” said ORIT.
The board of ORIT added it believes there is a strong rationale for shareholders of both companies, and the proposed combination could deliver a number of benefits:
• A further diversified portfolio of European renewable energy assets, with a combined portfolio net asset value of almost £1bn and gross asset value of around £1.6bn.
• Complementary portfolios offering increased geographic diversification, with almost no overlap between the two.
• Greater technological diversification, with the combined portfolio including onshore and offshore wind, solar, 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% in-line with inflation (CPI) and a progressive dividend policy.
• Creation of one of the largest, LSE-listed diversified renewable energy investment trusts, a FTSE 250 constituent with a combined market capitalisation of circa £745m 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.
• 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 it said, 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 said it has consulted with a number of AERI shareholders, receiving support for the Boards of ORIT and AERI to enter substantive discussions regarding the deal.
Since the shareholder consultation, ORIT said it 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.