Octopus Renewables Infrastructure Trust PLC on Friday announced its proposal for a combination with Aquila European Renewables PLC, saying the resulting portfolio could be worth over £1 billion.
Aquila European responded later that morning, confirming ORIT’s ‘unsolicited proposals’ but saying it is considering various options for its future, including a possible merger with another investor.
On Friday morning in London, shares in Aquila European surged up 8.2% to 69.50 pence. Shares in Octopus Renewables were up 0.1% at 89.70p each.
Octopus Renewables, a London-headquartered closed-ended investment company and FTSE 250 constituent, said it ‘believes there is now a compelling logic’ to combine with AERI, saying the merger would ‘create one of the largest LSE-listed diversified renewable energy investment trusts’.
ORIT said it has attempted several times to engage with Aquila European’s board on this topic, having made its first approaches in March and May before trying again in November. However, it claimed to have received ‘no material engagement’ from AERI which ‘delayed a substantive response to ORIT’s November approach into 2024’.
ORIT said that against this backdrop, it consulted with various AERI shareholders over the past few days and received support for both companies to enter substantive discussions regarding the proposed combination.
In explaining what it views as the ‘strong rationale’ for the combination, Octopus Renewables cited a large variety of benefits. These included a further diversified portfolio of European renewable energy assets, with a combined net asset value of almost £1 billion and a gross asset value of approximately £1.6 billion. ORIT added that the resulting ‘substantial portfolio of operating assets’ would have exposure to construction and development, thereby supporting NAV growth.
Aquila European, ORIT said, would then gain exposure to its ‘growing and attractive dividend’. Octopus Renewables noted its ‘progressive dividend policy’ and is targeting a 10.5% increase for financial 2023. AERI would also gain access to ‘a significant pipeline’ of Octopus Energy Generation projects.
In its response, Aquila European confirmed that it has received ‘unsolicited proposals’ from Octopus Renewables in relation to a possible combination.
However, it reiterated its announcement on December 14 that it continues to explore various different initiatives to address the issues facing the renewables sector and to make its stock price reflect its portfolio’s real underlying value.
‘In connection with this, the board of AERI has also committed to consider broader options for the future of the company, including the possible combination with another listed investment company,’ Aquila European explained.
The company then said it intends to consider the proposed combination with Octopus Renewables, as part of this wider process, ‘early in the New Year’.
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