A pair of new income generating investment trusts with a strong ESG (environmental, social and governance) focus plan to launch on the London Stock Exchange (LSE) through initial public offerings that will be available to retail investors.
Blackfinch Renewable European Investment Trust plans to raise up to £300 million for investment in a diversified portfolio of mixed renewable energy infrastructure assets in Europe, while Responsible Housing REIT wants to rake in as much as £250 million to put to work across a portfolio of UK Support Housing accommodation assets in order to generate a sustainable income for investors.
BLACKFINCH TAKES FLIGHT
Managed by renewable energy sector specialist Blackfinch, ‘BRET’ intends to deliver an attractive level of dividends and scope for capital appreciation over the medium to long term.
The trust is initially focusing on solar, wind and hydro assets in less crowded markets such as Italy, Portugal, Poland, Czech Republic, Austria and Hungary. It will acquire assets that are operational, ‘shovel-ready’ and also in-construction.
Seed assets worth roughly £232 million are under option for acquisition and Blackfinch has identified a £500 million-plus pipeline of further opportunities.
Once fully invested, the fund will target a dividend yield of between 1%-to-3% for the year to 30 June 2022, rising to 5%-to-5.5% for the year to June 2023 and to 6% thereafter.
BRET should also qualify for the LSE’s Green Economy Mark, which recognises that 50% or more of total annual revenues derive from services that contribute to the global green economy.
‘Demand for renewable energy in Europe is enormous,’ insisted the trust’s chairman, Anthony Marsh, ‘and there is a critical undersupply. This new investment trust will create a portfolio of European renewable energy infrastructure assets capable of generating stable long-term cash flows that will support a dividend yield over the medium-to-long term of 6% per annum and more, and total shareholder returns of over 8% per annum.’
ACCOMMODATION SHORTAGE
Meanwhile, BMO-managed Responsible Housing REIT is targeting a 5% dividend yield on the issue price (2.5p in year one) when fully invested, with the potential to grow in absolute terms through inflation linked lease agreements.
Targeting an NAV (net asset value) total return of a least 7.5% a year over the medium term, the trust’s strategy and dividend target are underpinned by long-term demographic drivers and inflation-linked income.
The UK’s Supported Housing sector experiences continuous resident demand, but continues to suffer from a lack of available, quality and fit-for-purpose accommodation.
As Guy Glover, lead manager at BMO, explained: ‘While local authorities have a statutory duty to provide for those in need of Supported Housing, the UK faces a shortage of suitable accommodation, underpinning our conviction in a strategy delivering a balance between all stakeholders to create a truly sustainable model.’
Numis Securities said: ‘We believe there are strong demand dynamics for the sector and a pressure to keep residents out of more expensive hospital care, and the sector benefits from meeting a social need.’
