Aquila Energy Efficiency Share Discussion Threads

[1917again] 25/10/2022 10:28

Does anyone have a handle on the indirect gearing via the investments AEET have ?

[stagvalley] 25/10/2022 09:04

What are people's thoughts on the Feb vote? Won't the vote either sharply narrow the discount beforehand !quite likely) or lead to a decision of shareholders to wind up (less likely, but highly profitable given the massive discount at present?). I am minded to add for this reason alone. Difficult to believe that the NAV is far off the true value. The vote is only 4 months away but seems not to have had any effect yet...

[andy246] 21/9/2022 12:09

CC2014, I fully agree with your assessment.
Now we need to convince the market, or at least 1 institutional investor to start buying shares and bring the price back up

[cc2014] 21/9/2022 11:29

3.5p dividend for this year, which I assume will be 1p for the first half year, 1.25p for the third quarter and 1.25p for the fourth quarter.

Extrapolating that will be four lots of 1.25p for next year = 5p which is line with the original prospctus and makes sense given AEET will be substantially invested by around March and will be churning about a 8% return so paying out 5% is well covered.

5p dividend on today's buy price of just over 77p can't be bad, around a 6.5% yield plus a decent discount to NAV to close.

[cc2014] 15/9/2022 16:46

I guess I have my answer.

Aquila buy 195k shares in relation to their investment fee and someone is happy to supply them without the share price moving an inch.

I guess Investec only have 23.5m left to shift now.........

[cc2014] 15/9/2022 11:27

I thought the market reaction would be much stronger, but the large fund managers take far longer to think about things than you or I. Maybe they will appear later. That's why I went rushing in at 8:01 to buy. I guess 76.2p is a good price but with AEET you never know.

The most frustrating thing is there is never enough volume to really test how determined the sellers are here. It's hard to tell whether a flow of buys would push them back or not

It's also hard to tell how much of the sellers is Invesco wanting to shift perhaps millions or whether the sell volume which has mostly been small has been coming from elsewhere.

I do not know what to think really. All I know is that the sellers have been going on and on for months and months and it really would be nice to find out the level of committment from the sellers to keep going.


Thanks for pointing out AERS. I hadn't realised those trades at 88.5p were sells. I'm not really up for selling at that price but it's kind of in the area I might be tempted if I see some crazy low price on something else.

[cynicalsteve] 15/9/2022 10:55

Bought 4000 this morning at 77.8. Raised the cash by selling the other Aquila fund AERS because they are not my favourite fund manager at the moment. Dare not buy more because I've got far too many. On the other hand that 1p dividend is going to be several hundred pounds for me. CC2014, I think you're right about them being in the dog house but thought there would be some market reaction.

[cc2014] 15/9/2022 10:29

Regrettably the floundering share price shows what happens once investors lose confidence. It's going to take a long time to shake that off, although I suspect once the dividend reaches 5p and it's 100% invested all will be forgiven.

SEIT is a large fund, around £1.25bn, fully invested and has delivered what it set out to do. The liquidity is good and it deserves it's premium share price.


TENT is a bit all over the place and I believe is suffering by having too many eggs in one basket with about 30% of it's revenues from one company, the largest tomato supplier in the UK. Obviously that's a challenging business to be in right now with shortages of labour and very high heating costs. It's market cap is small at around £100m, but has some interesting investments including Hydro and in deployment battery storage. I own a few. I paid 96p. The discount seems a bit harsh to me.

The investments in AEET look better than TENT to me. Certainly less credit risk and more diversified.

I would hope that by March 23 the discount here is down to 10% and I would expect it to continue to close slowly after that to less than 5%. The difficulty is that AEET really needs to get to a premia so it can issue more shares and I don't see how that's going to happen. Sure I can see it taking on some debt and getting the invested assets up to £125m but it's hard to see it getting anywhere near the AUM required for FTSE250 entry.


The immediate question is whether Invesco, the largest shareholder will stop selling out now they will get and income stream through dividends or whether they have lost the plot with the Board and just want out regardless.

[cynicalsteve] 15/9/2022 09:38

Thanks CC2014, at last some news that isn't bad.
I wonder what the 'normal' premium/discount to NAV will be. There are two other funds that are similar to AEET, although energy efficiency/transformation is a very diverse area of investment. TENT is on a discount of 10%, SEIT is at a 6% premium. I think we can all agree AEET is going to trade at a discount.
One thing in the half year report that slightly annoyed me was the comment 'The disappointing share price performance has yet to reflect the increasing level of commitments that the Company has achieved post period end'. I don't think they have the right to complain about OUR slow response to events!!!

[cc2014] 15/9/2022 08:06

On the basis on the RNS of the dividend starting I bought some more this morning.

I've been adding too since my last post.

3.5p dividend this year plus 55% now committed and 32% deployed with substantial committment by year end all at a 8.1% return surely means the share price will go up at some point in the future?

[cc2014] 02/9/2022 14:03

Bought a few more today. Felt like a safe place in the current environment.

[cynicalsteve] 15/8/2022 12:09

CC2014, if I had not invested in AEET the money would have gone into other Renewables/Energy Efficiency funds and US Treasury ETFs, definitely not the other 95% you mentioned! You do raise a good point about selling Renewables funds, when do we sell and even more important what do we buy? I agree that at this time AEET could be a long term buy, assuming Invesco isn't trying to get rid of the whole 25%! If they are voluntary liquidation of the whole fund should be at least considered.

[cc2014] 15/8/2022 11:25

Or you could have picked on of the 95% of the other stocks which have all fallen since February as the markets collapsed and be very grateful to be sitting in AEET.

I see you point of view though. I've recently sold my FSFL and NESF bought in Feb and some other renewables and switched some into AEET.

A 20%+ gain on FSF plus some dividends along the way were enough for me on FSFL and at current prices I think the risk/reward has changed.

[cynicalsteve] 15/8/2022 09:59

Even if things go well from now on it's not going to make up for the opportunity cost of holding AEET. If I hadn't invested in this I would have invested much more in funds like JLEN. The small amount of JLEN I did buy in February is up over 20%, AEET is never going to be able to catch up, the relative loss is permanent.

[andy246] 15/8/2022 09:42

CC2014, thanks for the insight on Investec being the seller.
I wonder if the sales are driven by fund managers at Investec Wealth, or come from the accounts of uncoordinated individual investors at Investec.

The next major catalyst is going to be the reinstatement of the dividend.

hxxp://pandora-capital.com/AEET.html

[cc2014] 15/8/2022 08:58

Investec are our large seller.

02/06/21 25.78%
23/02/22 24.99%
12/08/22 23.95%

The share price is going nowhere under that force of selling until either
a) someone with bigger pockets than me sees AEET as ridicously undervalued or
b) a significant proportion of the investments start realising a 8% return and AEET are paying the 5% dividend.

Starting the dividend would help.

[andy246] 12/8/2022 12:18

Jonwig,
I'm not sure the comparison to SEQI is fair. Most of the SEQI loans have no parent guarantee or the parent is unrated and has a risk profile equivalent to single-B or triple-C (the recent defaults would fall in this credit risk bucket). This is much riskier than AEET's loans, which are mostly with investment grade counterparties.

[jonwig] 12/8/2022 12:15

The short loan duration is a plus, but the BBB and under is less so. Italy is potentially a huge problem at government level, maybe less so at corporate level - I don't know.

[cc2014] 12/8/2022 12:07

The factsheet had nothing new in it. I was hoping for an update with the factsheet on the dividend. I think now that some of the portfolio is invested and generating income it's not unreasonable to start the dividend even if at a low rate.

It's done nothing to help the share price yet.


Regrettably I'm in agreement that some level of discount may be persistent as the reputation of this fund has already been damaged. It's going to take a while to shake that off, but even a move to a 10% discount which I see as too low would give a share price of 88p.

Comparing with SEQI I am relaxed. The loan to Salt Lake Potash was very poor judgement and I do not think Aquila are into that sort of game. They may be common in that they are both loans not equity but Aquila's loans are backed by an income stream at the lender which is well understood, whereas Salt Lake Potash was just an ongoing basket case of poorly understood construction risk. Your comparison is well made though. I'm relaxed but that doesn't mean everyone else is. After all, someone keeps selling down their shareholding in seemingly endless quantities. People sell for all sorts of reasons and sometimes they are very good ones.

[jonwig] 12/8/2022 11:29

The June factsheet has been published. Interesting in that it doesn't stress something it should, which is in the prospectus. That is that the investments are all debt financing, not equity. Level of security is not mentioned.

57% of the loans are BBB or below, and 74% of the terms are 0-5 years. This, as much as tardiness is probably responsible for the nav discount. A similar company, SEQI also trades at a discount and has had issues with two of its loans.

This could mean that the discount is persistent.

[mrcontrarian1] 25/7/2022 10:25

Thanks for posting presentation. Seems like they need a debt facility until track record builds and (hopefully) they get premium to NAV position in future and can start growing / issuing shares and market forgets about this slow start. Not sure how likely new share issues will be but hope this trust can stick it out, like what it does

[cc2014] 25/7/2022 09:26

Presentation published. Slide 16 the most pertintent reflecting the pipeline

Also slide 24 shows average portfolio return of 8.22% on investments made to date.



Further committment to all capital committed by Dec 22 and deployed by Mar 23.

[cc2014] 25/7/2022 08:06

77.26 to buy. I squeezed in another 5k. I'm fully invested now. Can't buy any more unless I sell something and I have plenty of AEET already.

[jonwig] 25/7/2022 07:56

Sorry, you're right.
NB. presentation today.