Happy to get rid, given the negative change in tax environment in Norway |
Valued at Eur 25.8 at end 2023 and 35.5 at end 2022 so not a massively exciting result. |
Aquila European Renewables plc ("AER" or "the Company"), the London-listed investment company advised by Aquila Capital Investmentgesellschaft mbH ("Investment Adviser"), today announces that it has entered into a sale and purchase agreement with Sunnhordland Kraftlag AS ("SKL") to sell its 25.9% interest in Tesla for consideration of approximately EUR 27.1 million[1]. |
Perked up a bit here but still not far off the lows. Due a NAV update and divi announcement shortly. |
I think the wasting assets argument applies less to solar, because I suspect it might make sense (financial, not environmental...) to chuck the panels every 10 years and buy new more efficient ones, so it's more of a regular maintenance cost. Inverters are already 98%+ efficient, so you just replace them when they break
The big bucket of NAV assumptions is definitely an issue, because it means there is more variability and risk in there - so it's not really the bond proxy that it is sold as, it's more like equity income I guess
Mind you, you could argue that a lot of the companies in equity income funds are effectively wasting assets with a limited lifespan :) |
Methinks that perhaps the industry is creating it's own problems.
The fund managers fees in nearly all cases are based on NAV and those have been pushed high by use of loads of assumptions in the cash flow models.
I guess the share prices may eventually settle at 10% below NAV and so no new money will even get raised. |
Fair points, albeit if the tech keeps getting cheaper, do you want to buy legacy ITs? Works if they're continually adding, but those days are over (share issues over NAV).
Then it comes down to price of course, & I'd argue some are cheap enough. But I still say they're wasting assets :) |
The interesting thing is that the technology keeps getting cheaper and more efficient, at significant speed (especially solar)
So your lease with planning permission, cabling, grid connection potentially (NPI) keeps generating more with lower maintenance/replacement costs
The fly in the ointment may be governments getting greedy - for all the pontificating about green energy they just can't resist a tax grab (Norway the most recent impact here)
The other much discussed problem is the tech getting so efficient and cheap that power prices collapse. That hit the prices of all these trusts a while back (4ish years, from vague memory?), but then of course prices did the exact opposite for a while, so that's a somewhat unproven theory so far
(and ROOF was just an over-complicated idea from the start!) |
Well just as long as SUPR don't hand over the supermarket at the end of the lease. |
I suggest 95% of shareholders aren't aware of that since no-one but me seems to actually read the accounts any longer. A spreadsheet with a bunch of ratios and a brokers note seems enough for most people.
On the other hand ROOF is only paying 5.5p dividend so it's not (or won't be in the long term) paying out all its income as dividends (but watch out for increasing dividends). |
Sobering, from ROOF - wonder how many shareholders/potential shareholders are aware of that paragraph.
Agree re panels, inverter, blades, but - don't they have to raise more money to afford those replacements if everything is getting returned to shareholders via divis (or take on more debt, or sell something). Worked great when there could be regular share issues.
(In fairness, some have made some good asset sales recently). |
 So, I sort of agree with both points.
It depends on how the asset is managed.
Solar panels degrade at 0.4% a year so if you stuck them in a field which you owned the depreciation would be say 0.5% if you allowed for the inverter to be replaced every so often. The issue is that the fields are rented for a period of around 25-35 years, but already we are seeing the periods extended so it's hard to work out exactly what the depreciation is.
Wind turbines are similar although I can't give you a figure for the degradation. It's higher than solar panels but more confusingly the new blades are more efficient than the ones that are being replaced (even when the blades were new) so make of that what you will.
So, imho I don't think these assets are eating themselves as much might be apparent at first, (as long as the farmer never wants his field back). Some of the solar farms I see are now being built on what I'd describe as scrubland, which have never been farmed and makes more sense to me.
But, then we have ROOF which I will never touch. I have this copied from the annual report. Sorry I can't give a page reference but I just cut and pasted it and I'm never investing in ROOF given this. To me it looks like financial wizardry where the PPA payments pay off the lease and at the end of the lease the assets gets handed over. Basically an amortising loan. In other words at the end of the PPA the solar panels will have zero value to ROOF. (and as a consequence I'm loath to invest in SUPR as it's run by the same fund manager and I worry what financial engineering they are getting up to there too).
"Asset life on the current portfolio is assumed to be the length of the PPA and lease term as the assets are handed over to the off-taker at the end of the term, with no extension terms included in the contracts, except for the investments in front-of-the-meter assets where the asset life is expected to be 30-40 years." |
spec but asset depreciation is reflected in the NAV.
Weiss now up to 19%. |
Although I created this thread for it's initial listing, I did not invest but have continued to follow its fortunes (or lack of them).
I am now wondering if this recent performance is indicative of the entire "renewable" investment space. FWIW, I don't think interest rates will fall anytime soon, so see little chance of this recovering.. As time goes on, does the ongoing power generation performance & income continue to support the share price for the long term, or is capital simply being eaten away to provide what does on the face of it appear to be a good yield. Does it account for the declining capital value of the assets, and their future replacement?
I do hold some TRIG, and am considering selling those at a smallish loss to protect what's left...
All views appreciated.. |
If they're small (& several merger attempts have failed), probably little point keeping them going, albeit this one may be just big enough.
S/p only going to go up with IR cuts if they're unanticipated cuts IMO - otherwise, for all these & eg REITs, priced in already (one August cut).
The ticker on this seems particularly apt. |
I hold some of these along with the likes of JLEN, ROOF, GSEO, TRIG etc.
Yield here is approx 9% and discount 30%. Gearing 35% which they claim is "modest".
Continuation vote in September. Don't really see the point of winding up these types of vehicles. As long as they provide reliable income what's the point. The share price will go up naturally when , or if, interest rates come down. |
The chart is simply horrible.
I took a look and could not find a reason to buy when compared with the peer group. |
And not before time. The money being wasted on all these reviews is out of order. |
Company Update -
Aquila European Renewables plc ("AERI" or the "Company") announced on 22 December 2023, that it was considering broader options for the future of the Company, including the possible combination with another listed investment company by way of a section 110 scheme of reconstruction under the Insolvency Act 1986 (the "Section 110 Review"). The Board of AERI (the "Board") announced on 26 February 2024, that following the receipt and review of a number of indications of interest in a section 110 combination, a process of mutual due diligence with multiple interested parties had commenced.
Through the Section 110 Review, the Board received indicative non-binding section 110 offers from Octopus Renewables Infrastructure Trust plc and two other investment companies. Each indicative offer proposed the issue of newly issued shares of the listed investment company offeror as consideration and one indicative offer included a cash exit facility of up to 10% of the total consideration. On the basis of a NAV for NAV exchange, each of the three indicative offers represented an implied look through value ranging from a small premium to a discount to the current AERI share price.
Following the FY23 annual results, feedback on the Section 110 Review has been received from shareholders representing a majority of the total voting rights of the Company. Shareholders representing more than 25% of the total voting rights of the Company, sufficient to block a potential shareholder vote on a section 110 combination, indicated that they are not supportive of a section 110 combination of AERI with another listed investment company.
Alongside the shareholder feedback, the Board has taken into account the discount to NAV that the listed investment company renewables sector is currently trading on and believes that at this time, a section 110 combination with another listed investment company is not value enhancing when weighed against the other potential options open to the Company. The Board is also mindful of the additional financial costs that it would incur in running the Section 110 Review to its conclusion. The Board has therefore decided to terminate the Section 110 Review.
In light of market conditions and shareholder feedback, the Board and its advisers continue to progress the review of broader options including:
· a wind-down of the Company with an orderly realisation of its assets over a period of time;
· a potential sale of some or all of the assets of the Company for cash; and
· the potential continuation of the Company in its present form in accordance with its current investment policy delivered by Aquila Capital Investmentgesellschaft, the Company's investment adviser.
The Board expects to provide a further update before the end of Q2 2024. Notwithstanding the outcome of the ongoing review of broader options, the Board notes its commitment to hold a vote on the Company's continuation at a shareholder meeting expected to be held in September 2024. |
Somewhat meh results, with Norway tax a nasty addition:
...and now the board "expects to be able to update shareholders regarding progress (on the auction) before the end of June 2024", bit of a change from "April, if not earlier"
Hard to tell whether that's the result of lots of interest or not much interest |
Update on company auction due by annual results on the 25th. Not holding my breath here. ORIT, a potential bidder, has seen a very weak share price too. At 63p AERS now yielding just under 9%. |
lacklustre share price reaction to this news! |
www.citywire.com/investment-trust-insider/news/aquila-european-renewables-opens-its-books-to-bidders/a2436909
"Aquila European Renewables (AERS) has launched an auction of the company two months after Octopus Renewables (ORIT) announced its interest in a merger.
The £315m portfolio of solar, wind and hydropower projects managed by Aquila Capital in Germany today said it had received ‘a number of indications of interest’ in a merger since then and had instructed its corporate broker Deutsche Numis to begin ‘a process of mutual due diligence with multiple interested parties’.
The board, chaired by Ian Nolan, said it would only consider a combination that was in the best interests of all shareholders. It said talks were at an early stage and there could be no certainty a transaction would complete. An update would be made by the annual results in April, if not earlier, it said" |
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