Atrato Onsite Energy Share Discussion Threads

[cc2014] 31/10/2022 08:34

The Company's NAV as at 30 September 2022 was GBP139 million (92.8 pence per Ordinary Share).

The NAV reflects the valuation of the Company's portfolio and incorporates the costs associated with the Company's Initial Public Offering ("IPO"), ongoing running costs and dividend distributions.

The Company has invested one-third of its IPO proceeds to date. These assets are performing in line with expectations and together with higher realised inflation, made a positive contribution to NAV. This has been offset by the first year's dividend, fund management fees and a prudent increase to the valuation discount rate.

Elevated macro-economic volatility, higher inflation expectations and UK political uncertainty over recent weeks has led to an increase in long-term UK government bond yields. Given the scale of the movements, Atrato Partners Limited (the "Investment Adviser") and the Board have conservatively valued the portfolio based on a weighted average unlevered discount rate of 6.6%. This discount rate is materially higher than the average unlevered discount rates observed in the UK renewables market. The increase in the discount rate equated to a reduction in the NAV of 6.5 pence per share.


I am wondering how a change in the discount rate to 6.6% when only a third of the assets were invested could have caused a 6.5p drop in the NAV. Or rather I understand the maths but I remain puzzled becuase my gut feel is that ROOF were paying dividends out of uncovered income so the NAV should have been falling to start with and adding a 6.5p hit would I think have taken it even lower. Unless of course this was the usual "buy an asset, use the DCF to immediately unlift it's value and off we go". I presume that's the explanation so I'm answering my own question really.

I am wondering what's to come on the NAV's of the others in this sector, especially since a discount rate of 6.6% is not high at least by comparison with the peer group. Indeed given the recent interest rate rises I would have expected higher.

The make no mention of the proposed change to corporation tax rates. I assume this is post end September as we still had Truss then so that will be some more to come off the NAV I guess. My broad guess would be 3p if the cash was fully invested. I'm not sure whether it will therefore be around a third of that.

I now have this whole sector on "avoid" until I better understand what's going on with the discount rates.

[jonwig] 13/10/2022 09:06

Interview with investment manager:



Immune from windfall tax as not grid-connected.

[jonwig] 03/10/2022 14:43

Director buys 101,419 shares @ 98.6p.

[jonwig] 07/9/2022 07:21

Two more, the larger one operational:

[jonwig] 18/7/2022 07:44

An acquisition:



Only £10.6mn, but at £0.53mn per Mw it looks on the cheap side. More to come, they suggest.

[jonwig] 14/7/2022 11:47

They've said they will get a move on:

The Company is in late-stage negotiations over £35m-£45m of pipeline assets that are expected to close within the next three months. A further £80m-£90m of assets are currently in due diligence.

But I agree, the premium hasn't been earned yet.

[cc2014] 14/7/2022 10:34

NAV at 31st March 97.4. Assets at 31st March £146m of which £145m cash

Since then a dividend of 1.75p means NAV around 95.6p. Assets around £146m with 139m cash

Looks wrongly priced to me. Why pay 106p for something worth 95p when 95% of the assets are in cash? Unless you have some belief the cash is going to be deployed in the very near future?

[jonwig] 13/7/2022 15:20

From the Telegraph, an article on booming solar (reasons obvious!):

Businesses have also been installing solar systems on their roofs. “Possibly more roof-top will be built this year than utility-scale,” says Chris Hewett, chief executive of trade group Solar Energy UK.

“For companies, particularly, the payback for large rooftops is very short now. It’s up to three years in some cases.”



Was hoping to buy lower than this, after IPO scale-back, but maybe this will do.

[cc2014] 06/6/2022 10:36

I feel under-researched on this one. I have to admit when it floated I didn't read the prospectus in any detail as I wasn't that excited and my memory has faded since then, but what I thought would be happenning was that they would take the roofs available on the SUPR portfolio and buy solar panels and put them on those. That doesn't appear to be happenning, so I will have to go and read it again. Maybe I'm confused.

I do remember clearly they said they would limit the fund as they only had so many investments. That seems to have changed.

There's a time/cost of money thing for sitting in this fund with it's assets uninvested. I struggle to see justification for the premia when compared with something like NESF which on the other hand is fully invested and running at a discount presumably as the market sees it as overgeared.

[jonwig] 06/6/2022 09:42

Usually, yes, but I get the impression the management team are still learning on the job. There isn't, I think, a comparable fund to this one.

[cc2014] 06/6/2022 09:09

NAV premia too great for me. Plus I always get grumpy with the fund manager charging their fee based on NAV when they haven't invested the money.

[jonwig] 06/6/2022 08:28

Interim results:



Premium to nav looks too high. I'd like to top up, after being scaled back, but not at 108p. Early days, but a lot riding on hope.

[cc2014] 01/6/2022 10:41

Thanks Jonwig. I too was hoping for a pullback to the IPO price and I was shocked how much this gapped up on the IPO in which I didn't take part.

I am uninterested in the current share price of 108p against a NAV of around 98p, but I'm trying to get straight in my head what I am prepared to pay, which I'm struggling with as I need to understand the investments, the discount rate, where interest and inflation rates are going.

Possibly there is little point in my musings. I guess I see 100p as a good entry point but the share price sure doesn't look like it's going there and I have no doublt the NAV soon won't be 98p as the fund manager will find a way to magically increase the value of the assets they've only owned for just a few months.

[toffeeman] 01/6/2022 09:01

So who got the £6.6m ROOF invested?

[jonwig] 01/6/2022 09:00

CC2014 - I can't comment on pricing, but ROCs have been phased out (since 2017, I think) and are very profitable in the current high price generating environment, whilst the new FITs have capped returns. Current ROCs can run their course.

When Sunak was considering a windfall tax on renewable generators, it was ROCs he was targeting, not FITs.

[cc2014] 01/6/2022 08:41

Hi, I'm wondering how I might some form of grip on what sort of return they are making from this investment. My concern really is that ROOF may be overpaying, by buying an asset which is 7 years old in what I perceive must be a red hot market.

It is possible that they have bought the asset of BBOX, although it's a few years since this article I found.

Alternatively it could be M&S who owned the panels on the roof and rented the roof space.

[jonwig] 01/6/2022 07:15

Their first completed investment;



- and it's not a new development. Their pipeline is huge, though, judging by their April update.

After the oversubscribed IPO, I was hoping for some drift down to nearer 100p. Could still happen, but less likely now.

[valustar1] 06/4/2022 13:48

Good to have an update today. Company has been very quite

[bountyhunter] 16/12/2021 14:05

it's clear which trades are buys and which are sells, just look at the actual prices or make a few dummy trades to confirm, nearly all buys today

[jonwig] 10/12/2021 16:44

Toffee - yes. It's surprising how many people still believe ADVFN's reporting algorithm.

[toffeeman] 10/12/2021 13:58

If (virtually) every trade was a buy then the price would have risen much more. They are all 'O' trades - so you cannot accurately assign them - you can only do that with 'AT' trades

[eaaxs06] 10/12/2021 13:49

Virtually every trade this week has been a buy, outpacing sales by 26 times!

Yet still the bid price stubbornly refuses to move and has been stuck at 108.5p all week long.

Good luck everyone, Sid.

[ramellous] 23/11/2021 08:19

I had a chunk of change ready this morning. Oh well I bought SREI instead after good update this morning.

[ramellous] 23/11/2021 08:16

Funny that should be so with ii. They were one of the intermediaries for the float.