Gresham House Energy Sto... Share Discussion Threads

[nerja] 25/5/2022 08:40

-- The Initial Placing is expected to close no later than 3.00 p.m. on 26 May 2022

Don’t think it’s open most platforms won’t have the time to get it through ,it’s why I have topped up.

[frederickbloggs] 25/5/2022 08:25

New shares placing? I wasn't aware of that. Not an open offer, I presume. Looking forward to collecting the dividend on Friday.

[nerja] 25/5/2022 08:23

Well there is the placement and it closes tomorrow which suggest it’s covered already.
I have topped up 6k at 148.275 just in case we can’t get it.

[nickrl] 24/5/2022 18:28

This has blown up because some mega offshore windfarms that have recently been commissioned with a CfD contract have chosen not to enact them which means they don't have to return the excess income received above the CfD strike price. They can do this legally for a few years before they lose the right to a CfD but if power prices likely to now remain higher they could take the risk.

GRID do trade power as well but majority income is currently providing frequency response services which with more renewables on the system is going to be its main income stream although as ive said before there are pipeline of battery storage installations being installed which will drive the price down for these services.

[sf5] 24/5/2022 18:14

Yes, I guess the share price strength suggests GRID is not in the firing line, and might even benefit from investors re-allocating companies that are, but these taxes can be a blunt instrument!

[jonwig] 24/5/2022 17:43

The current FIT-CFD scheme encourages renewables investment and automatically prevents "excess profits". I don't see any way that a windfall tax could be imposed on a system such as that.

As for GRID, it doesn't generate any power, but does help power distribution to be more efficient. Without battery storage, our electricity would be even more expensive.

Mind, if this appalling government discovered such a move would be popular and win votes, I guess it could do it!

[sf5] 24/5/2022 17:00

I wonder - might the mooted windfall tax extend to GRID profits? This article suggests it may be unexpectedly broadly based, hence the impact on renewables companies' share prices

[nerja] 20/5/2022 09:01

Jefferies raises Gresham House Energy Storage fund to 'buy' ('hold')

[nickrl] 17/5/2022 10:26

Its a good business and its ahead of others but a lot of capital is being poured into these assets by others and ESO (NG) is getting smarter at how it procures frequency response services and thats driving the £/MWh down. Also cost of building them is going up as pretty well all the kit is imported and with £/$ rate dropping compounded with everybody else in the world is jumping on the same bandwagon is pushing up raw material costs as well. Ultimately that may clip the rate of expansion and give back pricing power to GRID as more wind comes on teh system over the next couple of years. So given sharp share price rise recently a little run back is to be expected.

[frederickbloggs] 17/5/2022 07:26

Just some short term profit taking? Myself, here for the long haul @ 103p. This business has hardly got going yet.

[nerja] 16/5/2022 15:36

Lots of large sellers today for some reason

[jonwig] 04/5/2022 11:49

Good points, but I suppose they won't know the exact income cover as some variables within the opcos could affect what's received.

In the renewable energy and infrastructure fields there are lots of examples where investment trusts are moving into development assets which have both higher risk and higher reward.

For example, HICL had to take over a hospital from Carillion: fortunately it's working out. And Octopus Renewables is buying developments now, rather than mature assets. REITs have been at it for years.

Total return is the thing!

[marktime1231] 04/5/2022 11:38

Very impressive NAV performance as previously announced, and the clue that it will go all the way up to 145p by mid-year.

Less impressive income, and a lack of attention to that part of the business in the report, an asset manager paid by assets behaving like one. When they say dividend was fully covered by income, they mean "only just", otherwise there would have been a surplus cash contribution in the NAV revaluation, and there wasn't. Why not just state the income or coverage ratio????

Happy that the share price is responding, no doubt it will respond further, but how disappointing that the dividend is unchanged yet again. They know that's why we're here so ...

[jonwig] 04/5/2022 06:12

Quarterly NAV, etc:



Some remarkable numbers there!

Also dividend: 1.75p, xd 12/05, pay 27/05.

[jonwig] 02/5/2022 18:56

Edison research note (28/04):

[marktime1231] 14/4/2022 20:20

It was a tough decision for me choosing between the two, I picked GRID because it had pipeline scale, solid financial backing and management credibility, albeit asset focus rather than income operations. I still think GRID had too much focus on gross asset expansion and not enough on maximising income from operations, but that may be improving now. GSF communication style put me off, too much spiel, impenetrable sales patter. But I wasn't really sure which way to go. I wondered whether someone able to unpick the financial fundamentals would be able to explain the differences.

Lucky me as it turns out picking GRID seems to have been a winning choice so far. Very much appreciating the shareholder value being created and, provided they don't stray in to making wild investments in future, I expect the way they are going about it will end up yielding a better dividend. I am here for long term income. When they say the cost per MW of additional assets is falling and that they are using intelligent tools to optimise income and contemplating solar+battery farm investments it counters the worry that future prices will not be so frothy.

Hindsight is pretty powerful, but at the time I had no idea GRID would leave GSF behind, it wasn't clever analysis by me just lucky judgement.

[jonwig] 14/4/2022 07:10

marktime - I should be able to give you some sort of response to that, but I've never really given it much thought. If I'd invested in GSF in May 2018 (six months before GRID's IPO) I might have done some research and considered switching.

I passed on GSF because Gore Street Capital appeared to be a company without much heft or city recognition. Gresham House, on the other hand, is a well-known and highly regarded management company.

Incidentally, for the same reason I passed on a recent IPO, LIFE SCIENCE REIT (LABS)
because the managers were a complete unknown.

[marktime1231] 13/4/2022 10:34

The scrabble for new GSF shares at 110p is interesting. A £150M raise is about a 40% dilution, and they have permission to raise a further £600M in due course.

The contrasting fortunes over 4 years between GRID and GSF is even more interesting, considering they both launched in 2018 at 100p and both pay 7p. I'm sure someone crafty on here could post a comparison of NAV and share price Are they both equally comfortable in covering dividends with net income?

The demand for GSF suggests, if it was felt necessary, GRID would be able to tap the market in the 150's to fund an accelerated expansion programme. But GRID doesn't need to tap the market, it has access to all the funds it needs for the next 18-24 months, mostly based on gearing, so why dilute until there is a more immediate call for additional funds it can't borrow?

Perhaps the excitment is that people suspect there is as-yet hidden value in GSF shares whereas the value being created by Gresham House is visible? Punters expect GSF to mirror GRIDs performance because they are the same, right?

Or do we need to take a more critical look at the portfolios, the pipelines, the management, the strategy, the economics, explore the differences rather than assume they are the same?

[nickrl] 12/4/2022 21:52

jonwig NG are phasing out FFR (Fast Frequency Response)not DC. Note NG also adding in two other services Dynamic Moderation and Dynamic Regulation to replace that which GRID and others will be able to participate in.

[jonwig] 12/4/2022 13:41

Interesting comment, thanks!

But they seem to be aware of this. Whilst DC and similar operations provided 82% of revenues lat year, they say NG will phase these out anyway.

For 2022 they expect similar revenues to 2021 but a significan NAV uplift.

[nickrl] 12/4/2022 13:16

Another reason to hold dividend is that Dynamic Containment rates have dropped back considerably and there are more players coming into the market so this source of revenue won't be as high again on a 3/MWh basis. They are being smart with trading the battery as a BM but others will do same especially as Arenko supply the software to many other players as well so potential risk the algorithms will be doing the same thing and that could force price down.

The spike up last week hasn't tempted too many sellers but won't be topping up just yet let see what the NAV update brings.

[speedsgh] 08/4/2022 09:28

Battery fund GRID shoots lights out raising guidance after 20% return in 2021 -

Gresham House Energy Storage (GRID) set out its stall as one of the leading growth opportunities in the renewables sector today with annual results showing increasing momentum from the UK’s largest battery operator.

Net asset value (NAV) of the £490m portfolio, which is backed by many wealth and fund managers, rose 10.2% to 116.86p last year as more of its 24 projects became operational and were revalued at a higher level.

Including quarterly dividends, the investment trust delivered a 20.3% total investment return, extending to 51.5% of the total return shareholders have received since launch over three years ago.

Shares in the closed-end fund managed by Gresham House’s Ben Guest jumped nearly 6% to 148p today as the company raised previous guidance for further growth this year and aimed to take advantage of an acceleration in the rollout of clean energy as the UK and Europe look to cut reliance on Russian oil and gas following the war in Ukraine.

As GRID’s business model shifts towards trading energy – and exploiting volatile power prices – rather than simply being a backup supplier, it anticipates NAV per share will rise to at least 124p on 31 March and to 140-145p by the end of June.

‘This would equate to a 6.1% uplift in the first quarter and a 20-24% increase in the first half,’ said Numis analyst Andrew Rees. This follows a 6% NAV gain in the fourth quarter of 2021, Jefferies, GRID’s broker, said.

Investors were also impressed with a surge in earnings to £36.25m from £14m in 2020. This strengthened cover for GRID’s 7p per share in dividends to 1.3 times, a big improvement on the previous year when the payout was uncovered.

The company is again targeting to pay 7p this year putting the trust on a 4.7% forward yield.

Morningstar data on the Association of Companies website puts GRID shares on a big 25% premium at last night’s share price of 140p. But, as Jefferies analyst Matthew Hose pointed out, this falls to 13% against the 124p 31 March NAV the company has published today.

Although GRID has £114.3m in cash after paying its fourth dividend for 2021 and a £180m debt facility to use, analysts expect it to raise more money from shareholders, having drawn in £100m in an oversubscribed share issue last summer.

‘The company says the remaining cash on the balance sheet of £120m is committed to new investments, and it anticipates using the £180m debt facility. Therefore, we expect an equity issue in the near term and some investors may wish to use this as a way to access the fund,’ said Stifel analyst Anthony Stern, referring to the practice of investment companies to issue new shares at slightly below their market price.

Chair John Leggate said the board was closely following the global response to Russia’s invasion of Ukraine and the impact on the energy market. ‘For the moment, the indications are pointing towards a much faster rollout of renewable energy globally with an associated increasing demand for energy storage projects,’ he said, pointing to the potential easing of planning restrictions for renewables projects in the UK.

Guest added: ‘2021 has been another year of growth focused on value creation. We have eight projects in construction and further projects set to enter construction. This will deploy all existing equity funds as well as the existing debt facility, improving the company’s structure while increasing portfolio cashflow significantly.’

As part of its growth plans, GRID will shortly seek shareholder approval to invest up to 10% in ‘shovel-ready’ construction projects and to expand internationally. Currently, the company can invest up to 10% in Ireland but wants to replace this with a new policy of allocating up to 30% in major OECD markets. This could include some investment in solar generation.

[sf5] 07/4/2022 15:47

Encouraging presentation and Q+A yesterday.
Interesting that they're looking at dipping a prudent toe into overseas markets.
Am still a bit puzzled by the NAV policy though, like all 'royalty' type companies, it has to be approved by the auditors. Still, the merchant discount rate was revised only slightly, from 11.1% to 10.85% pa.
A large part of the NAV increase came from 'new project revaluations' - they can revise (up or down) a project's financials once it has been on stream for 60 days or more.

[marktime1231] 07/4/2022 10:47

Issue new shares at a price where the dividend costs less than bank-base + 3%. That means at around 160p. Unless interest rates soar. Now I see why they are keeping the dividend at 7p.