Back in early spring, I wrote a couple of articles for members exploring the pros and cons of beaten-up infrastructure investment trusts like HICL (LSE: HICL).
All the listed infrastructure trusts sat on big premiums to net asset values (NAVs) before the 2022-2023 interest rate hikes.
Investors valued them for their chunky dividends in the depths of the near-zero rate era. They’d bid up the trust’s prices versus NAVs, which depressed the yields1. But the yields on offer were still attractive to many, though not to me. (Not on a 20-30% premium to NAV!)
As interest rates rose, however, those premiums wilted.
Eventually the trusts were trading on 20-30% discounts. In most cases the dividend payments were at least held, so at least the income kept coming through.
Superficially all that had changed is investors wouldn’t pay a premium for income anymore. They wanted a discount, which boosted the yield for new money to 10% or more.
Canada comes calling
That situation unfolded over a couple of years. But my dives into infrastructure in early 2025 were prompted by something more immediate – an unexpected bid approach. One of the sector’s top trusts, BBGI, was taken out by a Canadian pension fund at very close to NAV.
Given that BBGI had swung from a 40% premium (!) to a 20% discount before the bid, the takeover price implied three things:
- An institutional-grade player saw BBGI’s quoted NAV of as accurate
- The NAVs of the remaining listed trusts might also be be pretty trustworthy
- Other bid approaches could unlock value for holders
It seemed a pretty good set-up. When I wrote my piece about it in early March, HICL, for instance was yielding 7.5%, just covered by income. So you were being paid to wait. Either for a recovery for the sector – probably with rate cuts – or for more takeover bids.
My post on HICL concluded:
While higher yields have increased discount rates and pressured asset prices, both HICL’s disposals and BBGI’s acquisition point to robust underlying valuations.
Adding to the case are the investment qualities of infrastructure that I discussed last time.
To which we might add that they aren’t big US tech shares trading on all-time frothy multiples!
I wouldn’t go crazy loading up on infrastructure, even in deaccumulation mode. But I do think a 5-10% allocation on today’s discounts makes sense, and I’m working towards the lower figure myself.
I’m not sure the trusts will beat the market over the next five years. But the high dividends will surely smooth the ride.
So far HICL has done okay. By summer the return after that Moguls piece was about 20% (including dividends) but it’s slipped back. I still hold, shuffling my position size up and down as I often do.
However I’m not here today to do a post-mortem on that infrastructure trust.
Rather I want to flag up the ones I deliberately avoided. The renewable trusts.
What’s wrong with renewable infrastructure?
In comments to my first article, readers asked about renewable trusts.
It would be hindsight to say I had a strongly bearish thesis about them. But I did note:
I agree with you about renewables in terms of the potential opportunity, but the risks are a lot greater too IMHO.
The truth was – and is – that renewable investment trusts give me the willies. While I have held them for brief periods, I’ve invariably soon gotten out again.
For what it’s worth, my gut instinct has been vindicated in 2025 by the share prices:
Source: Google Finance
These are year-to-date returns. Clearly you’d rather not have woken up on January 1 burning with a New Year’s Resolution to load up on infrastructure! (Except for BBGI…)
The returns would be less lousy with dividends, but the renewable trusts (Tickers: TRIG, BSIF, and UKW) would still be well underwater.
We can probably explain the overall weak returns with some handwaving about inflation and interest rates being higher for longer than expected, and perhaps greater political risk. I won’t rehash my member posts today.
But why the sharp divergence between infrastructure and renewables?
Renewable infrastructure trusts under the hammer
On the face of it, these infrastructure trusts all offer the same sort of thing. Upfront exposure to assets – which can be contracts to clean hospitals or fix nuclear reactors, not just physical stuff like wind turbines – in return for a stream of income over time.
Sometimes the income is linked to inflation, or to other pricing mechanisms. Also note that certain assets have a definitely fixed life (contracts, for instance) whereas others, with good care, could last indefinitely (say a bridge or port). All that affects how their NAVs are calculated.
Again, this post is just flagging up that stark divergence. I can’t get into analysing the many thousands of different assets and contracts held across all the trusts.
But that’s fine because the clear split in 2025 is between general infrastructure and renewable trusts. It suggests something broad strokes is going on.
Here are a few hypothesis (or guesses) which lean into those willies I’ve long had about the sector.
The renewable infrastructure trust business model is broken
There have always been questions about the long-term investment case for renewable energy trusts – and infrastructure more generally. About everything from fees, opacity, accountability, and business models to discount rates and technology risk.
The list goes on. But one oldie that has now come to a head is ongoing funding.
Long story short, renewable trusts used to issue shares at premiums to NAV to (in theory) invest in new assets and (less agreeably) to top-up or backstop their income.
Issuing shares at a big premium is in itself value-accretive. It can turn £1 of new money into, say, £1.20. Just by virtue of it moving on to a trust’s balance sheet!
Renewables needed to be able to issue shares like this long-term because they are not structured as finite life vehicles, and they are (or at least were) not priced as such.
But maybe they should have been. Because now that discounts are sky-high, nobody wants to buy newly-issued shares at NAV, let alone a premium.
We can debate about how long their assets – rusting windmills, ever less-efficient solar panels – will last. But even with build cost inflation, I don’t see anyone arguing that they are getting more valuable.
So NAVs are effectively in run-off mode.
Moreover some argue the trusts have not made proper provision for decommissioning. Absent the coming of nuclear fusion or the like, I’d presume an existing and permitted renewable installation is more likely to be maintained or replaced than decommissioned. But it’s a valid line of inquiry.
I was worried about funding for many years. (Monevator writer Finumus flagged the issue on his old site five years ago!) But it’s no longer merely a theoretical risk.
This month Bluefield Solar Income Fund (LSE: BFSIF) called it out as the reason it was putting itself up for sale, noting:
BSIF’s shares have traded at a persistent discount to NAV for over three years, limiting access to equity markets and constraining growth.
Earnings have been directed toward dividends rather than reinvestment, leaving the Company unable to fully benefit from its platform, proprietary pipeline and growth potential.
Without fresh capital, BSIF can’t grow without cutting its high dividends. And as income is the reason shareholders own this trust, that’s not an option.
BSIF has substantial assets. It trades on a 36% discount. You’d hope some institution will pay more than that to own them.
But the listed trust game is clearly up in today’s climate.
The renewable energy business model is in doubt
These funding issues are probably the main reason renewable trusts are languishing.
It’s a vicious loop. The worse the discounts get, the less likely they’ll ever trade even at par again. This makes them even less attractive, and prompts more selling and still-higher discounts.
By now I’d guess they are priced at the market’s best estimate of takeover value.
However this is a bit of a tautology. It doesn’t tell us why they cratered to deep discounts in the first place.
Besides all the wider drivers for infrastructure discounts that I listed above, could the investment case for renewable energy specifically be in doubt?
I think not… but also yes.
Some 97% of scientists agree that humans are warming the Earth by burning fossil fuels. This is causing climate change. So the push to emit less carbon via using more renewables is intact.
That’s true even as anti-scientific denialism in the White House has hamstrung the US.
The International Energy Agency just forecast that renewables will become the largest global electricity source by 2030, accounting for nearly 45% of production.
But the world hasn’t all gone full Greta Thunberg. It’s down to economics:
Source: Our World In Data
Unfortunately, we poor strivers must invest in vehicles that invest in renewable assets, not in the assets themselves. Let alone in spreadsheet maths! And this brings those high fees and so forth back into the picture – as well as issues like adverse selection due to the capital constraints and predictable income needs of renewable trusts compared to other players.
Moreover, the goalposts keep shifting.
Notice renewable trusts are struggling even as critics blame the UK’s ‘quixotic’ power-pricing mechanism – and the push to Net Zero – for our high electricity prices. If someone is making out like a bandit, it isn’t these trusts!
Nevertheless the government has announced it’s looking at the incentive regime – Renewable Obligation Certificates (ROCs) and Feed-in Tariffs (FiTs) – that was put in place to encourage more renewable installation.
Sticking with BSIF, the trust recently said the government’s proposals would cut the average annual household bill by £4 to £13, depending on exactly what changes are implemented.
However BSIF estimates the resultant hit to its NAV to range from 2% to a whopping 10%!
Whatever the ultimate damage, it can only make renewable trusts less attractive.
Political risk
I’ve noted above that Donald Trump’s administration is defying the entire scientific consensus with its stance on global warming, and with the actions it has encouraged in response.
The results so far are mixed. Even some fossil fuel leaders are aghast (if only because of the policy uncertainty). But it does seem to have amped up new oil exploration at the margin and it has hit forecasts for US renewable installation:
Source: IEA
Meanwhile the man who brought us Brexit – you know, that great opportunity that’s costing us £100bn a year in lost GDP, that saw immigration of nearly a million arrivals in 2024, and that deleted your birthright to live in 27 other countries – has now turned his talents to decrying Net Zero and renewable energy.
Reform says it will scrap Net Zero targets and cut subsidies. It’s warned industry to stop working on new projects. All damaging stuff in the short and long-term. Yet Reform’s lead in the polls probably drove Labour’s mooted incentive changes.
It’s distasteful for me to even talk about this. It’s pure Barry Blimpism – literally tilting at windmills.
We probably should look soberly at the high cost of UK electricity, but not through this scaremongering and scapegoating. That’s populism for you.
Needless to say it doesn’t make investing in renewable trusts any more attractive. Unless maybe you think their assets will become more valuable if new investment dries up, reducing supply?
Dark, but I suppose possible given the economics. The market doesn’t see it though.
Weather risk
The UK wasn’t very windy in the first half of 2025. On the other hand it hasn’t been especially cloudy.
I’m inclined to dismiss this concern because while I certainly believe in climate change, I don’t think it’s changed sufficiently in a couple of years to hammer the case for these trusts versus prior assumptions.
Higher inflation
You might point to higher maintenance costs for installed renewable energy due to all the inflation we’ve seen since 2022.
But this shouldn’t have hit renewables much harder than wider infrastructure, so again I don’t see it.
The market just doesn’t care about listed infrastructure
With all this said maybe the divergence between vanilla and renewable infrastructure in 2025 is a red herring? Perhaps investors (/the market) remain very ambivalent about all these alternative assets?
The takeover for BGGI perked up demand for its direct peers, but that has mostly unwound. The enthusiasm we saw for the likes of HICL in the first-half of the year has gone.
As I type HICL is on a discount to NAV of c.24% again. INPP is on a 17% discount.
Smaller discounts than those of the renewables trusts, true, but still plenty big.
Into the too-hard pile
Of course the explanation is likely a combination of all these factors:
- Ongoing higher yields snuffed the recovery across the infrastructure sector.
- Growing political risk makes betting on any government-influenced income streams riskier.
- Persistent discounts imperil the business models of all the infrastructure trusts.
- Takeover hopes have dissipated.
On all of these counts, renewables fare worse.
Corporate activity has been more lacklustre – for example Downing Renewables was acquired at a 7.5% discount in June, versus BBGI going at par – and renewables look at far greater risk from a Farage-led backlash. Difficult-to-fathom and often unintuitive power contracts make them harder for analysts to value. And the bigger discounts that result from all this make the prospect of them ever raising new money seem remote.
Given my environmental concerns, I should be a natural investor in these trusts. But I avoided them when on premiums, and even with discounts I haven’t held bar a small position I had in early 2025. I’m in no rush to go back.
Things do change. It’s not impossible all the issues could be resolved to make the trusts a bargain.
But to me, the challenges look more structural than cyclical. Why take the bet? Plenty of established closed-end stuff in the UK – income trusts, private equity and VC, property – looks reasonably priced, without so much existential risk.
It’s raining in London as I type, but I’m confident sunny days will come again.
However I just can’t say the same about renewable infrastructure trusts.
I know some Monevator readers were keen on these trusts. Do you still hold them? I’d love to hear more in the comments below.
- Because yield is dividend/price. [↩]
![Investing in infrastructure [Members]](https://monevator.com/wp-content/uploads/2025/02/BGGI-premium-to-discount-1024x521.jpg "Investing in infrastructure [Members]")
I hold 12-18 grand in these trusts out of a £150000 portfolio. When I bought them I was optimistic that humanity would get its shit together at dealing with climate change
Should I sell or hold?
@Frank — We can’t give any kind of personal financial advice. All just food for thought and further research. Good luck!
I used to own HICL until 2023 until I got involved, via work, with cost reimbursable contacts and realised quite quickly that they could be disappointing for both parties. At the same time I thought about buying a boat but came to the conclusion that it was really buying a hole in the water that you poured money into. Renewables seem to me to have a very similar characteristic, especially the offshore varieties, so I have steered clear of those.
Having read those articles early this year I added some 3i,inpp and a little hicl along with some property, gilts and high interest shares. It felt like the interest rate was going in the right direction. I am ahead but not that much and perhaps it’s wasn’t worth fiddling but the diversification was useful along with the dividend payments. I really thought hard about ukw, reit etc but in the end got some enrg (less uk risk) and was lucky to have an almost instant 20% return. I struggled with the investment case for uk energy trusts as it was dependent on the price of electricity which was imho too high already. They are high risk shares despite their appearance and really are not like 3i or inpp which are true infrastructure. There is a stronger case investing in national grid than these energy producers. I have always had in my head the prediction that solar will get really cheap and so will energy and I think that made me avoid them. Now we have politics in the mix I think the case is far too risky better to go into defence if you want to ride the politics imho. Thanks as always for these articles and I must admit I continue to look fondly on these types on investment trusts as in reality the country needs to spend big but we currently lack the means or political will to really push this agenda.
Having had fairly meh returns from UK wind and hicl I have sold them and put the money into BlackRock natural resources which I regret to report has a fair chunk of fossil fuel exposure. Contrariwise I have decided that it is an excellent time to put solar panels on my roof with a view to my next vehicle being a plug in hybrid. I’m hoping that all these changes are at worst net carbon neutral.
I independently bought HICL, SEQI, and GCP a few months ago purely based on the yield and an attempt to get diversification from US tech somewhere that’s not bonds but is bond like, sorta.
I’m too lazy and/or stupid to do the proper research on them, but even the 2% allocation I have makes me nervous because of the discount to NAV that I don’t fully understand.
Didn’t touch renewables for the same reason I won’t touch PE – if the government are pushing it then I’m the patsy at the table.
I really wanted renewable trusts to work, and held both Greencoat wind and Gore Street battery storage.
These things really should be growing and contributing to lowering the ridiculous price of electricity in the UK.
The dividends were good, but over time I couldn’t take the huge erosion in capital.
When you dig in to the economics you realise these renewables companies have the deck stacked against them:
– the UK energy grid is too congested so they can’t run at full tilt
– the energy auction prices in this country and the taxation regime can’t support renewable companies which need a predictable long term return for their investments rather than crazy short term auctions that favour the fossil brigade and random tax grabs by the government
Maybe when National Grid have upgraded the grid and the government has worked out that it’s better to support renewables rather than expecting them to bid against gas for lower and lower unit prices we’ll get somewhere.
It’s no surprise that Greencoat diversified out to other friendlier and more profitable markets in Ireland, Germany and the USA. But that hasn’t covered the ongoing losses on their big UK farms.
I thought the writing was on the wall for net zero 2-3 years ago, and so kept well away from things like renewable infrastructure trusts.
True, it’ll take a bit longer to die in the UK than elsewhere, but the end will come soon enough.
I have been loading up on several fossil fuel and other natural resource stocks for the last 2 years, and they are doing very nicely so far, but I expect the best is yet to come.
I dipped a toe into FGEN a while back but lost my nerve. The other Renewables ITs didn’t tempt me due the way the political wind was blowing (excuse the pun). There’s something about a really high yield and extra wide discount that puts me off. Yes, it could be an anomaly, or the market may have correctly assessed these vehicles as value traps.
I think there are better ways to invest in renewable energy – battery and hydrogen companies, for example, and perhaps extending that to nuclear energy, but these are speculative growth investments, not for income.
I wonder if the mainstream infrastructure ITs will also languish from here if there’s a sense that the government can’t be trusted as a counterparty? PINT has been my best performer in the wider sector by far and I will hang on to it. But the rest might get redeployed. (I hold INPP rather than HICL as there’s no stamp duty to pay, and it’s in a sheltered account.)
I own some UKW, but as the holding is a very small percentage of the portfolio, which is overwhelmingly global index trackers with heavy lean towards ESG, and SRI…., I’ve just decided to hang on to the UKW for now. The dividends do make me feel better.
As I write this, at 22.00 hours, from the Grid Carbon app, wind power is supplying 36.1 % of UK electricity, Gas 27.9%, Nuclear 9.9%, France 7.5%, Norway 4.2% etc. Regardless of Trump, Farage…, the facts on the ground are speaking for themselves.
Thanks for the article as always, I think these trusts as they are now they do carry a lot more risk like you said. I hold/held TRIG,UKW & BSIF, I have ended up cutting my losses with BSIF after the recent news and selling, I decided to sell UKW as I was in profit with that one so I thought I would take my cash and run. BSIF I think also had high gearing/debt.
Still hold TRIG for now but the risks with government meddling and a possible future with reform, I think their going to be in for a rough ride.
I hold HICL & CORD still hopefully these will fair better. May be it might be worth a look into some of the big US asset managers like Brookfield?
Super writing and research @TI, and a very worthy topic too, given the gravity of climate change. Also grateful for the thoughtful comments above.
I used to be an optimist on this, but not anymore. The heart once said “buy” renewables trusts. The head now says not. Great idea in principle. Poor returns so far in reality.
Fully endorse all of what @footbag #7 and @Frank #1 say.
Wanted all these renewables trusts to work out, and more generally for humanity to get its collective act together, but, on both counts, it now looks like it’s just not to be. Shared sense lost to collective stupidity, and it’s too late now.
Interesting to consider which of the four horsemen of the renewables trust apocalypse, which you list in bullet points under your Too Hard pile, is most to blame.
Anyone of them might be enough to explain all the performance issues and the discounts.
However, reflecting on it, the idea of a self reinforcing discount linked to an inability to raise new funds does seem to be especially compelling as the primary culprit, but it would be easier to blame higher interest rate persistence and ‘fear of Farage’ (a well placed fear in my view).
There’s a paradox of sorts here though.
If it’s too expensive to buy at a premium can it ever be too cheap to buy at a discount?
Put another way, are we saying, in effect, that there’s no right discount for a renewable IT *and* also simultaneously saying that there’s no right premium?
Which basically would mean that there’s no right price at all?
That seems just a little bit harsh, even from the cold hard investment perspective of avoiding value traps.
Surely, at some point if (hypothetically) the discount on a given trust keeps growing and growing, and eventually goes out to 70% or 80%, and if the NAV is and remains fully, convincingly, and recently audited; then sheer ‘Grahamite’ value all but dictates a small punt, just on ‘Special Situation’ type grounds?
On infra. more generally (as opposed to renewables trusts specifically), basically my position and approach fully aligns with @Comment Boltmaker #6 (save that I do also happen to hold some listed PE, mostly via HVPE IT).
News coming in on the wires that Swedish pension funds are suffering heavy losses on their renewables investment portfolios with some major companies going bust placing many pensioners retirements at risk
xxd09
@B. Lackdown
I was considering whether having an EV was going to make the case for installing solar at home. However, I have flexibility on when I charge and a time of use electricity tariff (Octopus Agile). This year I have driven over 3,000 miles with a cost of electricity of £120. At that price, solar on my roof isn’t worth the hassle.
@xxd09 (#13)
Nothing to do with renewables – two Swedish companies, both founded by the same billionaire (a battery manufacturer and a ‘green’ steel manufacturer) are in trouble and a number of pension schemes have invested. AP2 (one of the schemes affected) has 458 billion SEK under management with around 1.4 billion SEK in the battery company and 500 million SEK in the steel company (i.e., a total of about 0.5% of AUM, so well within daily fluctuations of stock market valuations). While the Telegraph (which I assume is your source) spins a nice story, it, as usual, has its own agenda.
Thanks for the comments and additional detail all (and to @Alan S for that Swedish intrigue, which is new to me).
Just briefly as I’m on the move today, I agree (and did mention in the piece) that political risk is surely increased across the board for all infrastructure trusts.
But I think it undoubtedly looms larger for renewable trusts, not least with the agitation about Net Zero and Reform waiting in the wings. :-/
Political risk is also transmitted by the secondary mechanism of higher gilt yields (and arguably higher inflation) as we’re seeing in the market today on the back of all the Downing Street briefing and Reeves apparently backtracking on raising income taxes.
@all — With both sides of that Telegraph piece having a comment each on this thread, for constructive reasons let’s please keep this thread focussed on renewables trusts and leave media debates to another day. Thanks!
On subject of gilt yields, did anyone notice an odd ‘step’ change in the valuation of IGLT yesterday in comparison to VGOV? Would have thought the two would pretty much move in lockstep? (Apologies understand a bit OT, but it intrigued me as to the cause).
Back OT(ish) – this is quite a nice link to see what’s going on with UK electricity provision – https://electricinsights.co.uk/#/homepage?&_k=605u9x
Wind has just snuck over 50%! Incredible!
@Rhino — That gilt quirk is OT but it’s also interesting. 😉 In the past I’ve eventually found similar to be a data issue, but not obviously so here. Hard to imagine it’s anything fundamental though?
IGLT – apparently it went ex-dividend yesterday, so causing the price fall.
@Dales — Oops (I’m blushing) yes that’ll do it. Brain failed and I forgot IGLT was a distributing fund. Cheers!
Wish i’d bought Rolls Royce rather than UKW, GRID, TRIG and HICL.
I thought this was an investment site, not a Greta Thunberg fanboy page. I’ve been chatting to some defensive fund managers this week and it is reassuring to hear that they are far more focused on investor returns than making Al Gore and Greta Thunberg happy. And just in case I sound like some ‘climate denier’ (a very weird phrase indeed) I’ve been driving an electric car for 8 years and have solar. I just think a lot of the climate hype is all about making money and if people actually researched it thoroughly, they’d realise it isn’t quite as it is being portrayed, so mocking Trump (of whom I am not a fan) is a bit naive, particularly when one looks at the opposite approach and the economic suicide being committed in Germany to it’s carbon obsession.
kid coca, are you going to hold them or sell?
Morning Frank. We’re all on different paths with our financial journeys, so any action i take may not necessarily apply to others, so please make your own decisions in this regard. I am not a financial adviser.
FWIW, i have just sold 3 of them (i’m down ~30% across them, and that includes dividends!). There’s a lot less red numbers on my screen now so that’s cheered me up a bit.
@Dales – also thanks from me, that explains it!
Should we bother about NAV for these type of companies ? NAV makes sense for investment trusts holding marketable securities , less so for infrastructure holdings.
Compare SSE which reported this week. Most of the business units of SSE would not be out of place in an infrastructure trust: renewables, other energy generation infrastructure, gas storage assets, transmission & distribution networks. The SSE interim results statement highlights performance parameters like operating profit, cash flow , earnings per share etc – not a mention of “NAV” or similar until you get into the details ( there is something called “RAV” – regulated asset value a few pages through the interim report) .
Is the way foward for TRIG etc to stop bothering about NAV. Report highlighting other parameters that matter, & leave NAV to the footnotes. If necessary, change from an investment trust to a normal holding company – operating company structure .
Alternatively, with this persistent and large discount, the market is surely saying that the Trusts have their NAV calculation all wrong. As I understand it , NAV is mainly based on a discounted cash flow calculation, which is very nice but depends heavily on subjective inputs to the discount rate, to future input costs and future sales prices . What will future energy prices be ? What is the chance that SMRs or nuclear fusion collapse the power market ? Will the government screw us over with a windfall tax ? So another solution is for the Trusts to re-think, recalculate their NAVs with more pessimistic input assumptions and reset.
I have HICL & INPP in various family portfolios – minor positions (<1%) but the regular dividend payments are useful for covering costs and having cash available if there is an opportunity elsewhere. In fairness, I don't see them as growth assets – more run it for cashflow where you may have a residual site at the end to either renew or close out for a termination payment – much like aircraft leasing.
@Fred — This site has always had an environmental angle and always will. From 2010:
https://monevator.com/environmental-degradation-and-wealth/
The environment is an externality that has been radically under-priced (/entirely discounted) for thousands of years, right up until the last 40-50.
The Stern review showed two decades ago that climate change mitigation was cheaper and more effective than dealing with its consequences.
No doubt Germany pushing for lower carbon emissions has made life more expensive, but (a) much of this is from the ill-advised shutdown of its nuclear reactors post-Fukoshimi (I’m in favour of nuclear) and (b) more of it is from its entwining its fortunes with cheap Russian gas. If it had actually moved further away from fossil fuels (and left its nuclear reactor programme intact) it’d be in a better place.
Climate denier is just short-hand for someone who says that global warming is not human caused or doesn’t have consequences. The overwhelming scientific consensus is clear. If one thinks (as elements of your post imply) that caring about this is misguided, it’s as useful a label as any.
I don’t think we should hand over the keys to the economy to the radical left or the Greens. We should be debating say nuclear versus renewables. We should be weighing up the cost of a tidal barrage across the Thames or Swansea Bay versus any environmental damage that would result. We should be constantly looking at whether we have the best range of incentives to encourage more insulation and more use of heat pumps and the like.
Also given the unhelpful rise of short-term populist politics, we sadly might need to think at where the revenues for some of this are drawn from. (i.e. Perhaps general taxation versus household bills).
But I’m personally fed-up with Barry Blimps (not you, generally) pointing out it’s cheap to burn fossil fuels on the back of a 150-year old infrastructure.
No shit Sherlocks! If it wasn’t causing a problem then I’d be all for continuing to burn them until Peak Oil becomes the threat again.
Which in the long-term would be, so in that sense all we’re doing is pulling the transition to renewables earlier into our timeline.
It should be a global effort. It’s become a beggar-they-neighbour game driven mostly by the likes of Trump and Farage and their non-English speaking brethren. Even China puts these guys to shame.
There’s an important part of the renewables story that is missing here right now; the plummeting cost of battery storage. In the last 12 months BESS costs have dropped by 40% and forecasted to do the same over the next 12 months. I don’t think people quite realise what a huge impact this is going to have on energy systems everywhere. The reality is that regardless of whether we get an anti-Net-Zero government next or not, in those four years the energy landscape will have changed dramatically.
I’m not trying to be ‘Barry-Blimpish’, but just for perspective, the Co2Coalition (CO2Coalition dot org) site is full of good info.
They have a good article on the 97% thing (just type 97% into the search bar).
On their board they have a noble prize winning physicist and ex member & co-founder of Greenpeace (+other distinguished individuals).
Excellent summary of root cause of economic spiral we are in now.. “Meanwhile the man who…” Hats off.
@Algernond We must be looking at different websites, I can’t see any “good info”, only a load of long-debunked nonsense.
On China and BESS. We (UK) have got 15 GW of solar total. China built 90 GW of solar in April this year alone. They built 10GW of BESS that same month. We took 10 years to build 6GW.
China are absolutely flying on solar. They will have plenty of cheap juice to dominate digital services, e.g. AI, in the future.
I wonder whether it is the dramatic drop in the cost of renewables (and the projected continuation of the trend), that leads to the poor performance of renewables investment trusts?
I don’t know enough about how these are structured, but I could imagine a situation where, if you did not account for falling capital costs, you could end up holding assets that have a cost of capital deployed that no longer matches the value of the electricity generated.
My response to anyone who challenges the need to tackle climate change is always – “OK point out the flaws in the IPCC 6th Assessment WG1 report – The Physical Science Basis”. https://www.ipcc.ch/report/sixth-assessment-report-working-group-i/.
This quotes all the underlying science as we understand it, involved thousands of working scientists, and the text was approved by the governments of 195 countries. So far, I have had no response except claims that all these people are being paid to say these things, and/or it is a vast conspiracy.
It’s OK to challenge or doubt the existence of anthropogenic global warming, but you have to do the work to show the flaws in the accepted arguments and show how your explanations of the observed facts are better. “I don’t like the answer” is not a good argument.
There is important work to do on understanding how bad it will get and how fast, and on identifying the best options for dealing with AGW, but not on whether or not it exists and is bad for our economies and ultimately our tenure on the planet.
Thanks for nothing, FGEN has dropped 2% today since this article broke 😉 I got rid of Bluefield Solar several months ago due to concerns over the much higher leverage than peers.
But currently still hold FGEN, UKW and HICL. Just under 5% allocation to the whole lot, but it has still been annoying.
It would have been nice to have a chunk of inflation proofed solid income payers in green energy that were largely immune to economic woes and wider market sell offs. That was the fantasy, but the reality is not looking promising.
FGEN has a diversified blend of assets but the 12.6% yield is a ringing alarm bell in itself.
I may well dump on Monday, and maybe the others.
But just deciding what to replace them with.
Anyway, thanks for a timely article TI as this was already on my potential sell list.
@jds247 > the plummeting cost of battery storage
Wonder if it would work to stick some of those battery rigs on trains or barges and bring some of that power down from Scotland to where it’s needed.
@Rhino #34 > China are absolutely flying on solar
A glance at the Global Solar Atlas might show why – as well as much more area they have much more insolation. Britain is a poor place to do solar, conversely we have a higher wind resource, which maybe @jds247’s battery storage to make more useful is coping with the high peak-to-mean ratio
Cheaper energy is something we need in Europe burning someone else’s gas isn’t imho a good long term solution. From a defence perspective we (Europe) need to have control of energy and a good energy mix plus an interconnected grid across Europe are absolutely key. If investors can make money from this infrastructure great but it looks like it’s got alot of risk on the energy generation side so the premium required is higher than normal for such cash generating financial vehicles.
It’s worth noting that the UK energy utility major SSE announced a massive fundraise and investment programme to help with the energy transition this week which was well-received by the market. (The shares even went up, imagine that!)
https://www.ft.com/content/db4d72de-4a1e-4ad0-9580-b7ad1cd169b6
Ermine will be pleased to hear the plan is all about moving energy down from Scotland, among other things! 😉
It’s heartening that investors will pony up money for the right electricity investment vehicle and cost/return structure, and again to me suggests some kind of market failure going on with the renewable investment trusts. :-\
(To be clear I’d much rather be wrong about this, and for the trusts to return to favour and fruitfully multiply! Here’s hoping.)
@TI #39 > the plan is all about moving energy down from Scotland
Perhaps those battery barges will still have the edge on the wires, as well as not spoiling yet more of the natural beauty of this scept’rd isle. Time to update Tanenbaum’s never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway to include the power capacity of a barge full of batteries for a long and thin island?
@ermine — I’m a nature fan, but let’s remember that this isle was originally covered with trees that were long ago burned down and the lines will pass through substantial landscapes where moss and bracken covers swathes of industrial damage. I’m sure we can cope with a few more power lines and stations. 🙂
Interesting piece. I wonder if the high depreciation rates and decommissioning costs mentioned might also apply in time to data centres, which seem to be in the investment doyenne du jour.
@TI #41 while I totally accept the implicit charge of being a NIMBY, I do think from an engineering POV battery barges have potential. Offshore wind starts in the sea, so this could reduce the cost of cabling. Wind energy to wind speed is a cube law, so there’s a very high peak to mean ratio.
The cost of the grid wiring is a static element for wayleaves and civils, and a variable amount due to peak power handling capacity. If Scottish windfarms really are being paid to idle 40% of their generated power then not only is this a shocking waste of embedded capital but storage (and possible alternative delivery methods) would help get this wasted peak capacity into service. Local static battery storage could help reduce the peak to mean ratio, but for some reason this is not being done now.
I don’t know what the energy density of battery storage is compared to LNG which is another energy source delivered by sea, It could also offer a way for African solar to find more distant markets.
The National Grid was originally designed to link up the most efficient conventional power stations to the load. We didn’t build most generation is Scotland because that wasn’t where the primary load was 😉
We can’t choose to site renewable resources, since they depend on the natural world. They inherently have a much higher peak to mean ratio than conventional sources. Build baby build of the old system isn’t necessarily the best way of adapting to the new energy topology, though I’m sure it’s part of the mix. If there are new distribution methods including physical transportation of energy stores, let’s use them
@ermine — Cheers for the further thoughts. We don’t disagree about the background issues (well I suppose we might still have differing views about the overall efficacy of renewables) but I am right with you in noting much of the mismatch between offshore wind and waves in Scotland and the insatiable desire for electricity from ten million Apple iPhone chargers in London. I’m just struggling to imagine that physically moving energy in a battery can ever be a viable alternative to power lines. I’m not an electrical engineer, but my understanding, informed by everything from previous grid choices to the fact that we don’t buy bags of batteries at Tesco to power our ovens, is that batteries only have the edge where the demand is portable or when you need to store supply at source, before transmitting it via the lines at a later date.
But who knows, perhaps there is a role for it? This is the kind of thing we should be urgently and open-heartedly exploring as a nation as we build out the new grid. Not listening to numpties who claim that filling their SUV with diesel is a stance against a Bolshevik takeover. 😉
No one disagrees with the principle of protecting the environment and the use of renewables -it’s the pace of change and cost that are the stumbling blocks
Over 30% of Car drivers are still diesel-98% of Lorries that deliver our food are still diesel
Well over a billion pounds paid to SSE not to produce electricity
Perhaps 0ver thirty billion required to renew/install infrastructure for the grid
Some of these serious obstacles have to be overcome by an economy that is not in a very healthy state at the moment
I am not an active investor but SSE shares seem to be a winner at the moment-the company seems to be earning whether they produce electricity or not! -plus generate a good dividend -no doubt it’s in my FTSE index fund
Interesting to see how it all pans out
xxd09
@ermine (37,40)
When you mentioned battery trains or barges in #37, Tanenbaum immediately occurred to me. I was gratified to see you reference him later in #40.
I have a significant exposure to infrastructure. HICL seems cheap and PHP feels very long term. INPP only needs to blink to be a buying opportunity etc. However half mine is in renewables. I like the idea of dividends backed with infrastructure, particularly inflation-linked infrastructure when I compare with my expectations for – say – VWRL (or even VHYL if I am now hiding from the Mag7 there).
You case is well-made, TI.
The renewables have had a torrid time since Liz’s fiscal event sent gilts rocketing and they revealed their bond-a-like colours in sympathy. That was the switch to discount that has persevered.
Are they horribly run by greedy investment managers? Too right. email them and find out how ordinary their answers are to simple questions. We are not dealing with the next Mastermind here. Indeed some of this opacity has made them impossible for asset managers to buy and so prevented inflows, artificially increasing the yields. While not the smartest, they recognise survival instincts and have cut fees or at least market to share price not NAV. And they do recognise the importance of an increasing and stable dividend — even if it means selling assets at NAV (accretive in a 30-off world). The fact that BSIF tried to slip one past the shareholders recently with an attempt to merge with the expensive investment manager and got roundly slapped down is a sign that the asylum is not fully in the inmates’ control.
Political risk is real (as the consultation showed), but also these are assets generating a lot of power at very low marginal cost. The debt largely matches the CfD / ROC time periods and then are maintenance-for-electricity assets. Reform cannot afford to turn the lights out or to increase electricity costs, and the cost of ROCs is low to consumers and the cost of CfDs even lower. Power does not appear to be getting cheaper, data centres seem to grow like fruit flies around here and we seem unable to put Putin in his box or to control UK gas prices. And Labour appear to be unable to listen to even their own supporters about how to restructure the market and make things cheaper for consumers.
These are multi-decade assets and with a 10-12% yield, I am getting a lot of cash back quite quickly, so total return is an important thing to look at (instead of share-price alone). If this is the end, does it come in just 8 years? Even if we’re in run-off those NAVS have 10% discount rates. When the man behind the AI curtain is revealed, I will have a dry-powder factory to get back in.
So yup — lots of horrible stuff going on pushing the yields up, some technical stuff meaning they are artificially high for investors without an audit committee, and the ability to sit tight and take yield to maturity.
Great article and I think you’ve laid out how unattractive these trusts are at the moment esp. with the knowledge that even just waiting for an outcome decision on the pricing mechanism may or may not get overtaken by a pullback on the total FTSE.
Given the current assessment is so very bad on several fronts, is it possible now is actually a good entry point for a small investment given the dividend returns?
It amazes me how little folks know about the vehicles and products they have invested in…which I think is why we’re seeing such large discounts. Take the battery funds, for example, investors thought they were buying infra assets, when in reality they were merchant traders…exposed to battery spreads and shallow ancillary service markets. It’s unsurprising that folks have been burnt and thrown in the towel.
I sold my renewables trusts over the summer to consolidate around the core (HICL, INPP) and core-plus (3IN, PINT). It’s been clear that a) reform and b) scrutiny on household energy bills are both building momentum, and that this could present some significant downside risks for the generators. For example, removing carbon pricing from the power sector would crater wholesale power power prices, resulting in a large saving for households/industry, but damage the dividend covers across the sector.
Arguably quite a lot of bad news is priced into the sector already. We’ll find out how much of this in the next year, assuming Bluefield can pull off a sale of their portfolio.
I’m still incredibly bullish on infrastructure as an asset class with around 17% of my assets invested. And the London trusts are one of the best ways to play this, given:
– Discount rates, which have settled at higher levels as yields have increased;
– Scarce assets, which are highly sought after by holders of long term liabilities (see BBGI);
– High levels of implicit or explicit inflation linkage;
– Growing allocations to infrastructure by LPs and private wealth, which will need to buy assets from existing holders; and
– The discounts on the trusts, themselves, which imply total returns above 8%.
Where else can you get a high probability of equity like return with strong downside protections?
There is a very good article on UK energy prices here:
https://dieterhelm.co.uk/energy-climate/british-energy-policy-not-cheap-not-home-grown-and-not-secure/
Similar to xxd09, the issue I have with climate change is that the ‘problem’ is very ill defined and the ‘solution’ even more so. It’s also a subject infected with ideologues with a religious zeal where any sacrifice to Gaia can be justified (especially when other people are the offering).
All that makes informed debate on the inevitable trade-offs very difficult and given that backdrop it’s no surprise that people are now resisting (similar to what happened with the immigration debate).
I’ve stopped short of investing in such IT’s because of the premiums, and/or because I felt I didn’t understand them enough. The litany of problems and risks indicates they might be oversold though, and the risks are different from the rest of the portfolio (interest rates aside).
>Persistent discounts imperil the business models…
This seems critical and I find it puzzling. Why is it essential for them to raise m0re capital now when the cost of capital is higher?
They should have a very long time horizon, and until a few years ago they could raise equity easily. In the current environment they can just manage the existing assets, set aside part of the income to cover depreciation* and roll over into new assets when the old ones are past their lifetime.
*) This may be the problem, as @old_eyes pointed out. Are these ITs correctly accounting for depreciation, given that renewables technology is improving quickly?
Front and centre:
– the climate crisis is real and serious
– we should do something about it
– but that “something” isn’t necessarily investing into renewables ITs
– and that “we” doesn’t necessarily include me
Every investment should be assessed on its independent merits as an investment not a moral choice.
Moral sentiments have their places but my portfolio isn’t one of them. Just because the environmentalists are right, and they are right, doesn’t mean they can earn me a risk adjusted return better than the alternatives.
If that sounds like hypocrisy, it is, but I live by this mantra from some banter between Roy Bland and George Smiley in
le Carré’s ‘Tinker Tailor Soldier Spy’:
‘You’re an educated sort of swine,’ he announced easily as he sat down again. ‘An artist is a bloke who can hold two fundamentally opposing views and still function: who dreamt that one up?’
‘Scott Fitzgerald’, Smiley replied, thinking for a moment that Bland was proposing to say something about Bill Haydon.
‘Well Fitzgerald knew a thing or two,’ Bland affirmed…And I’m definitely functioning, George. As a good socialist, I’m going for the money. As a capitalist, I’m sticking with the revolution, because if you can’t beat it spy on it. Don’t look like that, George. It’s the name of the game these days: you scratch my conscience, I’ll drive your Jag, right?’
At the end of the day I have to weight up the return I’ll get from investing in, say, TRIG, with all of its issues and challenges, against, say, buying shares in Ecopetrol on a (purchase yield at $9 share) dividend of 19% p.a. (BTW, spotted this take online after I brought in):
https://youtu.be/m-6MkWt-yvk?si=tZb0EOT1jv_3ws9f
Or, for that matter, and notwithstanding that concrete is a massive CO2 (and, therefore, anthropogenic global warming) contributor, and that cement is central to concrete production; looking to invest into Steppe Cement (STCM), a single site cement producer in Kazakhstan, headquartered in Malaysia (Labuan) and listed in London (AIM), and not because I doubt the environmentalists’ case (to reiterate, I do not) but instead simply because it currently has: a 15% dividend yield, a NCAV Ratio of 4.7x, a TBV Ratio of 0.9x, an EV/5 Year FCF Ratio of 5x and a Price/5 Year FCF Ratio of 5.5x.
At the end of the day, it comes down to risk and reward, Benjamins and making a decent turn, not morals and virtue.
TRIG opened 11% up on merger news this morning.
https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3WT0C1:0-hicl-renewables-infrastructure-to-combine-to-form-uk-s-largest-listed-infra-firm/
Consolidation makes perfect sense in terms of liquidity and cost synergy but would have assumed INPP was the logical bedfellow for HICL
Consolidation of INPP with HICL would just leave a larger fund with the same problem.
Merging a traditional infrastructure fund with a renewable energy fund enables a traditional infrastructure fund with somewhere to invest its surplus funds (apart from Sizewell C there haven’t been a lot of new investment opportunities) and the renewable energy fund with a source of capital for new projects. Whether it will help the investors is an open question.
After BBGI but out I now own about 7% in renewables and 3% in infrastructure. I think the risk reward remains attractive given high equity prices.
Well. HICL (trad infrastructure) and TRIG (renewables) merger announced this morning!
https://www.londonstockexchange.com/news-article/HICL/combination-of-hicl-and-trig/17329160
The merger is at ‘heads’ stage and needs shareholder approval. TRIG shares are up, but HICL shares are approaching a 10% fall on the news.
I haven’t studied the document in detail. Superficially it imports the issues besetting renewables into HICL.
But it is interesting HICL’s managers are approving the decision. They know more about infrastructure and renewable assets than me.
I guess they believe the combined model will have more capital to deploy as and when, and that HICL can effectively fund expansion at TRIG while the market for pure renewables fund-raising is so weak?
@James — Oops, missed your post, reading comments in the website’s backend. Also didn’t realise TRIG opened so strongly! (It’s now down to a 3% gain). Hmm.
Yes but people would have had to be pretty quick (the first 10 min of trading), by the time most people figured out what the driver was the window would have been closing.
I guess some were just relived to just take a lifeboat or didn’t like the idea of the new entity not being a 100% renewables play.
At least its good to see some proactive moves even if they are essentially internally driven. Maybe we’ll see some similar behaviour elsewhere or perhaps a rights issue.
Blimey, I’ve literally just logged into my SIPP to dump FGEN (picking up today’s 2.6% gain) and UKW with the intention of continuing to hold HICL and noticed with shock it is currently down 8% and then saw the news of the TRIG merger.
There is probably a Trigger’s broom analogy somewhere with these renewable trust assets 🙂
I’m not sure about this thesis that the funds mainly expand their portfolios via outside capital. They seem to be pretty good with generating cash. UKW cites a 10% IRR in their last Annual report and that’s also the number coming from TRIG now. UKW then explicitly states that at the current NAV, they have the option of dividends, buybacks or new investments. TRIG had a pipeline of projects under construction.
@Curious — Renewable trusts could certainly reinvest their cashflows — the thesis is more that then they couldn’t pay high dividends. (I’m sure they could pay much smaller dividends). BSIF just said as much, and it was a featured of trusts on a premium to NAV that many investors were aware of as part of the mechanics and even attractions of trust ownership. (And also a big risk to some, such as @Finumus in his post a few years ago).
I just took a quick look at UKW’s earnings figures as per Sharescope and reported earnings are very lumpy. But as best I can tell from the cashflow figures, a quick conclusion is that for last couple of years they’ve had about 12.7p per share free cashflow and they’re paying out dividends of just over 10p a share.
So yes there is apparently some scope there for reinvestment, but still, very nearly 80% of free cash generated is going out the door to shareholders. Is that remaining 20% (if that’s what a more rigorous analysis reveals it to be) sufficient to keep the NAV base growing over the long-term if we assume existing assets eventually go to zero (in accounting terms if not in reality)?
I don’t know but they aren’t cash fountains with little capex need like, say, Coca-Cola that’s for sure.
Oh well avoiding trig hasn’t worked maybe I will chuck in some more to hicl and wait a bit. No point rushing in atm, perhaps they will be a take over of some more of these renewable trusts before the end of the tax year
Re. HICL / TRIG merger.
Feel totally betrayed by this. Just sold my HICL holding. Oh well. At least the dividends mean I got base rate level of return from it since buying earlier this year.
Combining them at NAV values does seem a pretty poor deal for HICL shareholders given the discounts, pre announcement HICL was ~23% and TRIG ~35%
Looks like the “end in sight” in the title is being acquired (‘mergers of unequals’, as with TRIG and HICL).
Shame these renewables ITs can’t be put into an EIS wrapper. The discount to NAV plus 30% inc. tax relief would I think be enough for me to take more of the plunge.
At the moment though, without it, the waters look a bit cold (albeit there might be a carpet bagger angle if one could reliably guess which might be next to be brought out).
It’s interesting looking at natural gas prices, in the US they are 50% more expensive in the last couple of months (now higher than any point since the end of 2022), if those unit costs stay high for a while it may prompt a reassessment if the electricity pricing curve and therefore the NAV.
Maybe another reason to hold on to renewable energy trusts for now.
Capital Gearing have set out their thoughts on the merger – sums up my sentiments well:
https://wp-cgasset-2024.s3.eu-west-2.amazonaws.com/media/2025/11/CGAM-HICL-Letter-to-Chair-171125.pdf
Thanks London yank that link agrees with my thoughts. I have lost confidence in hicl board and will be voting against this and hope others take the opportunity to vote on the issue as they see fit.
Hold both TRIG and HICL. Sell one of them or both? Or wait for merger and then sell? Decisions, decisions.
I reacted to the market and moved all my TRIG into HICL when one spiked and the other dipped.
HICL and TRIG managers have come out for the defence:
https://citywire.com/investment-trust-insider/news/hicl-and-trig-defend-mega-merger-that-has-appalled-investors/a2478700
Like others I remain unconvinced. These were both chunky trusts before. They could merge within their sectors if greater economies of scale were required.
As I noted the managers see a justification for the merger and I have no reason to doubt their sincerity — no doubt InfraRed is less skeptical as a house given its long exposure to renewables — but the fact remains we could pick and choose how much we wanted of each before.
I currently see it as a win for TRIG shareholders and a poor development for HICL owners. But I’m not actually convinced it’ll go through to TBH. I think if I’d owned TRIG on the announcement day I’d have switched it into HICL. (Not investment advice, as always, and the prices have moved since. Just a reflection.)
I don’t like it when ITs change their remit or merge (unless I’m getting brought out at a premium to NAV that wasn’t on the table before) because it complicates whole of portfolio construction. If I buy an income related IT like say CQS New City HY I’m partly buying because it ‘fits’ with what I’m trying to do from an asset allocation/ diversification perspective.
For better or for worse, I might want to avoid certain sectors or ideas not out of moral sentiments or disapproval (in principle I think the idea of renewables is great, even essential, and so, in principle, I approve of renewables ITs), but rather because (as seemingly with renewables ITs) there’s some sort of potentially deep seated technical issue with the financing structure.
So, whilst I do fully respect the experience and expertise behind (and also the genuineness of) the HICL and TRIG boards’ shared view (notwithstanding I’m unconvinced by it), I would much rather have the agency in order to make my own decisions on this.
At the very least, having agency means that I can own my own mistakes.
Interesting comment about having the “scale to press for further industry consolidation”. Whilst I share other’s views on the merits of being able to pick and choose, given the state of the market post 2022, rolling up some of the better quality trusts into a single vehicle with the ability to raise equity seems like one of very few possible solutions to that existential equity capital markets access issue?
Minded to hold on to HICL for now, as TI says, seems doubtful the merger will go through and if it doesn’t, presumably HICL will reclaim the 7% it lost all else being equal
I was just having another look at Next Energy Solar, whose share price has performed very poorly since 2020 (100p down to 52p currently, with a 25p capitulation since the summer).
They’ve got their results coming up in a fortnight and assuming there is no M&A activity underway, it seems like they would do themselves a favour if they just announced a significant reduction in the dividend (at least for the next 4-6 quarters).
Their NAV has declined from about 100p to 92p since 2020 but out of the NAV they have paid out around 40p in dividends. Very nice pay-outs but its put them right at the point where they now may breach their 50% gearing limit.
Normally I would say a dividend cut could spook existing income investors into selling but in this case I’d say its possible, probably likely that cutting the dividend to develop their pipeline/improve their gearing ratio would result in a partial price recovery?
Update: HICL and TRIG merger cancelled due to lack of shareholder support.
https://www.londonstockexchange.com/news-article/HICL/update-on-the-combination-of-hicl-and-trig/17350566
HICL up 4% as I type. TRIG down nearly as much.
What a fiasco. What were the Boards thinking? The optics aren’t great. March up the hill and then march straight back down again. You might think that they could have discretely sounded out some of the big institutional shareholders about the idea first, but I suppose that they couldn’t because it’s market sensitive. Peter Spiller could have put them right.
I expect they did sound out a couple of HICLs largest shareholders eg Rathbones & Brewin Dolphin who together own 20% of the trust. But as they own large TRIG holdings too they were probably more supportive than other shareholders who just own HICL.
Incorrigible contrarian that I am, with TRIG’s share price now even lower than before the merger proposal I am wondering about a small punt.
The discount is currently back above 35%. Its continuation vote is in June 2026 and there’s got to be a good chance it will fail here. Given that everyone can see this, I have to wonder if predators won’t try to emerge to get snap up the whole entity ahead of a (likely more expensive) piecemeal disposal of the assets.
I haven’t followed every RNS announcement but as I understand it, wind asset sales by trusts have generally been going around or above book value (just checked and TRIG’s recent-ish German asset sale seems to have been meaningful above NAV) so there would seem to be value in a wind-up. (With that said I don’t like the battery assets, which seem more likely to depreciate faster to me).
Also, I presume it will resume buybacks halted on the merger announcement. That could provide a short-term fillip.
To be clear this is a ‘better dead than alive’ thesis. I think that’s a shame (see my article above…) but if these vehicles can’t enjoy investor support and confidence to trade around NAV and seeing a path to issuing more equity then sadly I don’t see a long-term future.