REG - Octopus Renewables - Capital Allocation Update

Octopus Renewables Infrastructure TrustAnnouncement

11/03/2025 07:15

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RNS Number : 0918A  Octopus Renewables Infra Trust PLC  11 March 2025

11 March 2025

 

LEI: 213800B81BFJKWM2JV13

 

Octopus Renewables Infrastructure Trust plc

("ORIT" or the "Company")

 

 Capital Allocation Update

Further £20 million assigned to extended share buyback programme

Steps outlined to reduce gearing by end 2025

 

Octopus Renewables Infrastructure Trust plc, the diversified renewables
infrastructure company, today announces an update on its capital allocation
programme, setting clearly defined capital allocation goals for the remainder
of the current financial year (the "Goals").

 

Alongside the Goals, the Board reiterates its commitment to a fully covered
dividend of 6.17 pence per ordinary share* for FY 2025. This is an increase of
2.5% over FY 2024, in-line with the UK Consumer Price Index (CPI) for the 12
months to 31 December 2024 and equates to a return of capital to shareholders
of approximately £34 million.

 

The three core Goals are outlined below, with more detail following on each.

 

1.    Extend the share buyback programme by assigning an additional £20
million to repurchases - equivalent to approximately 6% of market
capitalisation**

2.    Bring total gearing down to below 40% Gross Asset Value ("GAV") by
the end of 2025 (currently 45%) by reducing company debt by approximately £50
million

3.    Realise at least £80 million from asset sales by the end of this
financial year to fund the above, together with making selected accretive
investments, as part of the ongoing capital recycling programme

 

Extended and increased share buyback programme

Following on from the £10 million share buyback programme announced in June
2024, of which c.£8.12 million (excluding transaction costs) has been
deployed to date, the Board has committed to an extended buyback programme to
take advantage of the net asset value ("NAV") per share value accretion that
this allows at these discount levels. The buybacks will be facilitated through
the Company's existing cash resources, strong portfolio cashflow generation
and the ongoing capital recycling programme. The £30 million aggregate
buyback programme announced to date represents approximately 8% of the
Company's market capitalisation** (6% of which represents today's announced
£20 million buyback).

 

Continued focus on deleveraging

ORIT announced on 28 February 2025 the signing of a new five-year term loan
facility
(https://www.londonstockexchange.com/news-article/ORIT/orit-signs-new-five-year-term-loan-facility/16918901)
, on attractive terms, which has enabled the Company to pay down the more
expensive revolving credit facility ("RCF") by £98 million. The Company is
also in the process of extending the tenor and reducing the size of its RCF in
order to decrease commitment fees and further reduce costs for shareholders.
Further asset sales will reduce debt and bring total gearing down to below 40%
of GAV by year end.

 

Targeted asset sales

ORIT is committed to selling strategically selected assets to support its
capital allocation objectives. The Company has identified several portfolio
assets the sales of which should enhance the future return profile of the
Company, whilst also preserving the strong diversification. The proceeds from
these sales will be used to buy back shares and pay down debt, driving value
for shareholders.

Value-accretive investments

In addition, in line with its previously communicated strategy, the Board and
Investment Manager reaffirm that a limited number of new investments will be
considered where they will support the Company's ability to deliver attractive
returns to investors. Each new investment will be assessed against the merits
of the investment versus other uses of capital, such as buying back shares or
paying down debt, and ensuring the Company will achieve the Goals outlined for
2025.

 

In-line with this, ORIT is making a follow-on investment of £1.5 million into
BLC Energy Limited ("BLCe"), a development business, focused on creating new
ground-mounted solar PV and co-located battery storage assets in the UK. The
Company's initial investment was announced on 31 July 2023
(https://www.londonstockexchange.com/news-article/ORIT/investment-into-uk-solar-development-business/16061805)
when it was highlighted that ORIT would have preferential rights to provide
development funding to the new pipeline identified by BLCe. Since the initial
announcement, the platform has performed well, and this additional funding
will support the most advanced projects to capitalise on the UK's reformed
grid queue process.

 

Enhancing shareholder value

The Board notes the ongoing challenging environment for listed renewable
energy infrastructure trusts, and remains committed to driving value for
shareholders. The Directors will therefore assess the existing portfolio and
investment strategy, supported by the Investment Manager, and conduct a review
of current fee arrangements as part of its longer-term plan to deliver
enhanced returns to shareholders. The aim will be to optimise existing assets
and identify opportunities aligned with the Company's investment objective to
generate further growth, whilst also maintaining a progressive fully covered
dividend.

 

Phil Austin, Chair of Octopus Renewables Infrastructure Trust plc, commented:

"ORIT has continued to make good progress, delivering on its fully covered
progressive dividend in line with UK CPI, and retaining its focus on
disciplined capital allocation. With £161 million of asset sales transacted
to date, achieving an aggregate weighted average uplift to holding value of
12%, we have been a leader in our sector as a percentage of market
capitalisation. However, we recognise it is important to continually review
and adapt and therefore we are pleased to announce clearly defined capital
allocation goals that we hope will resonate with our shareholders.

 

"Renewables infrastructure has always been a long-term asset class which both
offers attractive income often with built-in inflation protection and is set
for continued growth over the coming years. We have an experienced and quality
investment manager in Octopus Energy Generation, which is well placed to
unlock the exciting opportunities evolving in this sector. We also believe we
have, and will continue to build, a portfolio that will deliver growth over
the longer term. We are confident in the future of this vital sector and
believe that ORIT has a significant part to play in the transition to a
cleaner energy future."

 

 

 Octopus Energy Generation (Investment Manager)                     Via Burson Buchanan or

 Chris Gaydon, David Bird                                           orit@octopusenergygeneration.com (mailto:orit@octopusenergygeneration.com)

 Peel Hunt (Broker)                                                 020 7418 8900

 Luke Simpson, Huw Jeremy (Investment Banking)

 Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris

 Burson Buchanan (Financial PR)                                      020 7466 5000

 Charles Ryland, Verity Parker, Samuel Adams

 Apex Listed Companies Services (UK) Limited (Company Secretary)     020 3327 9720

 

* The dividend target stated in this announcement is a target only and not a
profit forecast. There can be no assurance that this target will be met, or
that the Company will make any distributions at all and it should not be taken
as an indication of the Company's expected future results. The Company's
actual returns will depend upon a number of factors, including but not limited
to the Company's net income and level of ongoing charges. Accordingly,
potential investors should not place any reliance on this target and should
decide for themselves whether or not the target dividend is reasonable or
achievable. Investors should note that references in this announcement to
"dividends" and "distributions" are intended to cover both dividend income and
income which is designated as an interest distribution for UK tax purposes and
therefore subject to the interest streaming regime applicable to investment
trusts.

** As at market close on 10 March 2025.

 

 

Notes to editors

 

About Octopus Renewables Infrastructure Trust

 

Octopus Renewables Infrastructure Trust ("ORIT") is a London-listed,
closed-ended investment company incorporated
in England and Wales focused on providing investors with an attractive
and sustainable level of income returns, with an element of capital growth, by
investing in a diversified portfolio of renewable energy assets
in Europe and Australia. As an impact fund, ORIT is helping accelerate
the transition to net zero by investing in green energy, whilst also
contributing to a broader set of UN Sustainable Development Goals through its
impact initiatives. ORIT's investment manager is Octopus Energy
Generation.  

 

Further details can be found at www.octopusrenewablesinfrastructure.com
(http://www.octopusrenewablesinfrastructure.com/)  

 

About Octopus Energy Generation

 

Octopus Energy Generation is driving the renewable energy agenda by building
green power for the future. Its specialist renewable energy fund management
team invests in renewable energy assets and broader projects helping the
energy transition, across operational, construction and development stages.
The team was set up in 2010 based on the belief that investors can play a
vital role in accelerating the shift to a future powered by renewable energy.
It has a 14-year track record with approximately £6.7 billion of assets under
management (AUM) (as of 30 September 2024) across 19 countries and total
4.5GW. These renewable projects generate enough green energy to power 2.6
million homes every year, the equivalent of taking over 1.4 million petrol
cars off the road. Octopus Energy Generation is the trading name of Octopus
Renewables Limited.

 

Further details can be found at www.octopusenergygeneration.com
(http://www.octopusenergygeneration.com/)  

 

 

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