REG - VH Global Energy Inf - Net Asset Value and Factsheet

VH Global Energy InfrastructureAnnouncement

21/02/2025 07:00

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RNS Number : 9354X  VH Global Energy Infrastructure PLC  21 February 2025

21 February 2025

 

VH Global Energy Infrastructure plc

 

Net Asset Value and Factsheet

 

ENRG Overview

ENRG is focused on enabling the energy transition globally through its
investments. Its objective is to generate stable returns, principally in the
form of income distributions, by investing in a diversified portfolio of
global sustainable energy infrastructure assets, predominantly in countries
that are members of the EU, OECD, OECD Key Partner countries or OECD Accession
countries. The Company's investments in sustainable energy infrastructure seek
to make an impact by supporting the attainment and pursuit of key Sustainable
Development Goals ("SDGs") where energy and energy infrastructure investments
are a direct contributor to the acceleration of the energy transition.

 

About Victory Hill Capital Partners LLP

 

Victory Hill is a London-based specialist investment management firm founded
by an experienced team of energy financiers. The investment team has
participated in more than $200bn in transaction values across 91 conventional
and renewable energy related transactions in over 30 jurisdictions worldwide.
The Victory Hill team deploys its experience across different financial
disciplines in order to assess investments holistically from multiple points
of view. The firm pursues operational stability and well-designed corporate
governance to generate sustainable positive returns for investors.

 

Financial Operational Highlights

Dividends

The Company announced an interim dividend of 1.45p per share in respect of the
period from 1 October 2024 to 31 December 2024, an increase of 2.1% vs. the
prior quarter.

With the declaration of the interim dividend, the total dividend

for the 2024 financial year was 5.71p per share, exceeding the dividend target
of 5.68p. As at 31 December 2024, the dividend was 0.96x covered by the strong
underlying cash generation from the operating assets. GBP has strengthened in
the year against

the basket of currencies. On a currency adjusted basis, dividend coverage is
1.24x. As construction assets achieve operational status, the dividend
coverage is expected to strengthen in 2025 and 2026.

The Company expects to pay quarterly dividends of 1.45p or 5.80p in total for
the 2025 financial year, in line with its progressive dividend policy, a total
increase of 2.1%.

 

Leverage

Total leverage of the Company is 6.6% of NAV as at 31 December 2024, which
comprises asset-level leverage at its US asset and Iberian and Swedish assets.
The Company does not currently employ leverage at the fund level.

31 December 2024 Net Asset Value (NAV)

 

The Company's NAV as at 31 December 2024 was 103.21p per share, compared to
the NAV of 111.17p per share as at 30 September 2024, a 7.2% decrease. The
movements in the NAV during the quarter include:

                                                               Pence per share
 Net Asset Value per share as at 30 September 2024             111.17
 Dividend paid during the quarter                              (1.42)
 Distributions from investments fair value of asset movements  (5.71)
 Fund expenses                                                 (0.41)
 Movement in foreign exchange                                  (0.57)
 Share buyback                                                 0.15
 Net Asset Value per share as at 31 December 2024              103.21

NAV Movements - Key Drivers:

Fair Value of Assets

·      During the quarter, a 77 bps rise in the average discount rates
across the portfolio led to a 4.6% decrease in NAV per share.

·      The movement in discount rates was primarily due to an increase
in the risk-free rate -with the 20-year US Treasury increasing from 4.18% to
4.68% as of 31 December 2024 and an increase in equity risk premium of 39bps
as well as an increase in the Brazilian country risk premium of 106 bps.

·      Discount rates for operational assets as at 31 December 2024 are
6.94% in the US, 7.77%in Australia, 10.16% for the Brazilian hydro facility,
10.33% for the Brazilian solar PV assets, and 9.15% for the operational assets
of the Iberian and Swedish portfolio.

·      The discount rates are calculated based on public sources,
starting with the 20-year United States bond yields for the risk free rate.
Other risk factors are derived from New York University's Corporate Finance
professor Aswath Damodaran's database that is regularly updated and is
publicly available.

Foreign Exchange

During the quarter, movements in foreign exchange led to an unrealised foreign
exchange loss of £2.3m (0.57p per share). GBP strengthened versus EUR, BRL
and AUD by 0.7%, 6.3%, and 4.6%, respectively and weakened by 6.3% versus
USD.

Portfolio Update:

Brazilian solar PV assets:

·      Two solar distributed generation ("DG") sites were energised in
January 2025, increasing the Company's total operational solar DG projects in
the country to 12 sites, with a capacity of 34.3MWdc. The two newly energised
assets have offtake agreements between 10 and 20 years and are supporting
clients to meet their decarbonisation targets.

·      A third solar site is mechanically complete and is expected to be
energised by Q1 2025, adding a further 6.25MWdc of new capacity.
Implementation of the construction for the final three sites of the programme
is now under review.

UK flexible power with carbon capture and reuse (CCR) asset:

·      The UK asset is in the final stage of commissioning, with the
power unit having come online in Q4 2024. The first stream of liquefied CO(2)
was produced into holding tanks in February 2025, and it is still our
expectation that the integrated plant will be fully commissioned by the end of
Q1 2025.

·      This flexible power plant helps to ensure the delivery of
dependable power in the UK amidst increasing penetration of intermittent
renewable energy. Furthermore, by incorporating carbon capture technology into
the gas-fired power generation component, the project captures and purifies
the CO2 exhaust. This project therefore not only provides reliable,
high-efficiency, net zero flexible power into the grid, but also addresses the
critical structural shortage in the industrial gases market. This unique
combination is one of the first of its kind and paves the way for further low
carbon flexible power generation assets in the UK.

Australian solar PV with battery storage assets:

·      Three solar and storage hybrid systems in New South Wales ("NSW")
completed construction and commissioning.

·      During the fourth quarter of the year, these three NSW assets
delivered exceptional performance, achieving margins significantly above
budget, as a result of the solar PV plus BESS combination capturing average
prices higher than for standalone solar. Elevated captured prices were
primarily driven by heatwaves and low wind resources, combined with outages at
major coal plants. We expect this trend to persist, as power prices remain
highly sensitive to supply and demand fluctuations, particularly under current
grid constraints.

·      The final two hybridised assets in the programme are due to come
online in Q3 2025.

Spanish, Portuguese and Swedish solar onshore wind assets:

·      In Q3 2024, the Company acquired a portfolio of five solar PV and
wind assets across Spain, Portugal, and Sweden, as well as the project rights
to four ready-to-build ("RTB") solar PV assets in Spain. However, due to
interconnection delays encountered on two of these RTB assets, pushing
completion to 2027, the Investment Manager has taken the prudent approach to
return the project rights of these two assets, at no cost. Consequently, there
is no longer a need for a co-investor and the Company can complete
construction of the entire programme with its initial equity investment and
project finance debt, whilst maintaining its 80% ownership of the entire
portfolio (the remaining 20% will be owned by the operating partner in Spain).
The programme now consists of seven assets with a total capacity of 158.1MW:

-     3.7MW operational solar PV in Spain;

-     6MW operational onshore wind in Sweden;

-     20MW solar PV under construction in Portugal;

-     10.3MW solar PV under construction in Spain;

-     19.8MW RTB onshore wind in Spain; and

-     98.3MW RTB solar PV in Spain across two sites

·      The leverage in the programme is expected to be approximately 50%
LTV.

·      Once the seven sites are fully operational, the levered expected
returns should remain unchanged and be in line with the Company's target
return. The Investment Manager also expects the mid-teen target returns
following the implementation of the value creation initiatives to remain
unchanged.

·      The 10.3MW solar PV site in Spain reached mechanical completion
in February 2025 and is expected to be fully energised in Q1 2025. The 20MW
solar PV site in Portugal is expected to reach operational status in H1 2025.

Brazilian hydro facility:

·      In the period, this asset has benefited from a favourable cost
position driven by above-average rainfall (90% of historical averages) which
boosted reservoir levels. Improved hydrological conditions have contributed to
lower market prices, directly reducing the operating costs associated with
power purchases from the spot market - a typical requirement for hydro plant
operators in Brazil that are part of the nationwide consortium.

·      This asset also continues to benefit from attractive long-term
power purchase agreements ("PPAs"), including PPAs for 2025 and 2026 secured
at peak prices observed during a severe drought in early 2024.

·      This asset received gold certification for excellence under the
Hydropower Sustainability Standard from the International Hydropower
Association. This prestigious recognition highlights the Investment Manager's
strong commitment to community engagement and the gold standard has only been
attributed to five other hydro plants worldwide since its formal introduction
in 2021.

US terminal storage assets:

·      In January 2025, the Company refinanced the existing loan
facilities to the asset, upsizing the facilities from US$16 million to US$30
million, consisting of a US$15 million term loan and a US$15 million revolving
credit facility.

·      On 1 February 2025, President Trump issued three executive orders
directing the U.S. to impose tariffs on imports from Mexico, Canada and China.
Initial analysis led the Investment Manager, alongside its operating partner
in Texas, to conclude that the imposition of the tariff should not have any
material impact on the northbound flow of product from Mexico into the
Company's terminals in the Port of Brownsville. From the information available
at time of the announcement of these tariffs, it is considered that the
potential financial impact of the tariff on customer revenues and business of
the Company's terminal assets is low. Furthermore, customer contracts have
been designed to manage downside risk and include minimum volume commitments
regardless of throughput through the terminals.

 

Corporate Governance

 

·      The Board is acutely aware of the wide discount to NAV that the
Company's shares trade at and the issues this causes the Company's
shareholders. With that in mind, the Board, with the support of its investment
manager and broker, is actively engaged with shareholders in considering
potential options for the future of the Company in order to narrow the
discount.

·      The Company expects to publish its annual results for the full
year to 31 December 2024 on or around 3 April 2025.

Sustainability Update

 

On 2 December 2024, the Company changed its name from VH Global Sustainable
Energy Opportunities plc to VH Global Energy Infrastructure plc. The Company's
ticker for the London Stock Exchange was changed to 'ENRG', while the ISIN and
SEDOL remained unchanged. This change was implemented to align with new
regulatory requirements for fund names established by the European Securities
and Markets Authority (ESMA). The Company's sustainable investment
objective-to "make an impact by supporting the attainment and pursuit of key
SDGs, where energy and energy infrastructure investments directly contribute
to accelerating the energy transition" - remains unchanged.

 

In conjunction with the name change, the Company was among the first
investment trusts to announce its adoption of the 'Sustainability Impact'
label under the Financial Conduct Authority's Sustainability Disclosure
Requirements (SDR). This label identifies investment products that aim to
achieve a pre-defined measurable impact in relation to an environmental and/or
social outcome. The adoption of the 'Sustainability Impact' label brings more
clarity and accountability, and reflects the Company's continued commitment to
achieving its sustainability investment objective.

 

·      A total of 75,837 tonnes of greenhouse gas emissions were avoided
in the fourth quarter of 2024.

·      A total of 249,612 MWh of renewable energy was generated from the
portfolio over the same time period, equivalent to over 92,000 average UK
homes powered annually.

·      Almost 6,000 tonnes of sulfur were avoided in the fourth quarter,
attributable to the US terminal storage assets.

 

* Sustainability data is calculated internally at Victory Hill as at 31
December 2024. Historical data and analysis should not be taken as an
indication or guarantee of any future.

 

The Company's LEI is 213800RFHAOF372UU580.

 

For further information, please contact:

 

Edelman Smithfield (PR Adviser)

Ged Brumby          +44  (0)7540 412 301

Hamza Ali              +44  (0)7976 308 914

 

Victory Hill Capital Partners LLP (Investment Manager)

Navin
Chauhan                       info@victory-hill.com
(mailto:info@victory-hill.com)

 

Deutsche Numis (Corporate Broker)

David Benda                           +44 (0)20 7260
1000

Matt Goss

 

Ocorian Administration (UK) Limited (Company Secretary)

oaukcosecteam@ocorian.com (mailto:oaukcosecteam@ocorian.com)

About Victory Hill Capital Partners LLP

Victory Hill Capital Partners LLP ("Victory Hill") is authorised and
regulated by the Financial Conduct Authority (FRN
961570).

Victory Hill is based in London and was founded in May 2020 by an
experienced team of energy financiers that have spun-out of a large
established global project finance banking group. The team has participated in
more than $200bn in transaction values across 91 conventional and renewable
energy-related transactions in over 30 jurisdictions worldwide. Victory Hill
is the investment manager of the Company.

The Victory Hill team deploys its experience across different financial
disciplines in order to assess investments holistically from multiple points
of view. The firm pursues operational stability and well-designed corporate
governance to generate sustainable positive returns for investors. It focuses
on supporting and accelerating the energy transition and the attainment of the
UN Sustainable Development Goals.

Victory Hill is a signatory of the United Nations Principles for Responsible
Investing (UN PRI), the United Nations Global Compact (UN GC), Net Zero Asset
Managers Initiative (NZAMI), a member of the Global Impact Investing Network
(GIIN) and is a formal supporter of the Financial Stability Board's Task-Force
on Climate-related Disclosures (TCFD).

END

 

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