Top-performing trust taps investors for £80 million in expansion drive

Gresham House Energy Storage is looking to buy its first overseas assets, reports Sam Benstead.

Private investors are being offered the chance to buy new shares in Gresham House Energy Storage (LSE:GRID) at a discount to their current price, as it seeks to raise money for investment in overseas energy projects.

The trust, which operates battery storage facilities in Britain and then sells electricity to the energy grid, is attempting to raise £80 million to help fund the purchase of solar energy storage and generation projects in California. This will be the first project it owns outside the UK and requires £135 million in total.

• Invest with ii: Buy Investment Trusts | Top UK Shares | Open a Trading Account

The £80 million will come from both the retail and institutional share offers. The placing is expected to close at 3pm on 24 May 2023.

Existing shareholders are invited to buy new shares at 155.5 pence each. They currently trade at 156p, a 1.35% premium to the latest net asset value (NAV) of 31 March 2024 of 153.77p.

However, investors in the placing will be entitled to the dividend for the quarter-ending 30 June 2023, which is expected to be 1.84p per share. The trust went ex-dividend on 18 May, meaning that investors buying regular shares now are not entitled to the June payout.

The total number of placing shares, including the institutional and retail offer, is expected to represent up to 10% of the trust’s existing issued ordinary share capital. The maximum number of new shares capable of being issued is 54,129,035.

• Are the 7% yields on renewable energy trusts worth the risk?
• The eight income investment trust heavyweights: how sustainable are the dividends?
• The ‘cheap’ investment trusts tipped as buys

Since listing in November 2018 to 31 March 2023, GRID has delivered a NAV total return of 95.1%. It now owns 590MW of operational energy projects, up from 70MW at launch. The trust yields 4.5%.

In addition, GRID has 437MW of fully funded projects under construction in the UK, targeting commissioning by the end of 2023, which will take operational capacity to over 1GW.

John Leggate, chair of Gresham House Energy Storage Fund, said: “Sector-leading returns have been driven by the team's disciplined focus on returns and capital allocation, applied to a rapidly scaling business, which has grown more than eight times since IPO.

“Today we are asking shareholders for incremental equity capital to support our first international acquisition, 160MW of solar plus co-located four-hour battery energy storage system projects in California with an attractive level of potential contracted revenues.”

Numis, the investment trust analyst, is a fan of the trust. It highlights that it has been one of the best-performing infrastructure trusts recently and is one of just two that trades at a premium to NAV.

It said: “Interestingly, the capital raise proceeds are earmarked for international assets and include some solar-generating projects bringing a different mix of revenues including merchant power and production risk, which contrasts to the current UK portfolio.”

• The highest yielding money market funds to park your cash in
• Day in the life of a fund manager: M&G's Eva Sun-Wai

Winterflood, another analyst, adds: “We believe the fund’s diversification into the US is a positive development and enhances the fund’s appeal.

“GRID is on a clear expansion path with 437MW of fully funded projects under construction in Britain targeting commissioning by the end of 2023.”

Existing shareholders will have received an email from interactive investor about the share placing, and an alert on the “corporate actions” section of their account if they log in via the website. There is a minimum subscription of £50 per investor, and only existing shareholders can participate.