TIDMNESF
RNS Number : 6160C
NextEnergy Solar Fund Limited
22 June 2021
LEI: 213800ZPHCBDDSQH5447
22 June 2021
NextEnergy Solar Fund Limited
("NESF" or the "Company")
Commitment of US$50m in NextPower III LP (an ESG Private Solar
Infrastructure Fund)
and New Revolving Credit Facility
NextEnergy Solar Fund, the specialist solar power renewable
energy investment company, is pleased to announce a commitment of
US$50m to NextPower III LP ("NPIII") and a new Revolving Credit
Facility ("RCF") of GBP100m.
NPIII provides the Company with an opportunity to efficiently
access, inter alia, an established portfolio of operational and
in-construction international assets. NESF's investment in NPIII
will represent c.3.5% of NESF's GAV as at 31 March 2021 and will be
funded by the Company's new RCF.
Investment in NPIII ESG
NPIII is a private ESG solar infrastructure fund established to
invest in solar infrastructure projects primarily in OECD
countries. Since its establishment in November 2018, it has built
an attractive portfolio of operational, in-construction and
pre-construction solar assets. It is diversified by geographic
location, regulatory regime, technology provider and electricity
offtake counterparty.
NPIII currently owns a solar asset portfolio of 394MW, of which
245MW are operational, with a further 453MW in acquisition under
exclusivity.
NPIII benefits from NextEnergy Capital's ability to source and
secure solar assets that deliver attractive risk-adjusted target
returns. An investment into NPIII will also provide NESF with
additional, off-market opportunities to co-invest with NPIII. This
will involve NESF taking direct equity stakes in selected
investment targets sourced by NPIII at attractive terms (on a
no-fee, no-carry basis).
NPIII Fund Overview
-- A global private solar infrastructure fund, launched in November 2018 with a ten-year life
o Long-term offtake agreements in place covering c.70% of
electricity generated across the portfolio
o Targeting gross investor IRRs of 13-15%, with the existing
portfolio outperforming target returns
-- Managed by NextEnergy Capital
o Asset manager is WiseEnergy, NESF's asset manager
-- 394MW solar assets in the US, India, Portugal, and Chile, of
which 245MW are operational, 54MW under construction and 115MW
pre-construction
-- Total pipeline of c.1.6GW pipeline
o Of this, 453MW solar assets in exclusivity across Portugal,
Chile, Poland and Spain
-- Winner of the prestigious international award "Renewables
Fund of the Year" in Environmental Finance's Sustainable Investment
Awards 2020
-- Capital raised to date of US$439m (including NESF's
commitment), sourced primarily from blue-chip European
institutional investors, with a target of US$750m and hard cap of
$1bn by year-end 2021
o Investment period ends in 2023
NESF Investment Rationale
NPIII is an attractive investment opportunity for NESF:
-- Increased geographical diversification: instant access to
operating solar assets in new geographies
-- Immediate incremental growth: capital deployment across a
well-diversified portfolio of operational, in construction and
pre-construction solar assets
-- Strong financial returns in excess of NESF's minimum
requirement and accretive to dividend cover
-- Large pipeline: 1.6GW under exclusivity and under
consideration, anticipated to drive further rapid capital
deployment
-- Opportunity for future co-investment: NESF can take direct
stakes on attractive terms in opportunities sourced by NPIII,
providing a potential return-enhancing portfolio benefit
-- Diversification of revenue: NPIII's long-term PPAs range from
seven to 25 years with high-quality off-takers and risk mitigation
with respect to individual markets' power prices
-- Potential of NAV appreciation: in construction and
pre-construction projects have the potential to re-rate as they
move into operations
-- Attractive terms: Investment in an award-winning private
solar fund with a strong track record since inception, alongside
well-regarded institutional investors - whilst also benefiting from
the additional savings from the absence of fees-on-fees due to
commonality of the investment manager
-- Strong ESG alignment: provides a positive social and
environmental impact to the countries it has and will invest
into
NPIII ESG Impact
-- When NPIII is fully invested at US$750m across an installed
capacity of c.2.5GW, it can expect to deliver an impact of
estimated annual avoided emissions of 2,000 ktCO2e(2) each year,
which on a conservative basis is the equivalent to providing energy
for 1.3 million homes per year(3)
-- NPIII is a fund that provides a positive social and
environmental impact to the countries it invests in. The
Sustainable Investment Policy is fully integrated into NPIII ESG's
investment strategy
-- NPIII's dedicated ESG team works with the Green Investment
Group to provide independent ESG reporting to investors for all
NPIII ESG investments. These reports can be found on the NextEnergy
Capital website sustainability page, under transparency and
reporting:
https://www.nextenergycapital.com/sustainability/transparency-and-reporting/fund-level-reporting/nextpower-iii-reports
NPIII Investment Costs
NESF's investment manager NextEnergy Capital has agreed to
rebate back to NESF its full investment management fee relating to
NESF's commitment to NPIII. As a result, from the day of signing,
NESF will reduce the basis upon which it calculates the investment
management fees due to its Investment Manager by subtracting from
the relevant NAV an amount equivalent to US$50m (during the NPIII
investment period, and then the actual amount invested, after the
end of the NPIII investment period). Separately, the terms and
conditions of NESF's investment into NPIII are fully aligned to the
terms and conditions of NPIII's other institutional investors.
NESF will also adopt a "look-through" approach and consider its
pro-rata share of NPIII in reporting on its portfolio with regards
to gearing, geographical distribution and other investment
limits.
New Revolving Credit Facility (RCF)
NESF is pleased to announce it has signed a new Revolving Credit
Facility which was secured on attractive terms with lenders NatWest
and AIB. The new facility amounts to GBP100m (GBP75m committed +
GBP25m accordion) with a 3-year duration and increases NESF's
overall RCF facilities to GBP165m (not including the accordion) of
which GBP54m is currently drawn.
The RCF provides NESF with cost-efficient funding to progress
its investment strategy pipeline, with an agreed margin of 120bps
over SONIA ("Sterling Overnight Index Average").
Kevin Lyon, Chairman of NextEnergy Solar Fund commented:
"NESF's investment into NPIII is an exciting opportunity to
immediately add international diversification, incremental growth
and an attractive return profile to our portfolio. The board
believes this commitment fits NESF's investment objective well and
the future co-investment opportunities can offer a unique,
return-enhancing portfolio benefit. NPIII's strong track record
since its inception, its high-profile investor base and
award-winning status provide us with further conviction around this
investment. It also contributes to our portfolio's geographic
diversification and risk mitigation with respect to individual
markets' power prices. We look forward to updating shareholders
further as our investment is deployed. The Board believes the new
RCF to fund this commitment and further investments is the most
cost-efficient funding strategy."
Notes:
(1) NESF investment policy limits:
-- Technological Limit: The Company may also invest in
standalone energy storage systems (not ancillary to or co-located
with solar PV assets owned by the Company) up to an aggregate limit
of 10% of the Gross Asset Value (calculated at the time of
investment)
-- Private Equity Limit: 15% of the Gross Asset Value may be
invested in solar assets through private equity structures
(calculated at the time of investment)
-- Geographical Limit: The Company is permitted to invest up to
30% of GAV (at the time of investment) in OECD countries outside
the UK. The Company may acquire an interest in solar PV assets
located in non-OECD countries where those assets form part of a
portfolio of solar PV assets in which the Company acquires an
interest and where the Company's aggregate investment in any such
assets is, at the time any such investment is made, not greater
than 3% of the Gross Asset Value
-- Development Limit: The Company mostly acquires operating
solar assets, but it may also invest in solar assets that are under
development (that is, at the stage of origination, project planning
or construction) when acquired. Such assets in aggregate will not
constitute (at the time of investment) more than 10% of GAV
-- Single Asset Limit: No single investment by the Company in
any one solar asset will constitute (at the time of investment)
more than 30% of GAV. In addition, the four largest solar assets
will not constitute (at the time of investment) more than 75% of
GAV
-- Gearing Level: Leverage of up to 50% of GAV
(2) Assumes: 80% of energy generation is in OECD countries; 20%
of energy generation is in non-OECD countries; OECD country grid
emission factor is the EU28 average; non-OECD grid emission factor
is an average of India and Mexico grid emission factors; an average
capacity factor of 20% is used to convert capacity (GW) into
generation (GWh) which is an average value for the US where NEC has
acquired assets.
(3) Assumptions based on average UK electricity consumption of
2.5MW per households per year.
For further information:
NextEnergy Capital Group 020 3746 0700
Michael Bonte-Friedheim ir@nextenergysolarfund.com
Aldo Beolchini
Ross Grier
Peter Hamid (Investor Relations)
Cenkos Securities 020 7397 8900
James King
William Talkington
Shore Capital 020 7408 4090
Anita Ghanekar
Sarah Mather
Camarco 020 3781 8334
Owen Roberts
Eddie Livingstone-Learmonth
Apex Fund and Corporate Services (Guernsey)
Limited 01481 735 827
Nick Robilliard
Notes to Editors(1) :
About NextEnergy Solar Fund
NESF is a renewable energy infrastructure investment company
that currently invests in operating solar power plants in the UK
and Italy. The Company may invest up to 30% of its gross asset
value in non-UK OECD countries, 15% in private equity structures,
and 10% in standalone energy storage.
NESF currently has a diversified portfolio comprising 94
operating solar assets, primarily on agricultural, industrial, and
commercial sites, with a combined installed power capacity of
c.814MWp.
As at 31 March 2021, the Company had gross assets of GBP1,025
million, of which 89% was invested in the UK, and net assets of
GBP581 million. The majority of long-term cash flows from its
investments are inflation-linked.
NESF's investment objective is to provide ordinary shareholders
with attractive risk-adjusted returns, principally in the form of
regular dividends, by investing in a diversified portfolio of
primarily UK-based solar energy infrastructure assets.
For further information on NESF please visit
nextenergysolarfund.com
Commitment to ESG
NESF is committed to ESG principles and responsible investment
which make a meaningful contribution to reducing CO2 emissions
through the generation of clean solar power. NESF will only select
investments that meet the requirements of NEC Group's Sustainable
Investment Policy. Based on this policy, NESF benefits from NEC's
rigorous ESG due diligence on each investment. NESF is committed to
reporting on its ESG performance in accordance with the UN
Sustainable Development Goals framework and the EU Sustainable
Finance Disclosure Regulation.
NESF has been awarded the London Stock Exchange's Green Economy
Mark and has been designated a Guernsey Green Fund by the Guernsey
Financial Services Commission.
NESF's sustainability-related disclosures in the financial
services sector in accordance with Regulation (EU) 2019/2088 can be
accessed on the ESG section of both the NESF website (
nextenergysolarfund.com/esg/ ) & NEC Group website (
nextenergycapital.com/sustainability/transparency-and-reporting/
).
About NextEnergy Capital Group ("NEC Group")
NESF is managed by the NextEnergy Capital Group, a specialist
solar investment manager, which has a strong track record in
sourcing, acquiring, and managing operating solar assets. NEC Group
is a leading player in the global solar investment sector and has
over 190 team members with offices in UK, Italy, India, and the USA
and assets under management of over $2.6bn across three
institutional funds.
NextEnergy Capital Group donates 5% of its net annual profits to
NextEnergy Foundation. NextEnergy Foundation is an international
charity that was founded in 2016. Its mission is to participate
proactively in the global effort to reduce carbon emissions,
provide clean power sources in regions where they are not yet
available, and contribute to poverty alleviation.
For further information on NEC Group please visit
nextenergycapital.com
For further information on NextEnergy Foundation visit
nextenergyfoundation.org
About WiseEnergy
WiseEnergy is NEC Group's specialist operating asset management
division. NESF is differentiated by its access to WiseEnergy, which
has provided operating asset management, monitoring, technical due
diligence, and other services to over 1,500 utility-scale solar
power plants with an installed capacity in excess of 2.3GW.
For further information on Wise Energy please visit
wise-energy.com
([1]) Note: All financial data is as at 31 March 2021, being the
latest date in respect of which NESF has published financial
information
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