Gresham House Energy Storage Fund acquires further 425MW of projects
Gresham House Energy Storage Fund plc, the UK's largest fund investing in utility-scale battery energy storage systems (BESS), has signed contracts for the acquisition of a further 425MW of projects from Gresham House Devco Limited (the current pipeline) of which 275MW are proceeding into construction with commissioning targeted for Q1 2022 and the remaining 150MW will be built subject to funding and other conditions.
The acquisition fully commits the equity funds raised in November 2020.
In addition to the current pipeline, the company has expanded its exclusive pipeline by a further 427MW (the subsequent pipeline). The Company's intention is to build all the subsequent pipeline by the end of Q1 2023, subject to funding and other conditions, with most projects being commissioned by the end of 2022. The subsequent pipeline gives significant visibility on the potential expansion of the company to over 1.2GW of operational assets.
In order to allow the company to build on its leading market share and significantly increase the size of its portfolio to take advantage of the compelling market opportunity for battery energy storage system projects, the company has also announced a proposed placing to raise approximately GBP100 million through an issue of new Ordinary Shares at a price of 112.0 pence per Ordinary Share (the Issue Price).
The net proceeds of the Placing are intended to finance the remaining two projects comprising the Current Pipeline totalling 150MW and 90MW from the Subsequent Pipeline.
The Issue Price represents a discount of 7.25 p[er cent to the closing share price of 120.75 pence on 30 June 2021 and a premium of 5.0 per cent to the last reported NAV of 106.66 pence as at 31 March 2021.
The Company has a dividend target of 7.0 pence per Ordinary Share for the financial year to 31 December 2021, to be paid quarterly, which represents a dividend yield of 6.25 per cent at the Issue Price*. Investors in the Placing will be entitled to the dividend for the quarter-ending 30 September 2021 (1.75 pence expected).
John Leggate, CBE, Chair of Gresham House Energy Storage Fund plc, says: "Battery storage is a strategic imperative for the UK to unlock its world-leading carbon reduction targets. GRID has the market-leading project origination, construction and operational experience to deliver a substantial part of the country's zero-carbon power infrastructure. The prospect of building lower-cost projects over the next 18 months is very exciting in terms of the value this is expected to unlock for our shareholders."
Ben Guest, Lead Fund Manager and Head of Gresham House New Energy, says: "We recently set out ambitious plans to significantly increase the size of our portfolio over the next two years, given the UK's need to increase battery storage capacity tenfold by the middle of this decade. Our increasing economies of scale, streamlined processes and systematic approach to deploying more battery storage capacity means we can increase our rate of deployment while reducing build costs. This growth will allow us to be significantly more competitive in delivering crucial flexible infrastructure for the UK's electricity market, positioning us well for the long term."