SDCL Energy Efficiency Income Trust plc (LSE ticker: SEIT), managed by Sustainable Development Capital (SDCL), has acquired a 71 per cent interest in a high-quality Combined Heat and Power (CHP) portfolio of eight operating CHP projects on the east coast of the USA for a total cash consideration of USD5.0 million.
Six of these CHP projects are being acquired from a well-known US manufacturer and installer of CHP units and solutions. The remaining two projects are being contributed by a fund managed by a US subsidiary of SDCL, which will result in that fund owning the remaining 29 per cent interest in the combined portfolio.
The projects, which comprise CHP units for a prison, university, multi-family developments and a nursing home, have a total installed capacity of 2.5MW of CHP and 1,250 tonnes of cooling capacity. They are each subject to Energy Purchase Agreements, which benefit from long-term contracted cash flows and have been fully operational and revenue generating for over a year. Revenues from the sites are generated through electricity sales, the provision of hot and chilled water and from electricity demand reduction.
As the acquisition was conducted alongside another fund managed by SDCL, the transaction was subject to additional review and approval by the SEEIT Board.
This acquisition represents SEEIT’s first new investment since listing on the London Stock Exchange and acquiring the seed portfolio in December 2018. The Company continues to invest the proceeds from the IPO to generate SEEIT’s return targets of between seven and eight per cent per annum and to generate its target dividend of 5 pence for its first full financial year. SEEIT is continuing to review an identified pipeline of new investment opportunities – a number of which are at an advanced stage.
Jonathan Maxwell, CEO and Founder of Sustainable Development Capital, says: “We are delighted to announce this acquisition, which follows the acquisition of our initial seed portfolio in December. It demonstrates our ability to deliver on our target pipeline opportunities in order to deliver long-term, stable and predictable cash flows and provide environmental benefits. This acquisition adds to our portfolio of CHP assets, allowing us to deliver cheaper, cleaner and more reliable energy solutions to clients, and importantly diversifying the wider portfolio geographically into the US. We are particularly pleased that SEEIT has now entered the US market, which offers opportunity for further investment into high quality CHP as we continue to seek out attractive acquisition opportunities.”
