The proposed float of renewable energy producer Infinis by Guy Hands’s Terra Firma is the latest in a string of renewables income plays to tempt retail investors. Infinis is the UK’s largest independent renewable energy producer with a 7.3 per cent market share. The float, which will have a retail offering, could value Infinis at around £1bn and the company intends to pay a £55m dividend in its first full financial year after the float, an indicative 5.5 per cent dividend yield.
Renewable energy yield plays are a growing theme at present. Renewable energy supplier Good Energy Group (GOOD) recently launched a corporate bond aimed at retail investors. The bond offers a 7.25 per cent interest rate and this can be boosted to 7.5 per cent if the bondholder uses Good Energy as their energy supplier for the duration of the bond. The company said last week that its initial £5m target has been oversubscribed and it may extend the bond to £15m.
Meanwhile, there have been several initial public offerings in the infrastructure trust segment including Greencoat UK Wind (UKW), Bluefield Solar (BSIF) and The Renewables Infrastructure Group (TRIG) which promise attractive, inflation-linked dividend yields.
And major investors have cottoned on too. BlackRock has bought a portfolio of wind farms from Aim-listed Renewable Energy Generation (WIND) and Terra Firma plans to launch a €3bn green infrastructure fund to buy up renewable energy assets. The positive mood in the renewables sector can be summed up by three little words in the Infinis float document: ‘supportive regulatory regime.’ That ultimately means subsidies support an attractive return on investment, both for retail investors and the likes of BlackRock.
