Harmony Energy Income Trust plans GBP 230mn IPO on LSE

Harmony Energy Income Trust plans GBP 230mn IPO on LSE

LONDON, UK: Harmony Energy Income Trust, an externally managed investment company that will invest in UK energy storage assets, intends to undertake an initial public offering (IPO) on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial institutional placing and offer for subscription for a target issue of up to 230 million new ordinary shares at an initial issue price of 100 pence per ordinary share.

Harmony Energy Income Trust’s investment objective is to provide investors with an attractive and sustainable level of income returns, with the potential for capital growth, by investing in commercial scale energy storage and renewable energy generation projects, with an initial focus on a diversified portfolio of battery energy storage systems (BESS) located in Great Britain.

The Company has contracted with Tesla Motors Limited (Tesla) in respect of its initial portfolio of battery storage projects, to be acquired on IPO, which will benefit from Tesla’s 2-hour duration Megapack systems and Autobidder AI revenue optimization platform. Harmony Energy Advisors Limited will provide investment advisory and operational asset services.

Harmony Energy is targeting a dividend yield of 8 per cent per annum, payable quarterly from 2023 (increasing from 2 per cent. in 2022). By investing predominantly in ‘shovel ready’ projects, the company seeks to maximise the opportunity for potential risk-adjusted capital value growth and it is expected by the Investment Adviser that the Company’s assets will benefit from a future fair value uplift once operational.

On Admission, Harmony Energy will acquire a portfolio of five BESS ‘shovel ready’ projects with an aggregate storage capacity of 213.5 MW (427 MWh) from Harmony Energy Limited with an additional 99MW (198 MWh) advanced project to be acquired following admission, taking the total initial portfolio to 312.5 MW (625 MWh).

In addition, the Company will have exclusive rights to acquire a pipeline of BESS projects of up to aggregate capacity of 687.5 MW, already within Harmony Energy’s control. This will take the Company’s initial target portfolio to 1 GW.

The Company has further preferential rights over Harmony Energy’s future projects. Once the net proceeds from the Issue have been fully invested and the projects are constructed and commissioned, the target unlevered net asset value total return for the projects is 10 per cent per annum over the medium to long-term.

Norman Crighton, prospective Chairman of Harmony Energy Income Trust PLC, said: “The Company offers investors the opportunity to invest in a rapidly growing part of the renewables sector; as wind and solar renewable energy projects increase, so too will the need for battery storage energy systems. The nation is becoming increasingly aware of the need to have the right infrastructure in place to secure our energy supplies.

As we increase our reliance on renewable power, battery storage will have a crucial role to play. The battery energy storage sector is one that has seen remarkable growth over the past ten years; it will only grow further and the Company will be at the forefront of this growth. The Board believes that battery storage energy systems will be critical in helping the UK achieve net zero by 2050 and we are proud that Harmony Energy is part of ensuring a sustainable future for generations to come.”

Paul Mason, Managing Director of the Investment Adviser, added: “Battery energy storage offers exciting growth, with 1.2 GW built and operating today versus a potential energy storage requirement of up to 43 GW by 2050. Investing in battery storage energy systems requires extensive sector expertise and knowledge, and our team has decades of investment and industry experience. Battery storage energy systems are a vital cog in the renewable energy value chain. We believe there is enormous potential in the sector and the 2-hour duration battery will be best placed to take advantage of this. We look forward to building out this opportunity.”

The Prospectus for the proposed IPO is due to be published shortly and the close of the Issue is expected to take place in early November 2021. The Company expects to apply for admission of its Ordinary Shares to the Specialist Fund Segment of the Main Market of the London Stock Exchange plc. The Company intends to carry on business as an investment trust.

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