NextEnergy in £150m IPO

The UK solar specialist is eyeing a pipeline of assets representing more than 280MWp of installed capacity and £300m of investment.

NextEnergy Solar Fund, a solar-focused investment vehicle, today announced its intention to float on the London Stock Exchange.

The company is aiming to raise £150 million (€182 million; $249 million) through the placing and offer of ordinary shares, which will seek to provide investors with a stable dividend indexed in inflation. The listing is expected to take place in February, with trading of the shares commencing in March 2014.

The proceeds will be used to acquire operational solar assets. NextEnergy Capital (NEC), the UK-based merchant bank that will manage the fund, has its sights on a deal pipeline representing a planned installed capacity of more than 280 megawatts peak (MWp) and around £300 million of investment. A core shortlist of transactions has already been identified, NEC said, all of which are expected to become fully operational within four months of the float.

NextEnergy Solar Fund is targeting an RPI-linked yearly dividend of 6.25 pence per share. The vehicle is aiming for aggregate returns to investors over the long term equal to an unlevered IRR of between seven and nine percent. Fees will be worth one percent of net assets under management – declining as the net asset value grows – with no performance or transaction fees.

NEC was founded in 2007 by Michael Bonte-Friedheim, a former managing director within Goldman Sachs’ energy and power unit, with the ambition to become “the leading specialist merchant bank for the renewable energy sector”. Wise Energy, its asset management subsidiary, manages more than 1,100 solar plants worth an estimated £3.1 billion.

NEC has deployed around £120 million of equity and debt – its own and third parties’ – in solar power projects since inception. These investments have spanned 14 plants in the UK and Italy, four of which have now been exited.

The announcement comes in the wake of a series of similar floats over the last few months, amid growing investor interest for the long-term, inflation-linked yields promised by renewable power plant projects. These have comprised Greencoat UK Wind, which raised £260 million in March, The Renewables Infrastructure Group (TRIG) and Bluefield, which respectively collected £300 million and £130 million in July, and Foresight Solar Group, which garnered £150 million in October.

Ingenious Clean Energy also announced its intention to float in London last week, with an initial target of £160 million.