Liberum SDCL Energy Efficiency Income Trust: £100m investment in Swedish gas distribution network

General/ 19 October 2020

Mkt Cap £452m | Prem/(disc) 9.1% | Div yield 5.2%


SDCL Energy Efficiency Income Trust has agreed a £100m investment in Värtan Gas Stockholm AB, the owner of Stockholm’s regulated gas distribution network. The investment follows the announcement on Friday that the company raised £105m of additional equity (£80m target). 

Locally produced biogas provides 70% of the gas for the network and SEIT’s aim is to increase the proportion of green gas in the network to 100% over time. Värtan Gas Stockholm AB aims to reduce and reuse waste gases at the point of production (e.g. waste water treatment plants) and at the point of use. 

The revenues are primarily regulated and are mainly based on fixed tariffs with low sensitivity to customer demand of consumption. The manager is also aiming to drive revenue growth in opportunities such as serving new transport customers. The acquisition will be funded from existing cash resources and debt facilities. Värtan Gas Stockholm AB also has project debt of £26m. 

In addition to the £100m investment, the manager is in advanced negotiations to acquire £150m of assets including a portfolio of commercial and industrial on-site solar projects in the US and high efficiency combined heat and power projects for commercial, industrial and public sector buildings in the UK.