- Net asset value down from £99.4mn to £86.7mn (86.7p)
- £12.2mn impairment charge mainly on CHP and hydroelectric portfolios
- £62mn of asset realisations at 92 per cent of carrying valuations
- Debt-free and only two assets remaining to sell
- Potential for 80p a share cash return
Triple Point Energy Transition (TENT:67.25p), an investment company that is supporting the energy transition, is making stellar progress with divesting its portfolio of infrastructure investments.
Since shareholders approved an orderly wind-down of the portfolio on 22 March 2024, the investment manager has exited four investments and realised 92 per cent of their £67mn carrying valuation in the process. Asset realisations include:
- £5mn Innova Renewables short-term development financing facility;
- £2.1mn receivables financing facility to Boxed Light Services;
- £37mn debt facility provided to a subsidiary of Virmati Energy to fund four battery energy storage systems (BESS) projects;
- £23.1mn of debt investments secured on a portfolio of three combined heat and power (CHP) energy service centre companies which deliver heat and power to glasshouses leased by APS Salads.
Admittedly, the post-period-end £17.5mn exit from the CHP portfolio is well below the £23.1mn amount outstanding loan balance on 31 March 2024, hence why the asset was written down by £6.1mn in the financial year to reflect the £17mn net present value of the disposal cash proceeds. The impairment reflects a deterioration in the on-site grower’s financial position. Cash of £14.5mn was paid to Triple Point on completion of the transaction, with a further three non-contingent cash payments of £1mn due to the company in September 2024, June 2025 and September 2026.
Two assets to sell
This means Triple Point’s net cash of £18.7mn (18.7p) on 31 May 2024 has now increased to £33.2mn (33.2p) excluding the £3mn (3p) deferred cash consideration from the CHP portfolio sale. The company has two remaining assets to sell, which it plans to do by 31 March 2025.
The largest is an unencumbered portfolio of nine operational, feed-in-tariff (FiT) accredited, hydroelectric power projects in Scotland, which have a total installed capacity of 6.6MW. They were acquired for £46.2mn in late 2021 and had a carrying valuation of £50.4mn on 30 September 2023.
Although Triple Point booked a £5mn impairment charge against the hydroelectric portfolio in the 2023-24 accounts to reflect a change in power price forecasts (£1.1mn reduction in valuation) and an increase in the discount rate from 5.6 to 6.5 per cent due to the significant rise in gilt yields (£3.9mn), the company should still realise around £45mn (45p) on disposal. The company has received multiple non-binding offers and plans to move on to due diligence and submission of binding offers in the coming months. In addition, Triple Point is actively looking for buyers for a second LED receivable finance portfolio that has £1.1mn (1.1p) outstanding.
So, having suggested buying Triple Point shares at 58.5p (opening offer price was 60p on date of publication) in my 2024 Bargain Share Portfolio, and banked a quarterly dividend of 1.375p in April 2024, I feel that a total cash return of at least 80p per share on the holding is achievable. In the meantime, the next 1.375p-a-share quarterly dividend goes ex-dividend on 4 July 2024. Buy.
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