IDP's HYP as of 20 May 21.

[Dod101]

On UKW...
https://www.londonstockexchange.com/new ... g/14862647

Feb 2021

"Greencoat UK Wind plc (the "Company" or "UKW"), the leading listed renewable infrastructure fund, invested in UK wind farms, is announcing that it is seeking to raise up to £198 million through a placing (the "Placing") of new ordinary shares in the capital of the Company (the "Placing Shares") by way of a non-pre-emptive issuance to institutional investors at 131p per share.

Proceeds from the Placing will be used to repay or reduce borrowings under the Company's revolving credit facility to allow the Company to fund its strong pipeline of acquisition opportunities, including an acquisition in the near term and £162 million of previously announced committed acquisitions over the next 12 months."

"Under the terms of the Placing and conditional upon, inter alia, Admission (as defined below) (together the "Conditions"), UKW intends to place up to 150,853,600 new Ordinary Shares in the capital of the Company (up to 8.3% of the existing issued share capital) at a Placing Price of 131p per Placing Share (the "Placing Price"):"

Doesn't this dilute ownership, particularly for 'retail ' investors. More shares...more free cash to find to pay dividends. However, it is the restriction of shares being offered at a discount to institutional investors rather than to all existing shareholders. Then again, UKW is owned ~83% by institutions and ~16% Joe Public.

I wish people would stop using EPICS. So UKW is Greencoat. In that case I withdraw my previous comment. I know enough about Greencoat and have written enough about it that anyone interested will know that I am not in the least impressed by it for all sorts or reasons, not least because of these very regular placings.

Dod

[richfool]

I wish people would stop using EPICS. So UKW is Greencoat. In that case I withdraw my previous comment. I know enough about Greencoat and have written enough about it that anyone interested will know that I am not in the least impressed by it for all sorts or reasons, not least because of these very regular placings.

Referring to Greencoat alone can be misleading, as there is a Greencoat UK Wind plc (UKW) and also a Greencoat Renewables plc (GRP)., both in the same renewables sector. Using the ticker makes it clear which one is being discussed and avoids confusion.

Regular placings is indeed an aspect which is common with the renewables.

[MDW1954]

Regular placings is indeed an aspect which is common with the renewables.

And of course, also with REITs, for much same reason.

Personally, I do not regard them as dilutive: the funds are being used to acquire more assets. One holds just as big a proportion of the original asset base as before, with fixed costs spread over a larger set of assets.

That is also why I am generally supportive of them. Buy into a BBOX, WHR, RGL, CREI or EBOX, and they go with the territory.

And it's much the same with renewables.

MDW1954

[Arborbridge]

On UKW...
https://www.londonstockexchange.com/new ... g/14862647

Feb 2021

"Greencoat UK Wind plc (the "Company" or "UKW"), the leading listed renewable infrastructure fund, invested in UK wind farms, is announcing that it is seeking to raise up to £198 million through a placing (the "Placing") of new ordinary shares in the capital of the Company (the "Placing Shares") by way of a non-pre-emptive issuance to institutional investors at 131p per share.

Proceeds from the Placing will be used to repay or reduce borrowings under the Company's revolving credit facility to allow the Company to fund its strong pipeline of acquisition opportunities, including an acquisition in the near term and £162 million of previously announced committed acquisitions over the next 12 months."

"Under the terms of the Placing and conditional upon, inter alia, Admission (as defined below) (together the "Conditions"), UKW intends to place up to 150,853,600 new Ordinary Shares in the capital of the Company (up to 8.3% of the existing issued share capital) at a Placing Price of 131p per Placing Share (the "Placing Price"):"

Doesn't this dilute ownership, particularly for 'retail ' investors. More shares...more free cash to find to pay dividends. However, it is the restriction of shares being offered at a discount to institutional investors rather than to all existing shareholders. Then again, UKW is owned ~83% by institutions and ~16% Joe Public.

Am I reading this wrongly: discounted at 131p? But the shares are 130p today.

I believe it is the nature of companies like this to raise money in this way now and then - isn't it part of the territory? I think BBOX does it also. One trusts that enlarging companies this way leads to more stability and returns for the future: a bigger and better cake. If not, we should run a mile

Arb.

[Arborbridge]

I wrote my post just now, being unaware that others had commented on the same thing. At least I find we agree - almost to the same wording!

Arb.

[daveh]

Regular placings is indeed an aspect which is common with the renewables.

And of course, also with REITs, for much same reason.

Personally, I do not regard them as dilutive: the funds are being used to acquire more assets. One holds just as big a proportion of the original asset base as before, with fixed costs spread over a larger set of assets.

That is also why I am generally supportive of them. Buy into a BBOX, WHR, RGL, CREI or EBOX, and they go with the territory.

And it's much the same with renewables.

MDW1954

Also TRIG* often (but not always) does its placings as open offers so you (PIs) get the chance to buy at the discount price. Also when they do a placing it is usually at a discount to the share price, but a premium to the NAV and the share price usually falls back towards the placing price, so even if you can't take part in the placing you get a chance to buy at close to the placing price if you want to avoid being diluted.

I own a fullish holding of TRIG and if I was going to invest more in the renewables sector I'd look at the two storage companies first as a bit of diversification. One of the reasons i chose TRIG initially was I liked its spread of different investments.

* I'm using TRIG as the example as thats the one I Know about as I'm invested so know how many of their recent placing were done as open offers and how many as institutional placings.

[Arborbridge]

I wish people would stop using EPICS. So UKW is Greencoat. In that case I withdraw my previous comment. I know enough about Greencoat and have written enough about it that anyone interested will know that I am not in the least impressed by it for all sorts or reasons, not least because of these very regular placings.

Dod

I assume you don't like BBOX either, then? Yet despite this disadvantage as you see it, both BBOX and UKW would have made one significantly richer in five years than shrea you like such as PHNX and CSN.

I don't mind this mechanism if it enlarges the cake for all shareholders - and that's down to being in the right market and the right time with competent management. If companies are raising funds for worthwhile purposes, why object?

Arb.

[Dod101]

Regular placings is indeed an aspect which is common with the renewables.

And of course, also with REITs, for much same reason.

Personally, I do not regard them as dilutive: the funds are being used to acquire more assets. One holds just as big a proportion of the original asset base as before, with fixed costs spread over a larger set of assets.

That is also why I am generally supportive of them. Buy into a BBOX, WHR, RGL, CREI or EBOX, and they go with the territory.

And it's much the same with renewables.

MDW1954

Regular placings are certainly dilutive if the shareholder does not take up or is not able to take up their share of the placing.

Dod

[MDW1954]

Regular placings is indeed an aspect which is common with the renewables.

And of course, also with REITs, for much same reason.

Personally, I do not regard them as dilutive: the funds are being used to acquire more assets. One holds just as big a proportion of the original asset base as before, with fixed costs spread over a larger set of assets.

That is also why I am generally supportive of them. Buy into a BBOX, WHR, RGL, CREI or EBOX, and they go with the territory.

And it's much the same with renewables.

MDW1954

Also TRIG* often (but not always) does its placings as open offers so you (PIs) get the chance to buy at the discount price. Also when they do a placing it is usually at a discount to the share price, but a premium to the NAV and the share price usually falls back towards the placing price, so even if you can't take part in the placing you get a chance to buy at close to the placing price if you want to avoid being diluted.

I own a fullish holding of TRIG and if I was going to invest more in the renewables sector I'd look at the two storage companies first as a bit of diversification. One of the reasons i chose TRIG initially was I liked its spread of different investments.

* I'm using TRIG as the example as thats the one I Know about as I'm invested so know how many of their recent placing were done as open offers and how many as institutional placings.

Indeed: TRIG is just as likely to do placings and other types of capital raising as any renewable or REIT, and indeed has done so (although I didn't like to say so).

MDW1954

[MDW1954]

Regular placings is indeed an aspect which is common with the renewables.

And of course, also with REITs, for much same reason.

Personally, I do not regard them as dilutive: the funds are being used to acquire more assets. One holds just as big a proportion of the original asset base as before, with fixed costs spread over a larger set of assets.

That is also why I am generally supportive of them. Buy into a BBOX, WHR, RGL, CREI or EBOX, and they go with the territory.

And it's much the same with renewables.

MDW1954

Regular placings are certainly dilutive if the shareholder does not take up or is not able to take up their share of the placing.

Dod

Dod, I thought my text above had explained my view of this. But to expand...

Let's say that a UKW-like company has 100 wind farms, and I own 5% of the company. It then does a placing to acquire a further 100 identical wind farms, and I don't participate.

Ceteris paribus, the dividend is unchanged, and I still own 5% of the original 100 wind farms. Granted, I own a smaller proportion of the overall company, but my original holding is unchanged.

I don't see the problem.

MDW1954

[Dod101]

And of course, also with REITs, for much same reason.

Personally, I do not regard them as dilutive: the funds are being used to acquire more assets. One holds just as big a proportion of the original asset base as before, with fixed costs spread over a larger set of assets.

That is also why I am generally supportive of them. Buy into a BBOX, WHR, RGL, CREI or EBOX, and they go with the territory.

And it's much the same with renewables.

MDW1954

Regular placings are certainly dilutive if the shareholder does not take up or is not able to take up their share of the placing.

Dod

Dod, I thought my text above had explained my view of this. But to expand...

Let's say that a UKW-like company has 100 wind farms, and I own 5% of the company. It then does a placing to acquire a further 100 identical wind farms, and I don't participate.

Ceteris paribus, the dividend is unchanged, and I still own 5% of the original 100 wind farms. Granted, I own a smaller proportion of the overall company, but my original holding is unchanged.

I don't see the problem.

MDW1954

Thanks I quite see that but as you say you now have a smaller share of the (larger) enterprise. I see that as the problem.

Dod

[MDW1954]

Thanks I quite see that but as you say you now have a smaller share of the (larger) enterprise. I see that as the problem.

Dod

And as the dividend is unchanged, and the company's fixed costs spread over more assets (thereby enhancing profitability), I am perfectly sanguine.

We will have to differ!

MDW1954

[Gengulphus]

On UKW...
https://www.londonstockexchange.com/new ... g/14862647

Feb 2021

"Greencoat UK Wind plc (the "Company" or "UKW"), the leading listed renewable infrastructure fund, invested in UK wind farms, is announcing that it is seeking to raise up to £198 million through a placing (the "Placing") of new ordinary shares in the capital of the Company (the "Placing Shares") by way of a non-pre-emptive issuance to institutional investors at 131p per share.

Proceeds from the Placing will be used to repay or reduce borrowings under the Company's revolving credit facility to allow the Company to fund its strong pipeline of acquisition opportunities, including an acquisition in the near term and £162 million of previously announced committed acquisitions over the next 12 months."

"Under the terms of the Placing and conditional upon, inter alia, Admission (as defined below) (together the "Conditions"), UKW intends to place up to 150,853,600 new Ordinary Shares in the capital of the Company (up to 8.3% of the existing issued share capital) at a Placing Price of 131p per Placing Share (the "Placing Price"):"

Doesn't this dilute ownership, particularly for 'retail ' investors. More shares...more free cash to find to pay dividends. However, it is the restriction of shares being offered at a discount to institutional investors rather than to all existing shareholders. Then again, UKW is owned ~83% by institutions and ~16% Joe Public.

Am I reading this wrongly: discounted at 131p? But the shares are 130p today.

Depends on whether you count ignoring the date "Feb 2021" monabri put before it and/or not reading "The Placing Price of 131p represents a discount of 2.1% to the closing share price on 11 February 2021 and a discount of 5.1% to the 30 day volume weighted average price of 138.1p and a premium of 8.8% to the last reported NAV of 120.4p (as at 31 December 2020) (adjusted for the 1.775p dividend which will be paid on 26 February 2021)." in the full RNS as "reading this wrongly"...

I.e. basically, we're dealing with a share whose price has fallen a bit over the last three months, and that's converted the placing price from being at a slight discount when it was launched to a slight premium now. It's also of course made its yield slightly more attractive now than it was then...

Gengulphus

[Dod101]

And that is one of the disadvantages of a Placing. At least in the short term it is going to have a depressing effect on the share price. It also of course produces more mouths for the dividend to feed and so reduces the dividend per share.

More interesting though than arguing about this would be a discussion on why they develop their business on these lines anyway. It is not as though they as a start up, need more capital for development; it seems simply to enlarge the business. Since the managers' reward is usually based on assets under management I cannot help feeling that that has an effect in that it will accelerate their earnings rather than allow expansion from existing resources.

Most successful businesses expand by reinvesting some or all of their earnings and I think a business should be capable of doing that. We do not after all expect or get Unilever coming to shareholders with either a Placing or a Rights Issue every year or two. Why cannot renewables investment companies reduce their payout to shareholders and from time to time reinvest their earnings? Maybe because there are wonderful investment opportunities that cannot be missed, but maybe not.

Dod

PS This post is only marginally relevant to IDP's post and if reported as off topic the mod could maybe please set up a separate thread. Maybe I should have done that. If so apologies.

[IanTHughes]

Regular placings are certainly dilutive if the shareholder does not take up or is not able to take up their share of the placing.

Dod, I thought my text above had explained my view of this. But to expand...

Let's say that a UKW-like company has 100 wind farms, and I own 5% of the company. It then does a placing to acquire a further 100 identical wind farms, and I don't participate.

Ceteris paribus, the dividend is unchanged, and I still own 5% of the original 100 wind farms. Granted, I own a smaller proportion of the overall company, but my original holding is unchanged.

I don't see the problem.

Thanks I quite see that but as you say you now have a smaller share of the (larger) enterprise. I see that as the problem.

Why is that dilution such a problem? I mean what problem(s) does it cause? What would you rather the company did, NOT expand?

I just don't get it, am I missing something?


Ian

[Arborbridge]

And that is one of the disadvantages of a Placing. At least in the short term it is going to have a depressing effect on the share price. It also of course produces more mouths for the dividend to feed and so reduces the dividend per share.

Dod

Too short a period to judge, I know, but it does not seem to have affected the UKW price any more than CSN and PHNX over the past three months - they are even-Stevens despite the placing. BBOX is ahead however (another company which "does" placings) but I think this continues to be a beneficiary of on-line shopping.

Arb.

[idpickering]

And that is one of the disadvantages of a Placing. At least in the short term it is going to have a depressing effect on the share price. It also of course produces more mouths for the dividend to feed and so reduces the dividend per share.

More interesting though than arguing about this would be a discussion on why they develop their business on these lines anyway. It is not as though they as a start up, need more capital for development; it seems simply to enlarge the business. Since the managers' reward is usually based on assets under management I cannot help feeling that that has an effect in that it will accelerate their earnings rather than allow expansion from existing resources.

Most successful businesses expand by reinvesting some or all of their earnings and I think a business should be capable of doing that. We do not after all expect or get Unilever coming to shareholders with either a Placing or a Rights Issue every year or two. Why cannot renewables investment companies reduce their payout to shareholders and from time to time reinvest their earnings? Maybe because there are wonderful investment opportunities that cannot be missed, but maybe not.

Dod

PS This post is only marginally relevant to IDP's post and if reported as off topic the mod could maybe please set up a separate thread. Maybe I should have done that. If so apologies.

If I can chip in here, tbh Dod, I don't mind your post as it ties in with all the others on this particular issue. Personally, I don't think I've had that much experience of 'placings', so this discussion is interesting and informative imho. Overall, it might even sway me as to whether I should invest in the likes of these companies at all?

Ian.

[Arborbridge]

Regular placings are certainly dilutive if the shareholder does not take up or is not able to take up their share of the placing.

Dod

Dod, I thought my text above had explained my view of this. But to expand...

Let's say that a UKW-like company has 100 wind farms, and I own 5% of the company. It then does a placing to acquire a further 100 identical wind farms, and I don't participate.

Ceteris paribus, the dividend is unchanged, and I still own 5% of the original 100 wind farms. Granted, I own a smaller proportion of the overall company, but my original holding is unchanged.

I don't see the problem.

MDW1954

Thanks I quite see that but as you say you now have a smaller share of the (larger) enterprise. I see that as the problem.

Dod

Then, you wouldn't accept the Dragon's Den argument that it's better to "give away" a little equity in order to have part of a bigger cake?

I'm not sure I see the problem either. Owning a slightly smaller part of a bigger company seems neutral or potentially better - if the company becomes more powerful/prosperous overall.
Of course, if the expansion is diworsifying its assets, that's a different matter.

Arb.

[GrahamPlatt]

One thing with acquiring more windfarms is that it increases the chances of something going wrong with one of them, but OTOH it reduces the effect of such an event on the whole company.

[Dod101]

One thing with acquiring more windfarms is that it increases the chances of something going wrong with one of them, but OTOH it reduces the effect of such an event on the whole company.

Yes in that sense it is a bit like an investment portfolio. I am not sure (in fact I have no idea) what factors would come into play in buying a windfarm anyway. I suppose the exposure to wind itself is that main one.

Dod