SEEIT sells UU Solar portfolio for £90.8m

SDCL Energy Efficiency Income Trust (SEEIT) announced the sale of its UK onsite solar portfolio, UU Solar, to UK Power Networks Services on Tuesday, for £90.8m.

The London-listed firm said the agreed price reflected a 4.5% premium to the portfolio's valuation as of 30 September.

It said the UU Solar investment, initiated in mid-2022, served as a key component of SEEIT’s portfolio construction strategy, aimed at generating income and preserving capital.

UU Solar played a pivotal role in supplying renewable electricity to UK water company United Utilities through a diversified mix of solar, wind, mini-hydro, and other renewable technologies.

The board said the long-term, contracted portfolio boasted an investment-grade counterparty, aligning with SEEIT's investment objectives.

Against the backdrop of evolving financial markets characterised by higher interest rates and inflation levels, SEEIT said it had recalibrated its investment strategy to optimise total returns while maintaining a prudent balance sheet.

The sale of UU Solar would unlock liquidity, enabling SEEIT to fortify its financial position, pursue its investment objectives, and enhance portfolio composition.

Proceeds from the sale would be used to reduce short-term borrowings under SEEIT's revolving credit facility (RCF).

Additionally, the sale would facilitate the reallocation of capital into existing platform investments, aligning with SEEIT's goal of driving higher returns from its proprietary pipeline.

“The sale is positive news for SEEIT as it makes a meaningful contribution to its objectives to reduce short term borrowings, to improve liquidity and to focus on investment in higher yielding assets that support SEEIT's total return objectives,” said Jonathan Maxwell, chief executive of the investment manager, SDCL.

“The agreed price represents a premium to the company's last published valuation, which supports the approach that SEEIT seeks to take to its portfolio valuations.

“Proving the valuation through realisations should hopefully help to enhance market confidence in the net asset value of the company's portfolio.”

Maxwell said SEEIT’s board and the investment manager remained committed to helping improve the liquidity and marketability of SEEIT shares.

“UK Power Networks Services represents an excellent strategic buyer for a high-quality portfolio serving an important client.

“We hope to build on our relationship with both United Utilities and UK Power Networks Services in the future to deliver new opportunities for SEEIT.”

At 1100 BST, shares in SDCL Energy Efficiency Income Trust were up 3.65% at 62.29p.

Reporting by Josh White for Sharecast.com.