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TRIG

General discussions about equity high-yield income strategies
daveh
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TRIG

#392609

Postby daveh » March 5th, 2021, 9:36 am

Trig the renewables infrastructure investment company are having an open offer to issue more shares, details here:
https://www.investegate.co.uk/renew-inf ... 00042579R/

Share Issuance Programme and Initial Issue

5 March 2021

The Renewables Infrastructure Group Limited, the FTSE 250 renewable infrastructure investment company with a diversified portfolio of 77 renewable energy investments (including commitments) across Europe, announces that it will shortly publish a prospectus and circular to put in place a new 12 month share issuance programme in respect of up to 600 million New Shares (the Share Issuance Programme).

Pursuant to the Share Issuance Programme, the Company also announces the launch of the Initial Issue, which will comprise the Initial Open Offer, the Initial Intermediaries Offer, the Initial Offer for Subscription, and the Initial Placing (the Initial Issue) at an issue price of 123 pence per Ordinary Share (the Initial Issue Price). The Board believes that it is important to offer all investors the opportunity to participate in the Company's growth, including smaller private shareholders who are not permitted to participate in institutional placings.

The Board intends to use the net proceeds of each Issue under the Share Issuance Programme (including the Initial Issue) towards making investments into renewable energy infrastructure assets in accordance with the Company's investment policy, including outstanding commitments and repaying debt drawn under the Revolving Credit Facility in acquiring assets.

Key highlights of the Initial Issue

· Existing Shareholders are entitled to subscribe for 1 New Ordinary Share for every 10 Ordinary Shares held on the Record Date (being 3 March 2021), as well as further New Ordinary Shares if they so wish through the Excess Application Facility.

· The Initial Issue Price of 123 pence per Ordinary Share represents a discount of 5.7 per cent. to the closing mid-market share price of an Ordinary Share of 130.4p as at 4 March 2021 (being the Latest Practicable Date).

· New Ordinary Shares issued pursuant to the Initial Issue will be entitled to receive the first quarterly interim dividend of 1.69 pence per Ordinary Share with respect to the three months to 31 March 2021, which is expected to be declared in May 2021 and paid in June 2021. The target dividend set by the Board for financial year 2021 is 6.76 pence[1].

The Directors have reserved the right, in consultation with the Joint Bookrunners and the Investment Manager, to increase the size of the Initial Issue in the event that overall demand for the New Ordinary Shares exceeds the target size.



I will probably take up the open offer. Annoyingly I own the most TRIG shares in my ISA that is closed to new subscriptions, so cannot top it up with new money, and more money in the form of dividends doesn't arrive until after the payment date for the open offer, so won't be able to take up the full offer there. My other ISA still has some headroom to put in a last tranche of cash before April 5th, but has a much smaller holding of TRIG. I'll (probably) take the offer up in full there and apply for additional shares to match what I can't take up in my other ISA - but there is the chance that application may be scaled back.

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Re: TRIG

#392615

Postby GrahamPlatt » March 5th, 2021, 10:02 am

You could of course shift the cash from one ISA to the other.

Dod101
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Re: TRIG

#392618

Postby Dod101 » March 5th, 2021, 10:10 am

I like TRIG although I hold no shares in it. There was along discussion about it some weeks ago. This announcement illustrates part of my reservations. They keep raising more cash, with the result that existing shareholders need to keep putting in more cash in order to avoid dilution. At least there seems to be only one Placing in this round, where existing shareholders are likely to be excluded.

Dod

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Re: TRIG

#392671

Postby UncleEbenezer » March 5th, 2021, 11:21 am

Dod101 wrote:They keep raising more cash, with the result that existing shareholders need to keep putting in more cash in order to avoid dilution. Dod

TRIG is a collective investment vehicle operating in a growing line of business that presents ever more opportunities. Raising more cash is the norm.

Now that Ventus have announced their intention to sell assets, that'll be just one of many good uses for money from TRIG or one of its peers.

Dod101
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Re: TRIG

#392681

Postby Dod101 » March 5th, 2021, 11:37 am

UncleEbenezer wrote:
Dod101 wrote:They keep raising more cash, with the result that existing shareholders need to keep putting in more cash in order to avoid dilution. Dod

TRIG is a collective investment vehicle operating in a growing line of business that presents ever more opportunities. Raising more cash is the norm.

Now that Ventus have announced their intention to sell assets, that'll be just one of many good uses for money from TRIG or one of its peers.


Yes I appreciate that but it does not change my misgivings.

Dod

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Re: TRIG

#392715

Postby richfool » March 5th, 2021, 12:50 pm

Hmm, that requires some pondering, as I have just set things up to start drawing the income from my ISA, (in the hope that within the next year or so I might be able to do a last bit of world travelling, before I get too old and infirm). Normally I draw upon the dividend income to fund top-ups and offers such as TRIG's. As an existing holder of TRIG, I am tempted to take up the offer and use my accumulated dividends for that purpose. A 5.70% discount sounds attractive. Though it seems to be down on the day 3.7% currently.

Dod101
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Re: TRIG

#392722

Postby Dod101 » March 5th, 2021, 1:12 pm

The trouble with this sort of investment is that it is not self funding, unlike say Unilever. Unilever does not come back to its investors every time it wants to build a new factory say, but funds it from its own resources. A company like TRIG distributes most of its earnings most years. I am not sure why and that is another interesting debate. In the meantime however, shareholders need to recognise that unless they are prepared to invest as and when the company decides to do another fundraising, they will be diluted.

Dod

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Re: TRIG

#392769

Postby richfool » March 5th, 2021, 2:58 pm

..... the Initial Placing (the Initial Issue) at an issue price of 123 pence per Ordinary Share (the Initial Issue Price).

· Existing Shareholders are entitled to subscribe for 1 New Ordinary Share for every 10 Ordinary Shares held on the Record Date (being 3 March 2021), as well as further New Ordinary Shares if they so wish through the Excess Application Facility.

· The Initial Issue Price of 123 pence per Ordinary Share represents a discount of 5.7 per cent. to the closing mid-market share price of an Ordinary Share of 130.4p as at 4 March 2021 (being the Latest Practicable Date).

The target dividend set by the Board for financial year 2021 is 6.76 pence[1].

Currently the SP is 124.80p, so it is getting close to the discounted offer price of 123 pence (discount calculated at 5.70% based on 130.4p price of 4 March)

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Re: TRIG

#392780

Postby Gerry557 » March 5th, 2021, 3:10 pm

I sympathise regarding finding headroom in ISAs so close to the end of the tax year. You might have thought that starting a n offer in the new tax year would offer the best chance for investors to use their allocation or allow time to solve ISA accounts that can't be funded. I had hoped that use of multiple brokers would be allowed by now providing one stayed with ones allowance.

I did accidentally make this mistake once, adding funds into a second broker and fessed up to the tax man. I even offered to remove said funds. They said it would be reviewed after tax end but nothing ever came of it. I was within my allowance though.

First World problems!

At least private investors are allowed to take part unlike some who restrict to corporate investors only. You can still partly benefit as the share price generally drops close to the offer price.

I suspect that I will add more.

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Re: TRIG

#392809

Postby Gersemi » March 5th, 2021, 4:15 pm

Dod101 wrote:The trouble with this sort of investment is that it is not self funding, unlike say Unilever. Unilever does not come back to its investors every time it wants to build a new factory say, but funds it from its own resources. A company like TRIG distributes most of its earnings most years. I am not sure why and that is another interesting debate. In the meantime however, shareholders need to recognise that unless they are prepared to invest as and when the company decides to do another fundraising, they will be diluted.

Dod


I don't really understand the worry about 'being diluted'. I mean it's not like you had a controlling stake is it? If it is to maintain the level of dividends doesn't that mean you are buying dividends with capital? I would have thought that the idea is that TRIG are investing in profitable ventures so that they can pay higher dividends, so your personal dividends should be maintained without buying more shares.

Note: I don't hold TRIG myself, so have no idea how these new investments are panning out in practice.

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Re: TRIG

#392818

Postby daveh » March 5th, 2021, 4:32 pm

richfool wrote:Hmm, that requires some pondering, as I have just set things up to start drawing the income from my ISA, (in the hope that within the next year or so I might be able to do a last bit of world travelling, before I get too old and infirm). Normally I draw upon the dividend income to fund top-ups and offers such as TRIG's. As an existing holder of TRIG, I am tempted to take up the offer and use my accumulated dividends for that purpose. A 5.70% discount sounds attractive. Though it seems to be down on the day 3.7% currently.



It usually does that whenever they make a big placing whether as an open offer or an institutional placing. The premium gets smaller and the price approaches that of the offer price - it tends to slowly go up again afterwards. If you are looking to add to your holding it can be a good time to buy even if there is no open offer. You just have to keep your eye on the price around the period of the placing. Unfortunately it is still generally slightly more expensive than the offer price.

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Re: TRIG

#392820

Postby Dod101 » March 5th, 2021, 4:33 pm

Gersemi wrote:Note: I don't hold TRIG myself, so have no idea how these new investments are panning out in practice.


Generally speaking the new investments tend to do well enough but the point is that in issuing new shares in abundance each year, they are creating new mouths to be fed, both in terms of dividends and NAV. Increasing the size of the business will of course help spread the corporate costs, but other than that I cannot believe that the ordinary shareholder is much better off and he is buying the new dividends by putting in more cash. If he does not do so he is being diluted and although it does not seem to matter once, it is bound to build up over a period and will in time be noticeable.

It is like the opposite practice, a company buying in its own shares. It makes little difference once, but over time benefits the continuing shareholders. It is just that we only see one effect; we do not see what would have happened had the transaction not taken place.

Dod

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Re: TRIG

#392825

Postby daveh » March 5th, 2021, 4:40 pm

Dod101 wrote:
Gersemi wrote:Note: I don't hold TRIG myself, so have no idea how these new investments are panning out in practice.


Generally speaking the new investments tend to do well enough but the point is that in issuing new shares in abundance each year, they are creating new mouths to be fed, both in terms of dividends and NAV. Increasing the size of the business will of course help spread the corporate costs, but other than that I cannot believe that the ordinary shareholder is much better off and he is buying the new dividends by putting in more cash. If he does not do so he is being diluted and although it does not seem to matter once, it is bound to build up over a period and will in time be noticeable.

It is like the opposite practice, a company buying in its own shares. It makes little difference once, but over time benefits the continuing shareholders. It is just that we only see one effect; we do not see what would have happened had the transaction not taken place.

Dod


Yes but you wouldn't want your company buying in its shares when they are expensive, only when they are cheap, so buying when the shares are sitting at a reasonably high premium to NAV is not a good idea. Selling more shares at a premium to NAV is good for existing share holders. I like that they are buying more income producing (green) assets and, trusting that the management know what they are doing, am willing to provide them with more capital to do so. Though at some point I should diversify to one or more of the other green infrastructure funds to spread my single company risk.

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Re: TRIG

#392835

Postby richfool » March 5th, 2021, 5:17 pm

I would think those who are quick to spot these announcements are quite likely to sell part of their existing holding, before today's falls for example, and then use those funds to top up at the cheaper offer price, which does then seem a bit unfair on those investors who just sit tight and don't notice (the Doris's).

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Re: TRIG

#392965

Postby UncleEbenezer » March 6th, 2021, 6:44 am

Dod101 wrote:The trouble with this sort of investment is that it is not self funding, unlike say Unilever. Unilever does not come back to its investors every time it wants to build a new factory say, but funds it from its own resources. A company like TRIG distributes most of its earnings most years. I am not sure why and that is another interesting debate. In the meantime however, shareholders need to recognise that unless they are prepared to invest as and when the company decides to do another fundraising, they will be diluted.

Dod

"This sort of investment" being the vast majority of all collective investment vehicles:
- OEICs are directly driven by investor demand.
- Most ITs (for example, the biggest IT SMT) regularly issue new shares when at a premium and they see opportunities. It's not unusual to see several RNS announcements per week about it.
- Many VCTs have annual offers for subscription.

What makes TRIG different in this instance is that they're taking the trouble to offer First Refusal to existing shareholders. That's probably in response to criticism from investors who take an interest (like sharesoc) about being excluded from placements.

Unilever is not a fair comparison. Their business is to produce and sell products, and it would be exceptional for them to have a need to raise new equity. I don't know ULVR, but commenting generally on its FTSE100 peers they rely a lot on debt finance.

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Re: TRIG

#392966

Postby UncleEbenezer » March 6th, 2021, 6:48 am

Gersemi wrote:I don't really understand the worry about 'being diluted'. I mean it's not like you had a controlling stake is it? If it is to maintain the level of dividends doesn't that mean you are buying dividends with capital? I would have thought that the idea is that TRIG are investing in profitable ventures so that they can pay higher dividends, so your personal dividends should be maintained without buying more shares.

Note: I don't hold TRIG myself, so have no idea how these new investments are panning out in practice.


Exactly.

TRIG, and its infrastructure-investing peers, are the closest we have in today's market to a buy-and-forget income investment.

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Re: TRIG

#392975

Postby Dod101 » March 6th, 2021, 8:28 am

UncleEbenezer wrote:"This sort of investment" being the vast majority of all collective investment vehicles:
- OEICs are directly driven by investor demand.
- Most ITs (for example, the biggest IT SMT) regularly issue new shares when at a premium and they see opportunities. It's not unusual to see several RNS announcements per week about it.
- Many VCTs have annual offers for subscription.

What makes TRIG different in this instance is that they're taking the trouble to offer First Refusal to existing shareholders. That's probably in response to criticism from investors who take an interest (like sharesoc) about being excluded from placements.

Unilever is not a fair comparison. Their business is to produce and sell products, and it would be exceptional for them to have a need to raise new equity. I don't know ULVR, but commenting generally on its FTSE100 peers they rely a lot on debt finance.


You make the mistake of assuming that by 'this sort of investment' I mean 'the vast majority of all collective investment vehicles'. Not so. OEICs for instance are completely different as they are open ended mutual funds. They do not issue new shares because they have not got any.

'Most ITs'. They are nearer the mark but mostly, unless embarking on a corporate restructuring, they only buy and sell their own shares in order to try to control the discount or premium to NAV not usually for the purpose of deliberately expanding their business and certainly not on a regular basis.

'VCTs' I do not know much about them so will not comment.

So by 'this sort of investment', I mean like TRIG. I do not think it is an investment trust and so comparison with those is irrelevant. It is a closed end investment company. There are others not unlike it but that is not my point. My point is simply that because it more or less annually seeks to raise fresh capital, shareholders need to be prepared to keep adding more capital or they will see themselves diluted over time. It is anything but a 'buy and forget income investment'. Buy and forget and in 20 years time you will find that you will then own a much smaller piece of the cake. If you are happy to see that, fine, otherwise you will have to keep forking out. Why is comparison with Unilever unfair? Of course they rely on debt finance but there is nothing to stop TRIG doing that as well.

I am not saying there is anything wrong with TRIG's model and there is nothing sinister about it, just that I do not like companies that keep seeking new funds from investors.

Dod

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Re: TRIG

#392989

Postby richfool » March 6th, 2021, 9:10 am

Dod101 wrote:My point is simply that because it more or less annually seeks to raise fresh capital, shareholders need to be prepared to keep adding more capital or they will see themselves diluted over time. It is anything but a 'buy and forget income investment'. Buy and forget and in 20 years time you will find that you will then own a much smaller piece of the cake. If you are happy to see that, fine, otherwise you will have to keep forking out.

Posters often make the point about dilution and investors owning a progressively smaller piece of the cake. I assume they mean owning a smaller part of the investment company, as opposed to that particular holding representing a decreasing proportion of their portfolio.

Either way, does it really matter, as the value of one's investment 'ebbs and flows' over time anyway, as can and does dividend income. Most people who hold these sorts of trusts/companies are holding them for dividend income and some growth. So surely the value of that investment and the dividends arising are in any event going to fluctuate somewhat. Aren't we just being picky about something which in practice is almost inconsequential to the small investor, or just quibbling over semantics? I don't know the answer, so am posing the question for greater minds to consider!!

Is it a 'Big Issue' or just a scrap of paper, type of thing? I.e. Can't we just let it wash over our heads?

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Re: TRIG

#392992

Postby richfool » March 6th, 2021, 9:20 am

Incidentally, did those holding TRIG, spot this about the affects of corporation tax increase on their NAV and dividends, in which TRIG gets a significant mention?
The chancellor’s decision to hike corporation tax in today’s budget will hit the valuation of listed infrastructure funds, including those investing in renewable energy assets, according to stockbroker Stifel.

Rishi Sunak announced corporation tax would increase from its current level of 19% to 25% from April 2023, one of a number of moves aimed at reining in the ballooning UK deficit.

That will see infrastructure funds pay a higher rate of tax on the income they derive from their assets. The change will not just result in a smaller pool of income to pay shareholders dividends but will hit their underlying valuations, which are linked to their future cashflows.

https://www.theaic.co.uk/aic/news/cityw ... n-tax-hike

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Re: TRIG

#393002

Postby Dod101 » March 6th, 2021, 9:45 am

richfool wrote:Incidentally, did those holding TRIG, spot this about the affects of corporation tax increase on their NAV and dividends, in which TRIG gets a significant mention?
The chancellor’s decision to hike corporation tax in today’s budget will hit the valuation of listed infrastructure funds, including those investing in renewable energy assets, according to stockbroker Stifel.

Rishi Sunak announced corporation tax would increase from its current level of 19% to 25% from April 2023, one of a number of moves aimed at reining in the ballooning UK deficit.

That will see infrastructure funds pay a higher rate of tax on the income they derive from their assets. The change will not just result in a smaller pool of income to pay shareholders dividends but will hit their underlying valuations, which are linked to their future cashflows.

https://www.theaic.co.uk/aic/news/cityw ... n-tax-hike


That appears to be another reason for avoiding TRIG although many companies will be affected by an increase in Corporation Tax.

Dod


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