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The Renewable Inrastructure Group (TRIG)

Closed-end funds and OEICs
Dod101
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The Renewable Inrastructure Group (TRIG)

#343901

Postby Dod101 » September 30th, 2020, 11:35 am

I have been taking a look at ITs and Investment Companies in general mainly to maintain my income and to find a replacement for Temple Bar which, as discussed elsewhere, seems to have lost its way.

I have looked at the traditional ITs which have a good yield but unsurprisingly they are mostly invested in the usual UK suspects and I do not want that.

I have however alighted upon TRIG which is invested in Wind and Solar Power in the UK, Germany, France and Sweden. They seem to talk sense in their Annual Report and I like the geographic spread, as well as the Solar aspect in addition to Wind. I really do not like any company which is too specialised and so this one looks interesting. The yield is somewhere around 6% which is about what we can expect from this type of company.

Does anyone have adverse comments because I may very well have missed something?

Dod

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Re: The Renewable Inrastructure Group (TRIG)

#343904

Postby MaraMan » September 30th, 2020, 11:40 am

Not an adverse comment Dod but I also took at a look at TRIG and, for all the reasons you have cited, liked what I saw and bought a tranche in mid-August.
Sorry that's not what you were asking but just thought I would add my tuppence worth.

MM

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Re: The Renewable Inrastructure Group (TRIG)

#343916

Postby mc2fool » September 30th, 2020, 12:14 pm

Dod101 wrote:Does anyone have adverse comments because I may very well have missed something?

Well, I bought TRIG a couple of weeks after it launched in 2013 and have held since, no additions or subtractions, and with an XIRR of 9%pa (largely in dividends of course, capital is up 29% over the period) I'm happy enough that it's done what I bought it for, so far at least.

However, when I bought it was at a premium of a mere 3.5%. It's currently at a premium of over 20%....

Dod101
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Re: The Renewable Inrastructure Group (TRIG)

#343918

Postby Dod101 » September 30th, 2020, 12:18 pm

Thanks to both. Re the premium, that seems to be a feature of all infrastructure funds at the moment. I am prepared to accept that in return for a steady business and yield. I prefer this small(ish) company to some of the other infrastructure groups and it would fit quite well with my other holding, 3i Infrastructure.

I guess I will go for it.

Dod

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Re: The Renewable Inrastructure Group (TRIG)

#343920

Postby ReallyVeryFoolish » September 30th, 2020, 12:31 pm

Very interesting. However, being devil's advocate here, how can a yield of 6 per cent (is that today's actual yield?) be sustainable at a 20 per cent premium to NAV. With subsidies reducing/disappearing, increased competition/capacity driving down energy prices etc....? Genuinely curious since I would be interested in a stake if there's good answers to those questions. Thanks

RVF

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Re: The Renewable Inrastructure Group (TRIG)

#343929

Postby Arborbridge » September 30th, 2020, 12:45 pm

Dod101 wrote: They seem to talk sense in their Annual Report and I like the geographic spread, as well as the Solar aspect in addition to Wind. I really do not like any company which is too specialised and so this one looks interesting.
Dod


I was thinking about this company as it is doing something quite interesting to me, but surely it is too (?) specialised.

Depends on your POV, but I've been tending lately to give up on niche players - though I note I was tempted back recently to PHP and BBOX, so I have to admit to meandering around that point.

Arb

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Re: The Renewable Inrastructure Group (TRIG)

#343940

Postby Dod101 » September 30th, 2020, 1:09 pm

ReallyVeryFoolish wrote:Very interesting. However, being devil's advocate here, how can a yield of 6 per cent (is that today's actual yield?) be sustainable at a 20 per cent premium to NAV. With subsidies reducing/disappearing, increased competition/capacity driving down energy prices etc....? Genuinely curious since I would be interested in a stake if there's good answers to those questions. Thanks

RVF


Very helpful to have someone playing devil's advocate because I am untrammelled by any real knowledge on the subject. Firstly, the yield on today's price is more like 4.9%.

Secondly, I have naively assumed that the drive for cleaner energy will help companies specialising in Wind and Solar Power, and the geographic spread will hopefully provide some protection against any one Government's view of regulation/subsidies.

To answer Arb's point, I would prefer a company that I can understand, with no debt, to say the agglomeration of different types of generation from the likes of SSE with its high debt. I hold SSE as well but I am really wondering if it is not a bit like RSA and Aviva in the insurance sector where they have a lot of accumulated baggage. I am not attracted to say Greencoat Wind as it is just too specialised in wind turbines and nearly all in the UK.

I already hold 3i Infrastructure because I like its mix of infrastructure projects and the fact that is well spread geographically. I think that TRIG would sit well alongside it.

Dod

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Re: The Renewable Inrastructure Group (TRIG)

#343948

Postby ReallyVeryFoolish » September 30th, 2020, 1:43 pm

Dod101 wrote:
ReallyVeryFoolish wrote:Very interesting. However, being devil's advocate here, how can a yield of 6 per cent (is that today's actual yield?) be sustainable at a 20 per cent premium to NAV. With subsidies reducing/disappearing, increased competition/capacity driving down energy prices etc....? Genuinely curious since I would be interested in a stake if there's good answers to those questions. Thanks

RVF


Very helpful to have someone playing devil's advocate because I am untrammelled by any real knowledge on the subject. Firstly, the yield on today's price is more like 4.9%.

Secondly, I have naively assumed that the drive for cleaner energy will help companies specialising in Wind and Solar Power, and the geographic spread will hopefully provide some protection against any one Government's view of regulation/subsidies.

To answer Arb's point, I would prefer a company that I can understand, with no debt, to say the agglomeration of different types of generation from the likes of SSE with its high debt. I hold SSE as well but I am really wondering if it is not a bit like RSA and Aviva in the insurance sector where they have a lot of accumulated baggage. I am not attracted to say Greencoat Wind as it is just too specialised in wind turbines and nearly all in the UK.

I already hold 3i Infrastructure because I like its mix of infrastructure projects and the fact that is well spread geographically. I think that TRIG would sit well alongside it.

Dod

More than interested to hear others views. We "might" be in a bit of a sweet spot for such companies? The assets are generally still new enough to require nothing much beyond routine maintenance and cleaning. But as they get older that will change. Servicing assets is generally where vendors make the bulk of their money. Expect companies like Siemens, Vestas and others to start to make a lot of money in wind turbine overhauls pretty soon. Operators have little choice. You repair or overhaul a turbine or it remains non productive. Even if you scrap one, it costs money. I expect maintenance budgets to expand greatly in the next decade or so. I expect service companies to respond by offering long term service agreements locking operators into maintenance contracts and other bolt ons like remote condition monitoring and the like. Which all costs money. Such agreements are usually highly profitable for machinery vendors. One other fly in the medium term ointment might be inflationary pressures on interest rates used to finance these ventures. I know we live in unusual economic times. But sooner or later the unprecedented money printing around the globe over the last decade or more has to (?) result in increased interest rates one day. Just at the time that off shore wind power bids for new capacity are dropping to new lows and energy contracts are awarded without subsidy. Convince me I am wrong? Because I want to be.

RVF.

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Re: The Renewable Inrastructure Group (TRIG)

#343951

Postby dealtn » September 30th, 2020, 1:50 pm

ReallyVeryFoolish wrote:
More than interested to hear others views. We "might" be in a bit of a sweet spot for such companies? The assets are generally still new enough to require nothing much beyond routine maintenance and cleaning. But as they get older that will change. Servicing assets is generally where vendors make the bulk of their money. Expect companies like Siemens, Vestas and others to start to make a lot of money in wind turbine overhauls pretty soon. Operators have little choice. You repair or overhaul a turbine or it remains non productive. Even if you scrap one, it costs money. I expect maintenance budgets to expand greatly in the next decade or so. I expect service companies to respond by offering long term service agreements locking operators into maintenance contracts and other bolt ons like remote condition monitoring and the like. Which all costs money. Such agreements are usually highly profitable for machinery vendors.

RVF.


Excellent.

It's posts like that, and thinking along such lines, which make this site so useful (to me at least). I hope to pick up such nuggets on Boards such as "Share Ideas" but justify why reading all boards is so useful. I've never invested in either an Investment Trust or Unit Trust but visiting here I have discovered a new angle of potential investment thinking.

(Obviously those that do so won't get to see this comment, but it amazes me that some on this site appear to only use a small number of Boards, and the most frequently visited in particular).

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Re: The Renewable Inrastructure Group (TRIG)

#343956

Postby midgesgalore » September 30th, 2020, 2:09 pm

Dod101 wrote:I have been taking a look at ITs and Investment Companies in general mainly to maintain my income and to find a replacement for Temple Bar which, as discussed elsewhere, seems to have lost its way.

I have looked at the traditional ITs which have a good yield but unsurprisingly they are mostly invested in the usual UK suspects and I do not want that.

I have however alighted upon TRIG which is invested in Wind and Solar Power in the UK, Germany, France and Sweden. They seem to talk sense in their Annual Report and I like the geographic spread, as well as the Solar aspect in addition to Wind. I really do not like any company which is too specialised and so this one looks interesting. The yield is somewhere around 6% which is about what we can expect from this type of company.

Does anyone have adverse comments because I may very well have missed something?

Dod


Hi Dod
I don't have adverse comments on TRIG, as you say they are quite well distributed over Europe and not just wind or solar - but both and also battery storage (Broxburn which isn't too far away from where I live). I like diversity and also that the NAV is > £100m.
I have held for days short of a year and my historic yield is 4.9%. The price bought was 126p at the time, around 11% premium to NAV.
On NAV I have regularly read that valuations are not always straight forward due to the nature of the portfolio and infrequently valued in detail. Its not like a portfolio of stocks where NAV can almost instantly be evaluated - as you will be aware with your experience.

I don't know if you looked at Octopus Renewables Infrastructure (ORIT)?
I bought some at IPO last year and I don't think all of the IPO funds are fully invested and they are not idly sitting down nodding at their desks. They are almost at £100m NAV and they paid a maiden dividend recently in August, and will be quarterly after that. Again they have infrastructure projects in Sweden, not just UK. Something else of interest as the premium is 13.5% as opposed to 21.5% for TRIG

Since JLEN Environmental Assets Group (JLEN) has such a large premium to NAV I opted for TRIG because it has diverse investments as JLEN have.


I should say I also hold Greencoat UK Wind (UKW). It has been ok in performance over the duration I have held. It is much the same price as when I bought but has provided a steady trailing 5.4% dividend.

No plans to purchase more renewables other than maybe a top-up or, probably, rights in due course.

So nothing adverse about TRIG


midgesgalore

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Re: The Renewable Inrastructure Group (TRIG)

#343958

Postby monabri » September 30th, 2020, 2:11 pm

https://www.dividenddata.co.uk/dividend ... ?epic=TRIG

1.69p X 4 = 6.76p on a shareprice of 137p => 4.9%

Note the domicile of Guernsey (if not ISA'ed) for a tax return.

Premium is running at a heck of a premium.

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Re: The Renewable Inrastructure Group (TRIG)

#343959

Postby ReallyVeryFoolish » September 30th, 2020, 2:14 pm

monabri wrote:https://www.dividenddata.co.uk/dividend-yield.py?epic=TRIG

1.69p X 4 = 6.76p on a shareprice of 137p => 4.9%

Note the domicile of Guernsey (if not ISA'ed) for a tax return.

Premium is running at a heck of a premium.

Too much for comfort? Too much for my comfort, for certain.

RVF

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Re: The Renewable Inrastructure Group (TRIG)

#343974

Postby Dod101 » September 30th, 2020, 2:49 pm

Thanks RVF. I imagine that the owners of these assets are well aware of the maintenance angle and in any case wind turbines had a productive life at one time of no more than 25 years or so. I do not know if that has changed. The TRIG Annual Report tells us that they have no debt, but like many of these operations, by issuing new equity to fund new investments existing shareholders are likely to be diluted from time to time.

As for Vesta and other suppliers making money from maintenance contracts that is the same as Weir in the mining industry so it might be an argument fro investing in say Vesta as well.

I am not investing my life savings in TRIG and am happy to take a punt with it. A better investment than a number I can think of but of course the arguments you make are the main reason that I like some diversity. For instance I would not invest in Greencoat UK partly for the reasons you cite. A company like TRIG has a portfolio of assets. They are not all going to fall off the cliff edge at the same time and in any case they do trade the assets.

Dod

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Re: The Renewable Inrastructure Group (TRIG)

#343976

Postby ReallyVeryFoolish » September 30th, 2020, 3:00 pm

Dod101 wrote:Thanks RVF. I imagine that the owners of these assets are well aware of the maintenance angle and in any case wind turbines had a productive life at one time of no more than 25 years or so. I do not know if that has changed. The TRIG Annual Report tells us that they have no debt, but like many of these operations, by issuing new equity to fund new investments existing shareholders are likely to be diluted from time to time.

As for Vesta and other suppliers making money from maintenance contracts that is the same as Weir in the mining industry so it might be an argument fro investing in say Vesta as well.

I am not investing my life savings in TRIG and am happy to take a punt with it. A better investment than a number I can think of but of course the arguments you make are the main reason that I like some diversity. For instance I would not invest in Greencoat UK partly for the reasons you cite. A company like TRIG has a portfolio of assets. They are not all going to fall off the cliff edge at the same time and in any case they do trade the assets.

Dod

Likely Dod101 is right about upcoming expenditure. It begs the question whether the companies can pay a high yield and at the same time put aside money in the bank to amortise the lifetime cost of ownership. Or, is it something that shareholders are facing as a drain on their future dividends and there are no piggy bank savings such as I would imagine a prudent operator to have? I tend to think the management are on top of this stuff. But throughout my lifetime such faith hasn't always been rewarded in reality. And yes, the major players in the renewable industry manufacturing arena may yet have their time in the sunny uplands of the new energy landscape. Less so in the photovoltaic space where hardware is highly commoditised and I suspect nobody makes much money.

RVF

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Re: The Renewable Inrastructure Group (TRIG)

#343982

Postby Dod101 » September 30th, 2020, 3:19 pm

I have not studied the TRIG Annual Report line by line but stuff like depreciation is presumably handled at what they call project level as it is certainly not shown in the holding company accounts. They simply hold their investments at 'fair value', but presumably their managers, Infrared keep an eye on this sort of thing.

Interesting all of this.

Dod

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Re: The Renewable Inrastructure Group (TRIG)

#343984

Postby ReallyVeryFoolish » September 30th, 2020, 3:25 pm

Dod101 wrote:I have not studied the TRIG Annual Report line by line but stuff like depreciation is presumably handled at what they call project level as it is certainly not shown in the holding company accounts. They simply hold their investments at 'fair value', but presumably their managers, Infrared keep an eye on this sort of thing.

Interesting all of this.

Dod

Yes, but that's (depreciation) just a minor part of lifetime ownership costs. I hope the management are on the ball for future opex budgets as the assets age. My own experience within the energy industry isn't good. But that's just me. The management of TRIG and the like may be far better than I have seen in conventional energy firms.

RVF

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Re: The Renewable Inrastructure Group (TRIG)

#343991

Postby Dod101 » September 30th, 2020, 3:56 pm

BTW, It is only, as we might expect, the holding company (TRIG itself) that is debt free. As the Annual Report states there is of course considerable debt at what they call the 'project' level'. I must say I prefer to read hard copies rather than off the screen and will try to get one for TRIG.

Dod

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Re: The Renewable Inrastructure Group (TRIG)

#343992

Postby Arborbridge » September 30th, 2020, 4:00 pm

They simply hold their investments at 'fair value', but presumably their managers, Infrared keep an eye on this sort of thing.


I couldn't help that thinking that way didn't help me in the case of some companies in which I have invested ;)

I've also sometimes taken investments as a punt, which can be quite fun, but in the end, that's all. I usually come to the conclusion that a small investment makes no difference to the life I can lead, so it is hardly worth doing. It's the big chunks which pay my pension, or make a difference, not the small punts.
Other than "benchmarking" against my main investments, small punts are not worth the effort.

Arb.

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Re: The Renewable Inrastructure Group (TRIG)

#343995

Postby ReallyVeryFoolish » September 30th, 2020, 4:15 pm

Arborbridge wrote:
They simply hold their investments at 'fair value', but presumably their managers, Infrared keep an eye on this sort of thing.


I couldn't help that thinking that way didn't help me in the case of some companies in which I have invested ;)

I've also sometimes taken investments as a punt, which can be quite fun, but in the end, that's all. I usually come to the conclusion that a small investment makes no difference to the life I can lead, so it is hardly worth doing. It's the big chunks which pay my pension, or make a difference, not the small punts.
Other than "benchmarking" against my main investments, small punts are not worth the effort.

Arb.

My bold. And in fact, when I invested at IPO in ORIT, to buy in at NAV, the oversubscribed issue meant that the shares I ended up with were such a small part of my portfolio they weren't worth bothering with. I sold what I had at about a 8 per cent profit and bought a few more LGEN which had fallen more than my last purchase. Snag is, this business is so fashionable it's now impossible to buy at anything like NAV. Ofcourse that's a direct result of ultra low interest rates and cancellation of dividends elsewhere. I can't invest at such premiums because sooner or later the present fashion will subside.

RVF

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Re: The Renewable Inrastructure Group (TRIG)

#343996

Postby Gerry557 » September 30th, 2020, 4:15 pm

I hold both TRIG and UKW, for context!

Both do placings at fairly regular intervals, UKW only days ago. TRIG did not allow the PI's to take part in the last one! Often the share prices fall to match the placings. So probably a better time to "get in" than normal although the market did drag them both below NAV recently during the meltdown. So access and dilution can be a problem. It might even be fair to say its run better for the management and their fees that current shareholders. The company has grown a lot but the share return is fairly static.

Dividend was initially to grow + inflation but there have been mutterings that might change, from memory one did change the policy.

I think UKW changed the life from 25 year to 30 so increased its value at the stroke of the pen the other was expected to follow. Great if it works but it could also fall to 20 with the same pen or in actual reality. Subsidies are being cut by governments, partly why TRIG moved overseas.

Turbines might have a landfill tax in future be it 20 25 or 30 years time. Some people can be affected by them, ambulance chasers might try it on in future. I think the annual reports and or prospectus might have a list of "risks" that might be worth a read ...... to put you off some more.

I think both were running under average returns this year as the weather wasn't right.

So a part from that lot and for more context, Im awaiting the results of how many shares in the 131p UKW placing I might get. Checks current price, nearly 134 so still down 10p from the pre announcement but they need more funds so another placing not too far away. I might even have made a few pennies


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