Octopus Renewables Infrastructure Trust (ORIT) is considering offloading a number of assets to generate cash, with the company still trading at a discount in challenging investment conditions.
The fund, which is not related to Octopus Energy, invests in renewable assets across the world.
It has seen a sharp downfall in profits over the past 12 months — sliding from 11.38p per share to 0.97p per share — in a stark half-year update.
Such a decline reflects the realities of rampant inflation and supply chain disruption on the earnings of renewable investment funds, with rival product Downing Renewables also posting a disappointing update earlier this month.
ORIT’s share price is stable at 91.3 per cent, with a 0.66 percentage point uptick this morning, with investors pricing in its declining value — having plummeted from a peak of 116p per share last September in volatile trading conditions.
The company is trading at an 18.2 per cent discount, according to calculations from Hargreaves Lansdown.
This follows the underwhelming results in the latest offshore wind auction, where no major bids for new projects were announced.
These wider problems are causing specific issues for the company, with the company set to prepare financial statements on a going concern basis following reviews of cash flow forecasts.
The company expects to deliver its dividend target for the financial year of 5.79p per ordinary share, which will be fully covered by cashflows arising from its portfolio of assets.
As it stands, ORIT has unrestricted cash of about £280,000 and a revolving credit facility of £131m, with net assets totalling £608.2m.
However, the company expects to raise additional funds through capital markets once conditions improve, and remains bullish that there will be a healthy pipeline of projects to pursue.
Chairman Phil Austin believed the half-year was successful in the context of “volatile market conditions that have affected the whole subsector”.
He said: “ORIT has continued to make selected strategic investments from its pipeline, which have required limited capital commitment whilst diversifying its portfolio and revenue streams into new areas such as green hydrogen. ORIT’s clean energy portfolio has ensured the avoidance of 598,000 tonnes of carbon emissions; a further 16,000 tonnes from last year, through its energisation of key projects in the portfolio.”