Gore Street Energy Storage Fund Plc - Acquisition, £30m Commitment, Proposed Fundraising
Gore Street Energy Storage Fund plc
160MW Portfolio Acquisition
£30m Commitment from Irish Sovereign Wealth Investor
The Board of Gore Street Energy Storage Fund (ticker: GSF), is pleased to announce that the Company has entered into agreements to acquire a controlling interest in a 160 MW portfolio of projects ("Projects") in Northern Ireland and the Republic of Ireland (the "Acquisitions"). To fund the Projects and further pipeline, the Company also announces a proposed issue by way of an institutional placing, offer for subscription and intermediaries offer to raise up to £50m (the "Issue") and a subsequent placing programme of new Ordinary Shares and/or C Shares (the "Placing Programme"), conditional on shareholder approval and the publication of a prospectus. £31m has already been committed for investment in the Company, subject to the satisfaction of certain conditions. Of this £31m, £6m will be invested as part of the Issue and a further £25m is to be invested following the Issue by the National Treasury Management Agency ("NTMA") (as controller and manager of the Ireland Strategic Investment Fund ("ISIF")).
The Company has entered into an agreement with the NTMA for up to a £30m investment in the Company. £5m will be invested as part of the Issue (the "Initial NTMA Subscription"), and up to £25m may be drawn down upon certain criteria being met. NTMA's subscription is conditional on, amongst other things, a minimum fundraise of £15m in the Issue (excluding the £5m Initial NTMA Subscription). NTMA's investment is the result of a competitive review of specialist managers and demonstrates support for the quality perceived in the Company's investment adviser, Gore Street Capital Limited (the "Adviser").
The new Ordinary Shares to be issued as part of the Issue (including the Initial NTMA Subscription) will not be issued at a price below the latest published NAV per share (ex-dividend).
The proceeds of the Issue and investment from NTMA will be primarily used to construct and purchase the 160MW portfolio of energy storage assets in Ireland.
· Acquisition of a controlling interest in a 160MW portfolio of energy storage assets:
o two projects of 50MW each located in Northern Ireland ("NI Projects") and a further two projects of 30 MW each located in the Republic of Ireland ("RI Projects")
o estimated total funding requirement of approximately £77m for project construction, acquisition and CAPEX
o investment by way of shareholder loans carrying 10% interest, stepping down to 8% or 9% upon commissioning of Projects with 51% of any excess profits due to the Company
o the aggregate return from these new investments in Ireland has the potential to be significantly higher than the unlevered target returns of 10-12% (before fees and expenses) from Gore Street's portfolio on full investment noted in the Company's IPO prospectus in May 2018. Once operational these returns are expected to contribute significantly to the income received by the Company
o additional option to purchase a further 190MW portfolio of energy storage projects in Ireland, bringing the total transaction to 350MW
o this will be one of the largest energy storage acquisitions in Europe and one of the largest deals of its kind globally in 2019 to date
o investment into projects developed by, and joint venture partner with, Low Carbon, a developer with a strong track record in battery storage and diverse renewable infrastructure technologies
· Conditional commitment by NTMA to cornerstone up to £30m of investment into the Company:
o ISIF is a sovereign development fund controlled by the NTMA with a statutory mandate to invest on a commercial basis to support economic activity in Ireland
o NTMA subscription follows a competitive review of specialist managers and demonstrates confidence in the quality and deliverability of the Adviser
o £5m subscribed as part of the Issue with the remainder of up to £25m less certain expenses ("Additional NTMA Commitment") to fund 40% of the acquisition and construction costs of battery electricity storage facility projects located in Ireland which meet certain criteria ("Eligible Projects"), with the balance of such costs being funded by GSF (or by other investment vehicles which are controlled by, or have appointed as their investment adviser, the Adviser)
o the ISIF investment is conditional, amongst other things, upon raising a minimum of £15m in the Issue (excluding the Initial NTMA Subscription); NEC Energy Solutions Inc., a substantial shareholder of the Company, has indicated an intention to subscribe £1m pursuant to the Issue
· The Issue, the Placing Programme, the Initial NTMA Subscription and the Additional NTMA Commitment are subject to the publication by the Company of a prospectus and conditional upon shareholder approval at a general meeting of the Company currently expected to be held in July 2019.
Alex O'Cinneide, CEO of Gore Street Capital, the Company's investment adviser, commented:
"Gore Street is delighted to have been chosen for NTMA's investment commitment following a competitive review of funds focused on the energy storage asset class and this represents a transformational development for Gore Street. NTMA is one of Europe's major renewable infrastructure investors and this represents a strong endorsement of our investment strategy and a clear commitment to a rapidly growing renewables sector by a highly active sovereign development vehicle. We intend to take advantage of the large and diverse array of opportunities that we see in our pipeline in the UK, Ireland and internationally.
The investment in the Irish projects will represent one of Europe's largest energy storage acquisitions and one of the largest of its kind this year globally. Ireland's energy storage market is at a critical point in time, with significant investment opportunities rapidly arising, driven in no small part by the ambitious target of 40% renewable energy provision by 2020 set recently by the Irish State. The anticipated returns delivered by the acquisition portfolio have the potential to be significantly greater than those targeted by the Company in its IPO prospectus. Gore Street is well positioned to take advantage of these opportunities in the country for the benefit of stakeholders and shareholders and this transaction further supports the Adviser's intention to grow the fund significantly over time."