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ThomasLloyd Energy Impact Trust targets 7% yield from investing in Asian renewable energy projects

This new Asian renewable energy investment trust is targeting a yield as high as 7% – and the UK Government is buying into it, should you?

  • Infrastructure investor ThomasLloyd launches new investment trust 
  • The trust will invest in renewable assets in emerging markets in Asia 
  • The UK Government will invest up to £25m in the trust 

The UK Government is set to invest millions into a newly launched investment trust focused on renewable energy projects in Asia.

Investment company ThomasLloyd today announced its plans to raise $340million through its new vehicle, the ThomasLloyd Energy Impact Trust, with up to £25million backing from the Government.

The trust plans to target an annual dividend yield of 2-3 per cent in 2022, rising to 5-6 per cent in 2023, and at least 7 per cent thereafter.

The government will invest up to £25m in the trust as it encourages investors to back green projects

It is also targeting a net asset value total annualised return of 10 to 12 per cent in the medium to long term.

ThomasLloyd claims the trust will be the first ever dedicated emerging markets renewable energy offering to list on the premium segment of the London Stock Exchange.

It said: ‘Carbon emissions in Asia are now greater than Europe and North America combined. Economic and population growth, together with rapid urbanisation in Low Middle Income countries in Asia is driving huge demand for funding to develop and upgrade existing energy infrastructure.’

The trust says it ‘has an investment objective of delivering a triple return, comprising a financial return on investment, a measurable environmental return and a discernible social return.’

The ThomasLloyd Energy Impact Trust plans to be admitted in early December and the initial proceeds from the IPO are expected to be deployed within six to nine months.

It will initially invest in nine operational solar projects, and one under construction, in India and the Philippines, before investing across Indonesia, Vietnam, and Bangladesh.

The assets will be worth approximately $59million, with more than 500 MW of electricity generating capacity once fully operational.

‘We will use our operating platforms in [India and the Philippines] to expand into neighbouring markets… We will grow our team which is based in New Delhi and Bangladesh,’ Thomas Lloyd chief executive Michael Sieg told This Is Money.

‘That gives people confidence that there is an established process… often unfortunately in our industry [there is a] sort of trial and error process… I think that’s not what capital markets want to see.’

The government has said it will match Thomas Lloyd’s commitment by investing up to £25million, subject to the completion of diligence, as part of its MOBILIST initiative, which encourages private capital into emerging and developing countries.

Thomas Lloyd’s chief executive Michael Sieg told This Is Money this could drop to £15million if the trust is oversubscribed.

Other investment products that have received funding from the government include Africa Infrastructure Equity Fund and FirstRand Bank’s Climate Fund.

The board of ThomasLloyd Energy Impact Trust will be led by Sue Inglis, currently a non-executive director of Baillie Gifford US Growth Trust and The Bankers Investment Trust.

‘Demand for energy in Asia is profound and set to rise in the coming decades. Asia is home to 60% of the world’s population and the challenge of CO2 emissions in Asia is becoming ever more pressing. Investing as usual will not get us to Net Zero,’ said Inglis.

‘With a target NAV total return of 10-12 per cent per annum, the Company will provide Shareholders with an attractive level of dividend income and prospects for dividend growth and capital appreciation over the long term.

‘Critically, the Company will also help to reduce global greenhouse gas emissions, while delivering economic and social progress – a critical triple return. The Investment Manager is highly experienced, with an outstanding track record of delivering investment returns combined with genuine and tangible positive impact.’