UK’s first rooftop solar investment trust planning IPO

The latest proposed trust IPO offers a 5% yield with limited exposure to the wholesale energy market. 

Atrato Onsite Energy is planning to become the first UK-listed investment trust focused on rooftop solar power installations.

The trust, which is seeking to raise £150 million in an initial public offering (IPO), will invest in solar systems that are predominantly located on the roofs of commercial buildings. The systems will be commercialised through long-term indexed power purchase agreements with the occupiers of the industrial and commercial properties on which the assets are installed.

The trust plans a 5% yield in the first two years, followed by a progressive dividend thereafter. An overall yearly total return of 8% to 10% is being targeted in its first financial year and over the medium term.

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An IPO at the end of November is the target, and if the trust raises sufficient capital it will trade under the ticker ‘ROOF’. It says it will be the only investment company focused on onsite green energy generation. Other energy-focused trusts invest in rooftop solar, but do not exclusively invest in it.

Compared to peers, Atrato Onsite Energy says it will have “significantly lower exposure to wholesale power prices”.

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The trust would have an all-female board, chaired by Juliet Davenport, who was awarded an OBE in 2013 for services to renewables and has spent her career in the energy sector creating solutions to combat climate change. In 1998, she founded the AIM-listed company Good Energy Group (LSE:GOOD), a 100% renewable energy utility specialising in decentralised small-scale renewables.

She said: “The UK’s binding net-zero emissions target in 2050 and the resulting future demand for green energy means that additional generation from low-carbon sources such as rooftop solar is growing. The company will play a leading role in providing new green power capacity, delivering businesses a dedicated clean energy supply at a low fixed cost.”

Gurpreet Gujral, who will manage the trust, commented that investing in solar systems “have a number of unique and attractive features”.

He added: “These include allowing corporates to directly reduce their carbon footprint, while reducing their energy bills. They can also provide investors with a stable income stream with limited exposure to the wholesale energy market.”

Atrato Partners is the investment adviser to Supermarket Income REIT (LSE:SUPR), a real estate investment trust that is dedicated to investing in supermarket property.  

Two other investment trusts are lining up IPOs, as we recently reported. Pantheon Infrastructure is attempting to raise £300 million, while Harmony Energy Trust is seeking £230 million.

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Pantheon Infrastructure will invest in infrastructure across several different sectors. These will include digital infrastructure (such as wireless towers, data centres and fibre-optic networks); renewables and energy efficiency (such as smart infrastructure, wind, solar and sustainable waste); power and utilities (including transmission and distribution networks); and transport and logistics (such as ports, rail, roads, airports).

Harmony Energy Trust will invest in UK energy storage assets. The trust will focus on investing in commercial scale energy storage and renewable energy generation projects, with its initial focus being on battery energy storage systems in the UK.

Investment trusts have been in high demand in 2021, with a record amount already raised for a calendar year.

On the IPO front, there have been nine new trusts so far this year, which have raised a collective £2.1 billion. This figure exceeds the amount raised by IPOs in both 2019 and 2020.