UK govt seeds its first ever investment trust with £25m for EM infrastructure

ThomasLloyd is targeting a £250m IPO for its Energy Impact Trust

The UK government has pledged to invest up to £25m to help launch an investment trust that is backing sustainable infrastructure projects in Asia.

Specialist investor ThomasLloyd announced plans to raise up to $340m (£250m) in a public offering for the ThomasLloyd Energy Impact Trust. The new vehicle will invest exclusively in a portfolio of unlisted sustainable energy infrastructure assets, including renewable power generation, transmission infrastructure, energy storage and sustainable fuel production, in fast-growing and emerging economies in South and South East Asia.

The Foreign Commonwealth and Development Office (FCDO) announced it would seed the new vehicle, which was chosen as a finalist in a government programme to mobilise largescale investment via public markets in sustainable infrastructure in emerging and developing countries.

The government’s flagship green investment programme raised a further £66m from investors yesterday at COP26 on ‘Finance’ day.

ThomasLloyd claims this is the first time the UK government has ever seeded a trust. If the IPO goes ahead, ThomasLloyd Energy Impact will also be the first vehicle of its kind on the London Stock Exchange.

Alongside the government funding, a separate anchor investor that is an affiliate of ThomasLloyd has committed $35m to the IPO. This equates to 20% of the target raise already being secured, the firm said.

“With its fast-growing economy and rapid population growth, Asia is the world’s largest and fastest growing consumer of energy and the largest emitter of CO2,” said Tony Coveney, head of infrastructure asset management at ThomasLloyd Group. “We now need to work together to mobilise large scale institutional investment in Asia at pace.”

ThomasLloyd Energy Impact is targeting a net asset value total annualised return of 10-12% over the medium to long-term.

It is also targeting an annual dividend yield of 2-3% in 2022, which will rise to 5-6% in 2023 and at least 7% thereafter.

ThomasLloyd plans to list the trust in December and the initial proceeds from the IPO are expected to be deployed in six to nine months.

The seed portfolio comprises nine operational assets and one in-construction solar project in India and the Philippines worth $59m, with more than 500 megawatts of electricity generating capacity once fully operational. It also has a $750m pipeline of assets in India, the Philippines, Indonesia, Vietnam, Bangladesh and Sri Lanka.

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