The Renewables Infrastructure Group (TRIG)

The Renewables Infrastructure Group (TRIG) is one of the leading trusts in the renewable energy infrastructure sector, having a large portfolio of institutional quality assets of significant size and scale, which is diversified geographically and by technology. The renewables sector, of which TRIG is a large constituent, has been facing a challenging backdrop for sentiment, with the significant rise in interest rates around the world the main culprit. Despite progress on sales of assets since 2022, with c. 10% of the portfolio sold at prices above or in line with NAV, TRIG has not yet been able to reduce its short-term borrowings as much as planned. Further transaction activity would also serve to usefully validate TRIG’s NAV.

As we discuss in the Gearing section, TRIG has announced that for the first time it is in the process of arranging longer-term corporate-level debt, which will mean it can pay back the majority of the short-term debt, as well as give it more flexibility to deploy capital in the future—either re-investing in the existing portfolio to boost returns, investing in the development pipeline, or further share buybacks. The board is carefully monitoring the respective attractions of each, focussed on making the trust’s capital work hard and generate value for shareholders.

As we discuss in the Portfolio section, drawing down this debt will also enable the team to bring forward investment to accelerate growth in capital and income. TRIG has a significant development pipeline that could take the proportion invested in battery assets up to c. 10% – 15% if fully built out. Battery assets complement wind and solar assets in that their revenues benefit from the price volatility of intermittent generation, and so as the portfolio mix changes, the portfolio can potentially receive higher returns on invested capital.