Investors pile in to €270m Greencoat Renewables IPO

Greencoat listed in Ireland after buying wind assets

Gretchen Friemann

AIB reduced its cornerstone investment in the €270m Greencoat Renewables flotation by €10m after investors piled into the deal, lured in by its strong yield amid persistently low interest rates

The successful initial public offering (IPO) of wind farm investor Greencoat, which will debut on the junior markets of the London and Irish stock exchanges next Wednesday, has fuelled speculation that similar deals will follow.

Most of the demand for the deal, priced at €1, stemmed from Irish, UK and European investors. The books closed yesterday and while there was no retail component, a number of high-net-worth investors subscribed to the offer as did insurer, Irish Life.

The listing, advised by Canadian broker RBC Capital Markets and Davy, is the first of its kind to be listed in Ireland. It is backed by the same investment management team that runs the UK's first listed infrastructure investment trust, Greencoat UK Wind. Since that vehicle debuted in 2013, the industry has expanded to six players and is now worth a combined £3.6bn (€4.1bn).

Greencoat listed here after buying Irish wind assets. Market sources predicted more UK firms will scour Ireland for renewable energy assets to bundle them into a closed-end, high-yielding, tax efficient fund that appeals to public market investors.

All the UK trusts in this sector trade at a premium to their net asset value. RBC Capital Market's official marketing documents on the deal, obtained by the Irish Independent, predicted that Greencoat Renewables will also "start to enjoy a valuation that includes a premium to", its net asset valuation, as it starts to deliver on its strategy.

The broker's analysts claimed the premium could rise as high as 10pc.

But the real draw was Greencoat Renewables's near 6pc yield and sources said the surge of interest in the IPO underscores the market's bearish view on any short-term rise in interest rates.

A one-year share lock-up on the two cornerstone investors, AIB and ISIF, also helped drive demand, sources said. AIB and ISIF initially injected €25m and €75m respectively.

However the strong investor demand enabled AIB to cut its exposure by €10m as the deal was upscaled from €250m to €270m.

Greencoat bought wind farms in Cork and Tipperary earlier this year from Brookfield Renewable Ireland, an offshoot of Canada's Brookfield Asset Management. The properties had originally been sold by the State in the Bord Gáis Energy privatisation.

The firm will buy more assets in Ireland and may then target solar assets on the Continent.