AQUILA ENERGY EFFICIENCY TRUST PLC

Prospectus • May 10, 2021

National Storage Mechanism | Additional information

RNS Number : 0013Y

Aquila Energy Efficiency Trust PLC

10 May 2021

10 May 2021

LEI: 213800AJ3TY3OJCQQC53

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, SINGAPORE, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA (OTHER THAN ANY MEMBER STATE OF THE EEA WHERE THE COMPANY'S SECURITIES MAY BE LEGALLY MARKETED), OR ANY OTHER JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL, OR TO ANY NATIONAL, RESIDENT OR CITIZEN OF THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, SINGAPORE, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA (OTHER THAN TO PROFESSIONAL INVESTORS IN CERTAIN EEA MEMBER STATES FOR WHICH MARKETING APPROVAL HAS BEEN OBTAINED)

The contents of this announcement do not constitute or form part of, and should not be construed as, an offer of or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities for sale or subscription in any jurisdiction nor shall they (or any part of them) or the fact of their distribution form the basis of, or be relied upon in connection with, or act as an inducement to enter into, any contract or commitment to do so. This announcement is an advertisement and not a prospectus for the purposes of EU Regulation 2017/1129 as it forms part of the UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended (the "UK Prospectus Regulation") and Part VI of the Financial Services and Markets Act 2000, as amended, and shall not be relied upon in connection with or act as an inducement to enter into any contract or commitment whatsoever. A prospectus will be prepared and made available to the public in accordance with the UK Prospectus Regulation (the "Prospectus"). Recipients of this announcement who intend to purchase such securities are reminded that any such purchase or subscription must be made solely on the basis of the information contained in the Prospectus in its final form. Copies of the Prospectus will, following publication, be available from the Company's registered office and on the Company's website (www.aquila-energy-efficiency-trust.com).

Aquila Energy Efficiency Trust PLC 

(the "Company")

Intention to Float on London Stock Exchange

Placing, Offer for Subscription and Intermediaries Offer to raise up to £150m

Aquila Energy Efficiency Trust PLC today announces its intention to launch an initial public offering and to admit its shares on the premium segment of the Official List of the Financial Conduct Authority and to trading on the Main Market of the London Stock Exchange plc. 

The Company is seeking to raise up to £150 million1 by means of a placing, offer for subscription and intermediaries offer of Ordinary Shares (the "Issue"). In addition, pursuant to the Prospectus expected to be published shortly, a placing programme will allow the Company to issue further Ordinary Shares and/or C Shares in the 12 months from the date of publication of the Prospectus and following Admission (the "Placing Programme").

Highlights

·    The Company will seek to generate attractive returns for Shareholders, principally in the form of income distributions by investing in a diversified portfolio of Energy Efficiency Investments.

·    The Company's investments seek to reduce primary energy consumption, reduce CO2 emissions and in many cases deliver economic savings and other benefits to the counterparties including improved air quality. The Company will not invest in fossil fuel extraction or mineral extraction projects.

·    The Company is targeting a dividend of a minimum of 3.5 pence per Ordinary Share in relation to the financial year ending 31 December 2022; and a minimum of 5 pence per Ordinary Share in relation to the financial year ending 31 December 2023, with the aim of increasing this dividend progressively over the medium term.2

·    The Company is targeting a total shareholder return of 7.5 per cent. to 9.5 per cent. per annum (net of fees and expenses) in the medium term (by reference to the Issue Price) following full investment of the Net Issue Proceeds to be achieved over the long term through the reinvestment of excess cash flows, asset management initiatives and the use of portfolio leverage.2

·    The Company is differentiated by its ability to invest in diversified assets within the energy efficiency sector including, but not limited to, energy efficient lighting, smart building and metering services, cogeneration plants, heating, ventilation and air conditioning (HVAC) systems, efficient boilers, solar photo voltaic plants batteries, other energy storage solutions, electric vehicles and associated charging infrastructure. In addition, the Company may also invest into majority or minority interests in other companies with a strategy that aligns with the Company's investment objective, such as developers, operators or managers of Energy Efficiency Investments.

·    The Company will contract with a diverse range of private and public sector counterparties, including small and medium-sized enterprises, industrials and municipalities.

·    The Company will invest throughout the EEA, Switzerland and the United Kingdom. This geographical diversification is expected to reduce the exposure of the Company to any particular market.

·    The Company will focus on investments with values of up to €10 million, although larger investments may be made where available.

·    The Company will aim to generate stable income and cash-flows from its Energy Efficiency Investments typically through asset backed contracts with a duration of between 5 and 15 years.

·    The AIFM has appointed Aquila Capital as the investment adviser to the AIFM in respect of the Company. The Aquila Group was founded in 2001 and has more than 19 years' experience in alternative investment solutions. It is independently owned and operated with approximately €12.5 billion of assets under management or administration and more than 450 employees located in fourteen offices across Europe and Asia as at 31 December 2020.

·    The Investment Adviser has identified an Advanced Pipeline of approximately €210 million (approximately £180 million) of energy efficiency assets for potential acquisition by the Company, including certain assets held in Aquila Managed Funds as at the date of the Prospectus.

·    In addition to the assets constituting the Advanced Pipeline, the Investment Adviser has identified certain opportunities with a total value of around €300 million that may become available for investment after the first anniversary of Admission, which would meet the Company's Investment Policy and therefore potentially be suitable for acquisition by the Company, should they become available.

·    The Company is expected to qualify for London Stock Exchange's Green Economy Mark at Admission, which recognises companies that derive 50 per cent. or more of their total annual revenue from products and services that contribute to the global green economy. The underlying methodology incorporates the Green Revenues data model developed by FTSE Russell, which helps investors understand the global industrial transition to a green and low carbon economy with consistent, transparent data and indexes.

Peel Hunt LLP ("Peel Hunt") is acting as sole sponsor, placing agent and intermediaries offer adviser to the Company and, with effect from Admission, will act as the Company's corporate broker.

Commenting on the launch, Chair of Aquila Energy Efficiency Trust PLC, Miriam Greenwood, said: "It gives me great pleasure to announce Aquila Energy Efficiency Trust's intention to float on the London Stock Exchange with an IPO that we believe offers a highly differentiated investment opportunity.

The Company will allow investors to access a leading European investment manager with considerable experience in the sector and a diverse pipeline focused on proven technologies across the European Economic Area, the UK, and Switzerland. The Company is intended to assist corporates in stepping forward to play their part in addressing the major challenges facing the planet from climate change, supporting important and ambitious national targets across the region to reduce CO2 emissions."

Alex Betts, Senior Investment Manager of Aquila Capital said: "Today is a very exciting day for Aquila Capital as we launch a new listed fund offering on the London market that offers an opportunity for investors to gain exposure to a rapidly growing infrastructure sector. The highly diverse €210m Advanced Pipeline that we have assembled for the fund is predicted to generate stable cash flows for shareholders and significant environmental impact.

We believe the target annual returns are attractive, providing investors with an asset backed combination of income and capital growth. We aim to generate these compelling returns for investors while providing a crucial service in reducing primary energy consumption and CO2 emissions while delivering economic savings for clients and supporting the transition to an economy driven by efficient and clean energy systems."

Roman Rosslenbroich, CEO of Aquila Capital commented: "Aquila Capital's Energy Efficiency Strategy is the lateral connection of our investment capabilities in renewables and real estate. Energy efficiency is the "First Fuel", it touches all parts of the economy and lies at the heart of addressing climate change. In our day-to-day interactions with investors we see a substantial and continuous appetite for European energy efficiency investments which are characterized by an attractive and stable risk return profile due to largely contractually fixed cash flows and very limited exposure to fluctuations in the financial markets."

Expected timetable3

Publication of the Prospectus	10 May 2021
Placing, offer for subscription and intermediaries offer opens	10 May 2021
Latest time and date for receipt of completed application forms in respect of the offer for subscription	11.00 a.m. on 27 May 2021
Latest time and date for receipt of completed applications from intermediaries in respect of the intermediaries offer	3.00 p.m. on 27 May 2021
Latest time and date for commitments under the placing	5.00 p.m. on 27 May 2021
Publication of the results of the Issue	28 May 2021
Admission and dealings in Ordinary Shares commence	8.00 a.m. on 2 June 2021

For further information please contact:

Aquila Capital	Via Buchanan
Peel Hunt (Sole Sponsor, Placing Agent and Intermediaries Offer Adviser) Luke Simpson, Tom Pocock (Investment Banking) Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris (Sales) Alistair Boyle, Sohail Akbar (Intermediaries)	020 7418 8900
Buchanan (Financial PR) Charles Ryland, Henry Wilson	020 7466 5107 020 7466 5111

Notes:

1. The Directors have reserved the right, in conjunction with Peel Hunt and the Investment Adviser, to increase the size of the Issue to a maximum of 200 million Ordinary Shares if overall demand exceeds 150 million Ordinary Shares, with any such increase being announced through a Regulatory Information Service.

2. The return and dividend targets are targets only and not profit forecasts and there can be no assurance that the targets will be met or that any capital growth or distributions will be achieved.

3. Any changes to the expected timetable will be notified by the Company via a Regulatory Information Service.

Investment Opportunity

Experienced Investment Adviser

•             The Company's AIFM will be advised by Aquila Capital. Aquila Capital manages assets located across continental Europe and the UK.

•             The Aquila Group was founded in 2001, has more than 19 years' experience in alternative investment solutions and (as at 31 December 2020) has approximately €12.5 billion of assets under management or administration.

•             Seasoned investment team with over 70 years of investment experience.

•             Senior investment managers have been working together for more than 12 years and have completed investments in over 10 countries.

Depth of resource and expertise for execution and asset management

•             The Aquila Group has a team of investment professionals that actively pursue, negotiate and execute energy efficiency transactions.

•             The investment team has completed investments of more than €45 million in over 30 energy efficiency projects.

•             The Aquila Group has good relationships with a number of energy service companies and other developers of Energy Efficiency Investments.

Advanced Pipeline

•             The Investment Adviser has identified a pipeline of approximately €210 million (approximately £180 million) of energy efficiency assets for potential acquisition by the Company, including certain assets held in Aquila Managed Funds as at the date of the Prospectus.

•             In addition, Aquila Capital is engaged in due diligence and negotiations (in some cases at advanced stages) on a number of opportunities.

The Directors therefore have confidence that the Net Issue Proceeds can be significantly deployed or committed to acquire suitable assets within twelve months from Admission.

Asset, Counterparty and market diversification

•             The Company is differentiated by its ability to invest in diversified assets within the energy efficiency sector including, but not limited to, energy efficient lighting, cogeneration plants, heating, ventilation and air conditioning (HVAC) systems, efficient boilers, solar photo voltaic plants batteries, other energy storage solutions, smart metering, electric vehicles and associated charging infrastructure. In addition, the Company may also invest into majority or minority interests in other companies with a strategy that aligns with the Company's investment objective, such as developers, operators or managers of Energy Efficiency Investments.

•             The Company will contract with a diverse range of private and public sector counterparties, including small and medium-sized enterprises, industrials and municipalities.

•             The Company will invest throughout the EEA, Switzerland and the United Kingdom. This geographical diversification is expected to reduce the exposure of the Company to any particular market.

•             The Company will focus on investments with values of up to €10 million, though larger investments may be made where appropriate.

Contracted cash flows

•             The Company will aim to generate stable income and cash-flows from its Energy Efficiency Investments typically through asset backed contracts with a duration of between 5 and 15 years.

•             The majority of assets are expected to have O&M Agreements in place.

Independent Board and experienced AIFM

•             The Board comprises individuals, all of whom are independent of Aquila, from relevant and complementary backgrounds offering experience in the management of listed funds, as well as in the energy efficiency and infrastructure sectors, from both a public policy and a commercial perspective.

•             The Company has appointed International Fund Management Limited ("IFM") as its 'Alternative Investment Fund Manager' ("AIFM") to provide portfolio and risk management services. IFM is part of the PraxisIFM Group, one of the largest independent financial services groups based on the Channel Islands and listed on the International Stock Exchange.

AIFM and Investment Adviser

AIFM

The Company has appointed IFM to serve as its alternative investment fund manager. The AIFM is a Guernsey licensed investment manager and forms part of the PraxisIFM Group. The AIFM has a strong track record in providing management and risk advisory services to boards, funds and investment managers and advisers since 2006. The AIFM currently provides services to around 25 funds with an aggregate asset value in excess of $8 billion. The AIFM maintains professional indemnity insurance of not less than £10 million.

In accordance with the provisions set out in the AIFM Agreement, the AIFM is authorised to:

(a)      manage the assets of the Company (including portfolio and/or risk management of these assets); and

(b)      manage and administer the Company.

The AIFM has delegated portfolio management to the Investment Adviser.

In accordance with the AIFM Agreement, the AIFM is entitled to delegate, under its own responsibility, part of its duties and powers to another person or entity having the requisite product experience and deemed appropriate by the AIFM. Any such delegation will be made in accordance with the AIFM Agreement. In particular, the AIFM will engage the Investment Adviser for investment advisory purposes pursuant to the Investment Advisory Agreement.

The AIFM was incorporated, registered and domiciled in Guernsey under Guernsey Companies Law with registration number 17484 on 3 September 1987. The head office is located at Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 1GR and its website is www.intfundmanagement.com. IFM can be contacted by writing to its head office or by calling, within business hours, +44 (0)1481 737600. None of the content on the IFM website or the content of any website accessible from hyperlinks on IFM's website is incorporated into, or forms part of, this announcement.

The Investment Adviser

The AIFM has appointed Aquila Capital as the investment adviser to the AIFM in respect of the Company. Under the terms of the investment advisory agreement dated 10 May 2021 between the AIFM and the Investment Adviser, the Investment Adviser will (i) analyse and assess suitable Energy Efficiency Investments; (ii) advise the AIFM in relation to the analysis and evaluation of suitable Energy Efficiency Investments (including but not limited to follow on investments and re-investments) and any transaction related thereto; (iii) advise the AIFM in relation to acquisitions and disposals of assets; (iv) provide asset valuations to assist the Administrator in the calculation of the semi-annual Net Asset Value; and (v) provide operation, monitoring and asset management services. The AIFM has appointed the Investment Adviser for an initial period of four years and thereafter the Investment Advisory Agreement is terminable on twelve months' notice by either party (or on immediate notice in certain, usual, circumstances).

The Aquila Group was founded in 2001 and has more than 19 years' experience in alternative investment solutions. It is independently owned and operated with approximately €12.5 billion of assets under management or administration and more than 450 employees located in fourteen offices across Europe and Asia as at 31 December 2020.

The Aquila Group is focused on performance and value creation for its clients by spotting macro trends, dislocations and tipping points coupled with bottom-up management by specialised investment teams. The Aquila Group pursues operational stability and corporate governance to generate sustainable positive returns for its investors. It centres on sustainable trends in the areas of renewable energy, energy efficiency, social housing, green logistics, infrastructure, timber and agriculture as well as niche financial market strategies. The Aquila Group offers a focused range of real asset investment solutions managed by dedicated specialists in their respective asset classes.

The Investment Adviser's senior investment professionals

Alex Betts

Senior Investment Manager

Alex Betts has over 25 years' experience in private equity and 14 years in resource efficiency and has invested in a range of industries, geographies and stages. Based in London, he joined Aquila Capital from Adaxia Capital Partners. Alex is a former member of the private equity team at Climate Change Capital ("CCC"), was Head of Royal Dutch Shell's corporate venture capital unit and a former partner of Montagu Private Equity. He is British and graduated in Classics from Oxford University.

Franco Hauri

Senior Investment Manager

Franco Hauri has over 15 years` experience in private equity with 10 years in resource efficiency of which the last five years have been focused on investing in energy efficiency projects. Based in Zurich, he joined Aquila Capital from Adaxia Capital Partners. Franco is a former member of the private equity team at CCC, was an investment advisor at NanoDimension, a venture capital firm investing in nanotechnology, and a consultant with Bain & Company. Franco holds an MBA from Harvard Business School and a master's degree in finance, accounting & controlling from the University of St. Gallen (HSG). He is Swiss and speaks German, Italian, Spanish and French.

Bruno Derungs

Senior Investment Manager

Bruno Derungs has over 20 years' experience in private equity and 16 years in resource efficiency and has invested in a range of industries, geographies and stages. Based in Zurich, he joined Aquila Capital part time from Adaxia Capital Partners. Bruno is a former member of the private equity team at CCC, principal at SAM Private Equity, managing director of ATV a Swiss-based venture capital fund and consultant with Bain & Company. He holds a master's degree in electrical engineering from the ETH in Zurich and an MBA from Columbia Business School in New York. He is Swiss and speaks German, Italian and French.

Investment objective

The Company will seek to generate attractive returns, principally in the form of income distributions by investing in a diversified portfolio of Energy Efficiency Investments.

Summary investment policy

The Company will seek to achieve its investment objective through investment in a diversified portfolio of Energy Efficiency Investments (as defined below) located in Europe, with private and public sector counterparties. The Company will predominantly invest in (i) energy efficiency investments including the installation, in the built environment, transportation industry and other sectors of the economy, of proven technologies and solutions such as energy efficient lighting, cogeneration plants, smart metering, heating, ventilation and air conditioning (HVAC) systems, efficient boilers, solar photo voltaic plants, batteries, other energy storage solutions, electric vehicles and associated charging infrastructure as well as (ii) in the acquisition of majority or minority shareholdings in companies with a strategy that aligns with the Company's investment objective, such as developers, operators or managers of energy efficiency projects ("Equity Investments") ("Energy Efficiency Investments"). These investments seek to reduce primary energy consumption reduce CO2 emissions and in many cases deliver economic savings and other benefits to the counterparties including improved air quality. The Company will not invest in fossil fuel extraction or mineral extraction projects. The capital value of the investment portfolio will be supplemented and supported through reinvestment of excess cash flows, asset management initiatives and the use of leverage.

The Energy Efficiency Investments will typically include long term contracts, which entitle the Company or its subsidiaries to receive stable, predictable cash flows payable by the counterparties, who will benefit from the use of the installed equipment during a contractual period typically ranging from five to fifteen years.

The Company will make Energy Efficiency Investments in operational, ready-to-build or under construction assets. The Company may, when making Equity Investments, through such investments, indirectly hold investments that are in the development phase.

In respect of each type of investment, the Company will seek to diversify its commercial exposure by contracting, where practicable, with a range of different equipment manufacturers, project developers and other service providers, as well as off-takers.

Whilst the Company will seek to diversify its commercial exposure by investing in a diversified mix of technologies, the assets of the Company may be predominantly concentrated in a small number of proven technologies.

Investments may be acquired from a single or a range of vendors and the Company may also enter into joint venture or co-investment arrangements alongside one or more co-investors, including Aquila Managed Funds.

The Company will acquire controlling and, opportunistically, non-controlling interests in Energy Efficiency Investments and may use a range of investment instruments in the pursuit of its investment objective, including but not limited to equity, mezzanine or debt investments.

In circumstances where the Company does not hold a controlling interest in the relevant investments, the Company will secure its rights through contractual and other arrangements, to, inter alia, ensure that the Energy Efficiency Investment is operated and managed in a manner that is consistent with the Company's Investment Policy.

Investment restrictions

The Company aims to achieve diversification principally through investing in a range of portfolio assets across a number of distinct geographies and a mix of technologies. The Company will observe the following investment restrictions when making investments:

•             no more than 20 per cent. of its Gross Asset Value will be invested in any single asset;

•             no more than 20 per cent. of its Gross Asset Value will be invested in Energy Efficiency Investments with the same Counterparty;

•             following full investment of the Net Issue Proceeds, the Company's portfolio will comprise no fewer than ten Energy Efficiency Investments;

•             no investments will be made outside of Europe; and

•             no more than 7.5 per cent. of its Gross Asset Value, in aggregate, will be invested in Equity Investments, and at all times such investments will only be made with appropriate shareholder protections in place.

The Company will hold its investments directly or through one or more SPVs and the investment restrictions will be applied on a look-through basis.

The Company complies with the investment restrictions set out below and will continue to do so for so long as they remain a requirement of the FCA:

•             neither the Company nor any of its subsidiaries will conduct any trading activity which is significant in the context of the Group as a whole;

•             the Company must at all times, invest and manage its assets in a way which is consistent with its object of spreading investment risk and in accordance with the published investment policy; and

•             not more than 15 per cent. of the Gross Asset Value at the time an investment is made will be invested in other closed-ended investment funds which are listed on the Official List.

The Directors do not currently intend to propose any material changes to the Company's Investment Policy. As required by the Listing Rules, any material changes to the Investment Policy of the Company will be made only with the approval of Shareholders by way of ordinary resolution.

Currency and hedging

The Company does not intend to use hedging or derivatives for investment purposes but may use derivative instruments such as forwards, options, futures contracts and swaps to hedge currency, inflation, interest rates, commodity prices and/or electricity prices.

Borrowing policy

The Company may make use of long-term debt on both a limited recourse and full recourse basis to finance the acquisition or construction of Energy Efficiency Investments and for working capital purposes. Gearing will be employed at the level of the Company, at the level of any intermediate wholly owned subsidiary of the Company or at the level of the relevant SPV, and any limits set out in this document shall apply on a look-through basis. In addition, the Company may make use of short-term debt, such as a revolving credit facility, to assist with the acquisition of or investment in suitable opportunities as and when they become available. Aggregate gearing, whether via long-term or short-term debt, will not exceed 50 per cent. of Gross Asset Value, calculated at the time of drawdown. The Company will target aggregate gearing, whether via long term or short term debt, of between 35 and 40 per cent. of Gross Asset Value, but in any event will not exceed 50 per cent. of Gross Asset Value, in each case calculated at the time of drawdown.

Debt may be secured with or without a charge over some or all of the Group's assets depending on the optimal structure for the Group and having consideration to key metrics including, cost of debt, debt type, maturity profiles and lender diversity. Intra-group debt between the Company and subsidiaries will not be included in the definition of borrowings for these purposes.

In circumstances where the above limits are exceeded as a result of gearing of one or more Energy Efficiency Investments in which the Company has a non-controlling interest, the borrowing restrictions will not be deemed to be breached. However, in such circumstances, the matter will be brought to the attention of the Board who will determine the appropriate course of action.

Costs of the Issue

The target size of the Issue is £150 million. Assuming that the target of 150 million Ordinary Shares to be issued pursuant to the Issue is achieved and that the costs of the Issue are two per cent. of the gross issue proceeds, it is expected that the Company will receive £147 million in cash from the Issue, net of fees and expenses associated with the Issue.

Listing

The Company will seek admission of its ordinary shares to the premium segment of the Official List of the Financial Conduct Authority and to trading on the premium segment of the Main Market of the London Stock Exchange ("Admission"). The Company will be structured as a closed-ended investment company incorporated in England & Wales and registered as an investment company under Section 833 of the Companies Act 2006. Aquila Energy Efficiency Trust PLC intends to carry on business as an investment trust within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act 2010.

Directors

The directors, all of whom are independent, are as follows:

Miriam Greenwood OBE DL - Non-executive Chair

With qualifications as a barrister and in corporate finance, Miriam has spent more than 30 years working for a number of leading investment banks and other financial institutions and has been a non-executive director of a several publicly listed and private companies. She was, for nine years until 2013, a non‑executive director of the Gas and Electricity Markets Authority (Ofgem) and Chair of the Gas Network Innovation Competition for seven years, until recently, and has extensive experience in the energy and utilities industry. Miriam is Chair of SMS plc and holds non-executive director positions at River and Mercantile Group plc and at Gulf International Bank (UK) where she also chairs their respective Remuneration Committees. Beyond Board roles, Miriam is an adviser to Ofgem on the current RIIO2 price control and to the Mayor of London's Energy Efficiency Fund. A Deputy Lieutenant of the City of Edinburgh, Miriam was awarded an OBE for services to corporate finance.

Lisa Arnold - Non-executive Director

Lisa is currently a non-executive director of PIMCO Europe Ltd and chairs its Audit committee. She is also the Chair of Polar Capital Global Healthcare Trust plc (current market cap of approximately £300 million). She is also a trustee director of a number of pension funds. She chairs the Allied Domecq Pension Fund and the Investment Committee of the Sainsbury's Pension Scheme, and a Trustee Director of Whitbread Pension Fund. Lisa previously worked as a pharmaceuticals and healthcare analyst at firms such as UBS Warburg, Commerzbank and Lehman Brothers.

Nicholas Bliss - Non-executive Director

Nicholas established and led the global infrastructure and transport sector group at the international law firm Freshfields Bruckhaus Deringer LLP where he was a partner for over 20 years and also served on the Partnership Council, the supervisory board of the firm. During this period, he led on mandates involving some of the most notable infrastructure projects across the UK, Europe, Africa and the Gulf. In particular, he was heavily involved in the development and application of PFI, PPP and other project finance techniques to the delivery of major infrastructure projects. Since leaving Freshfields, he has developed an expertise in both advising and acting as an independent director in "distressed situations" at spv corporates owned by infrastructure funds or industrials.

Laura Sandys CBE - Non-executive Director

Laura is an independent director at SGN Ltd and of the Energy Systems Catapult. Laura is also the Chair of the Government's Energy Digitalisation Taskforce, co-founder of Powerful Women that promotes diversity in energy, Chair of the Food Foundation and Co-Chair of the IPPR Environment and Justice Commission. She runs the Reshaping Regulation Programme with Imperial College London and the Energy Systems Catapult. She was a Member of Parliament and served on the Energy & Climate Change Committee and was Parliamentary Private Secretary to the Minister for Climate Change.

Key Risks Specific to the Company and the Securities

The attention of investors is drawn to the key risks specific to the Company and an investment in the Ordinary Shares and/or C Shares, which include the risks set out below. Further details of the material risks relating to the Company and an investment in the Ordinary Shares and/or the C Shares will be set out in the Prospectus. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of the information in the Prospectus. No reliance should be placed on this announcement. The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested.

•             The Company is a newly incorporated public limited company, has no operating history or revenues and will not commence operations until it has obtained funding through the Issue. Its returns will depend on many factors, including the performance of the Company's future investments, and there can be no assurance that the Company's investment objective and policy will be successful.

•             No investment opportunities from the assets identified by the Investment Adviser as being potentially available for acquisition by the Company (the ''Combined Pipeline'') have been contracted to be acquired, there are no binding commitments or agreements to acquire any of these investment opportunities and the Company does not have a right of first refusal over any of the opportunities in the Combined Pipeline.

•             All target dividends and returns are based on a number of assumptions, including that the taxes payable by the Company remain materially unchanged, that the Company's ongoing running costs are as anticipated, borrowings are available, the investments generate profit and that the net issue proceeds will be fully invested within expected timeframes. There can be no guarantee that these assumptions or the Company's target dividends and returns will be met or that distributions will be made at all.

•             As the Company's revenue will be derived from the energy efficiency investments in the portfolio, the Company will be exposed to the financial strength of the counterparties to such projects or indirectly to the financial strength of the counterparties of the projects invested in as part of the equity investments. The Company is subject to the risk of the inability of any counterparty to perform its contractual obligations, whether due to insolvency, bankruptcy, annulment, invalidity, early termination or other causes. As a result, profitability of the Company may be impaired leading to reduced returns to a holder of shares in the Company ("Shareholder") and, in the worst case scenario, total loss of their investment.

•             The contractual arrangements governing energy efficiency investments may include targets against which the performance of the investments will be measured. Where such targets are not met as a result of construction or operating errors or defect, the relevant counterparty may be entitled to withhold part or all of the contractual payments due to the Company, or to terminate the relevant contract for the default of the Company.

•             Investment valuation is based on financial projections and, where relevant, terminal value for the relevant energy efficiency investments. Projections will primarily be based on the Investment Adviser's assessment and are only estimates of future results based on assumptions made at the time of the projection. Actual results may vary significantly from the projections.

•             Sterling is the functional currency of the Company. The geographical target of the Company is Europe, which includes jurisdictions which have alternative local currencies. Therefore it is probable that the Company will hold assets in European local currencies other than Sterling, the Company will make and/or receive payments that are denominated in currencies other than Sterling and consequently that the Company will be exposed to currency risk. Changes in foreign currency exchange rates will cause the value of energy efficiency investments, and any income arising out of the energy efficiency investments, to go up or down in Sterling terms.

•             The Company is reliant upon the performance of third-party service providers for its executive function including the AIFM and the Investment Adviser. In particular the expertise of the Investment Adviser will be critical to providing investment advisory and asset management services. The successful performance of the Investment Adviser will be dependent upon the expertise of the professionals in its team. If the Investment Adviser withdraws or is unable to provide these services or if its professionals cease to be employed by the Investment Adviser, this could have a material adverse effect on the Company's operations and results.

•             The success of the Company's investment activities depends on the Investment Adviser's ability to identify energy efficiency investments and the availability of such investment in the primary investment and secondary investment markets. Identification and exploitation of the investment strategies to be pursued by the Company involves a high degree of uncertainty. Even when a suitable investment opportunity is identified, there can be no assurance that such opportunity will be available at all or at a price or upon terms and conditions (including, where applicable, financing) that the AIFM or the Board, as applicable, considers satisfactory.

•             The Company will invest into energy efficiency investments through holding companies and special purpose vehicles and will therefore have to bear additional costs associated with such structures compared to direct investment as well as any structural risk (e.g. tax and legal risk) connected to the operation and maintenance of such structures.

•             The Group may use leverage for investment and working capital purposes, which may be on a full recourse basis. The use of borrowing may increase the volatility of the net asset value per Ordinary Share and/or net asset value per C Share, as applicable. If the value of all or any of the energy efficiency investments were to fall to a level such that the Company or the relevant energy efficiency investment was required to pay all or part of its borrowings, either as a result of a breach of a covenant or because of any inability to repay at the end of the term, the Company may be forced to provide additional security or to sell various energy efficiency investments in order to repay all or part of its borrowings. Such energy efficiency investments may be difficult to realise and therefore the market price which is achievable may give rise to significant loss of value compared to the book value of the energy efficiency investments. The result of such a sale will also result in a reduction in income from the energy efficiency investments generally.

•             The acquisition or construction of projects, facilities and/or infrastructures may be financed through external loans or other instruments. There is a risk that the short and long term debt financing that the Company is looking to secure is not available, or only available on unfavourable terms and conditions and as a result the relevant energy efficiency investment may not be able to be made and/or additional working capital is not available to the Company. Even if such debt financing is initially available, there is a risk that the relevant lender does not or cannot refinance the loan amount. In such case, alternative financing will need to be procured. If no alternative financing is available, the relevant Energy Efficiency Investment may not be able to be made and/or could become insolvent and thus incur partial or total loss, in particular where claims are subordinated to those of other creditors.

•             There can be no guarantee that a liquid market in the Ordinary Shares and/or C Shares will exist. The Company is a closed-ended investment company and Shareholders have no right to have their Ordinary Shares and/or C Shares redeemed or repurchased by the Company at any time. Accordingly, Shareholders may be unable to realise their Ordinary Shares and/or C Shares at the quoted market price (or at the prevailing net asset value per Ordinary Share and/or C Share, where applicable), or at all.

•             The market value of the Ordinary Shares and/or C Shares may vary considerably from the Company's underlying net asset value. There can be no assurance, express or implied, that Shareholders will receive back the amount of their investment in the Ordinary Shares and/or C Shares.

All capitalised terms used and not defined herein shall have the same meaning as in the Prospectus expected to be published on or around 10 May 2021.

Disclaimer

This is a financial promotion and is not intended to be investment advice. The content of this announcement, which has been prepared by and is the sole responsibility of the Company, has been approved by Peel Hunt LLP solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus expected to be published by the Company (and in any supplementary prospectus) and not in reliance on this announcement. Shortly after publication, copies of the Prospectus may, subject to any applicable law, be obtained from the registered office of the Company and will shortly be made available for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company.

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.

Peel Hunt, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and for no-one else in connection with the matters described in this announcement and will not regard any other person (whether or not a recipient of the Prospectus) as its client and will not be responsible to anyone for providing the protections afforded to its clients or providing any advice in relation to the matters contained herein.

The shares of the Company have not been, and will not be, registered under the U.S. Securities Act of 1933 (as amended) (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. Persons absent registration or an exemption from registration under the Securities Act. Moreover, the shares of the Company have not been, nor will they be, registered under the applicable securities laws of Australia, New Zealand, Singapore, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than any member state of the EEA where the Ordinary Shares and/or C Shares are lawfully marketed). Further, the Company is not, and will not be, registered under the US Investment Company Act of 1940, as amended, and investors will not be entitled to the benefits of such act. The shares of the Company will be offered and sold outside of the United States to non-U.S. Persons in "offshore transactions" within the meaning of, and in reliance on, the exemption from the registration requirements of the Securities Act provided by Regulation S thereunder. Subject to certain exceptions, the shares of the Company may not be offered or sold in the United States, Australia, New Zealand, Singapore, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than any member state of the EEA where the Ordinary Shares and/or the C Shares are lawfully marketed) or to, or for the account or benefit of, any national, resident or citizen of, the United States, Australia, New Zealand, Singapore, Canada, the Republic of South Africa, Japan or any member state of the EEA (other than to professional investors in certain EEA member states for which marketing approval has been obtained). The Issue and any subsequent placing under the Placing Programme, and the distribution of this announcement, in certain jurisdictions may be restricted by law and accordingly persons into whose possession this announcement is received are required to inform themselves about and to observe such restrictions.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

Notice to prospective investors in the Isle of Man: This announcement, the Prospectus and the Issue are addressed to and directed at persons on the Isle of Man in accordance with any relevant exclusion contained within the Isle of Man Regulated Activities Order 2011 (as amended) or exemption contained in the Isle of Man Financial Services (Exemptions) Regulations 2011 (as amended). Persons distributing this announcement, the Prospectus and the Issue must satisfy themselves that they are licensed to do so under the Isle of Man Financial Services Act 2008. The announcement, the Prospectus and the Issue must not be relied upon by any person unless received or distributed in accordance with the above.

Notice to prospective investors in Jersey: This announcement, the Prospectus and the Issue are addressed to and directed at persons in Jersey with appropriate registration under the Financial Services (Jersey) Law 1998, as amended. Subject to certain exemptions (if applicable), the Company shall not raise money in Jersey by the issue anywhere of the Ordinary Shares and/or C Shares, and the Prospectus relating to the Ordinary Shares and/or C Shares shall not be circulated in Jersey, without first obtaining consent from the Jersey Financial Services Commission pursuant to the Control of Borrowing (Jersey) Order 1958, as amended. No such consents have been obtained by the Company. The Jersey Financial Services Commission does not accept any responsibility for the financial soundness of or any representations made in connection with the Company.

Notice to prospective investors in Guernsey: This announcement, the Prospectus and the Issue are addressed to and directed at persons in Guernsey who are licensed under the Protection of Investors (Bailiwick of Guernsey) Law 1987 (as amended), the Insurance Business (Bailiwick of Guernsey) Law, 2002 (as amended), the Banking Supervision (Bailiwick of Guernsey) Law, 1994 (as amended), the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law 2002 (as amended) or the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000 (as amended). Persons distributing this announcement, the Prospectus and the Issue must satisfy themselves that they are licensed to do so under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended). The announcement, the Prospectus and the Issue must not be relied upon by any person unless received or distributed in accordance with the above.

Notice to prospective investors in the European Economic Area: This announcement, the Prospectus and the Issue are addressed to and directed at persons in European Economic Area who are: (a) in a member state of the European Economic Area who are qualified investors (within the meaning of the Prospectus Regulation (EU) 2017/1129) (the "EU Prospectus Regulation"), and (b) those persons to whom it may otherwise be lawfully communicated (all such persons referred to above being "Relevant Persons"). Persons distributing this announcement, the Prospectus and the Issue must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this announcement, the Prospectus and the Issue relate is available only to Relevant Persons and will be engaged in only with Relevant Persons. This announcement, the Prospectus and the Issue must not be relied on by persons who are not Relevant Persons. Further, each member state in the EEA that has implemented the Directive 2011/61/EU of the European Parliament and of the Council, as amended from time to time including pursuant to Directive 2019/1160/EU and Directive 2019/1156/EU (each a "Relevant State"), no Ordinary Shares and/or C Shares have been or will be directly or indirectly offered to or placed with investors in that Relevant State at the initiative of or on behalf of the Company, the AIFM or the Investment Adviser other than in accordance with the methods permitted in that Relevant State.

Notice to prospective investors in the Republic of Ireland: This announcement, the Prospectus and the Issue are addressed to and directed at persons in the Republic of Ireland who are professional investors as defined in Directive 2011/61/EU of the European Parliament and of the Council, as amended from time to time including pursuant to Directive 2019/1160/EU and Directive 2019/1156/EU ("AIFMD") and otherwise in accordance with AIFMD, Commission Delegated Regulation 231/2013, the Irish European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257/2013), as amended, and any rules issued by the Central Bank of Ireland pursuant thereto. This announcement, the Prospectus and the Issue are only addressed to and directed at persons in the Republic of Ireland (a) in compliance with the provisions of the Irish Companies Act 2014 (as amended); (b) in compliance with the provisions of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 614/2017) (as amended); and (c) in compliance with the provisions of the Irish European Union (Market Abuse) Regulations 2016 (as amended) and any rules issued by the Central Bank of Ireland pursuant thereto. The Prospectus has not been, nor will it be, registered with or authorised by any regulatory or governmental body in the Republic of Ireland. Accordingly, the Prospectus may not be made available, nor may the interests in the Company offered hereunder be marketed and offered for sale in the Republic of Ireland, other than under circumstances which do not require the publication of a prospectus pursuant to the Irish European Union (Prospectus) Regulations 2019 (S.I. No. 380/2019) and any rules issued by the Central Bank of Ireland pursuant thereto.

Notice to prospective investors in Luxembourg: This announcement, the Prospectus and the Issue are addressed to and directed at persons in Luxembourg who are "professional clients" within the meaning of Annex II of MiFID II. The Prospectus has not been, nor will it be, registered with or authorised by any regulatory or governmental body in Luxembourg. Accordingly, the Prospectus may not be made available, nor may the interests in the Company offered hereunder be marketed and offered for sale in Luxembourg, other than under circumstances which do not fall under specific offer limitations under the Luxembourg Law of 12 July 2013 on alternative investment fund managers (as amended) ("AIFM Law") and at the same time do not constitute an "Offer of Shares to the public" requiring the publication by the Company of a prospectus pursuant to Article 3 of the EU Prospectus Regulation and the Luxembourg law of 16 July 2019 on prospectuses for securities. Neither the Company nor its AIFM have been authorised or registered under the AIFM Law or are otherwise supervised by the Luxembourg Commission de Surveillance du Secteur Financier.

Notice to prospective investors in the Netherlands: This announcement, the Prospectus and the Issue are addressed to and directed at persons in the Netherlands who are "qualified investors" (gekwalificeerde beleggers) within the meaning of Article 1:1 of the Dutch Financial Supervision Act (Wet op het financieel toezicht). Neither the AIFM nor the Company is subject to supervision of the Dutch Central Bank or the Dutch Authority for Financial Markets.

Notice to prospective investors in Switzerland: This announcement, the Prospectus and the Issue are addressed to and directed at persons in the Switzerland who are (i) professional and/or institutional clients within the meaning of the Swiss Financial Services Act ("FinSA") or (ii) in any other circumstances falling within article 36 para. 1 of the FinSA, and in any case only subject to the restrictions provided in this notice concerning Switzerland. Neither the Prospectus nor any other offering or marketing material relating to the Ordinary Shares and/or C Shares constitutes a prospectus within the meaning of the FinSA. The Prospectus has not been and will not be reviewed or approved by a Swiss review body and does not comply with the disclosure requirements applicable to a prospectus within the meaning of the FinSA. Neither the Prospectus nor any other offering or marketing material relating to the Ordinary Shares and/or C Shares may be publicly distributed or otherwise made publicly available in Switzerland. The Company has not been and will neither be registered with the Swiss Financial Supervisory Authority as a foreign collective investment for distribution to non-qualified investors pursuant to the Swiss Collective Investment Schemes Act, nor has the Company appointed or will the Company appoint a Swiss representative and paying agent, required for distribution to non-qualified investors and to high-net-worth retail clients and private investment structures created for them, having declared that they wish to be treated as professional clients ("Opting Out HNWI") (as further defined in the FinSA (cf. art. 5 paras. 1 and 2 of the FinSA) and its implementing ordinance). Accordingly, interests in the Company, including the Ordinary Shares and/or C Shares may not be offered to non-qualified investors or to Opting Out HNWI in or from Switzerland.

Notice to prospective investors in Belgium: This announcement, the Prospectus and the Issue are addressed to and directed at persons in Belgium who are (a) qualified investors within the meaning of Article 2(e) of the EU Prospectus Regulation; (b) to a maximum of 149 individuals who are not qualified investors within the meaning of Article 2(e) of the EU Prospectus Regulation; or (c) to investors who acquire Ordinary Shares and/or C Shares for a minimum consideration of EUR 100,000 or the equivalent thereof in another currency. Neither the Company nor its AIFM have been authorised or registered under the Belgian AIFM Law of 19 April 2014 or are otherwise supervised by the Belgian Financial Services and Markets Authority.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations. Persons considering making such investment should consult an authorised person specialising in advising on such investments.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the Prospectus. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. Subject to their respective legal and regulatory obligations (including under the Prospectus Regulation Rules), the Company, the AIFM, the Investment Adviser and Peel Hunt expressly disclaim any obligations or undertaking to update or revise any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Listing Rules, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules, the Prospectus Regulation and MAR.

None of the Company, the AIFM, the Investment Adviser or Peel Hunt, or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the AIFM, the Investment Adviser and Peel Hunt, and their respective affiliates, accordingly disclaim all and any liability (save where required by law)  whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.        

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments; and (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing EU Directive 2014/65/EU, in the case of (a) and (b), to the extent that they form part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018; and (c) other local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares and the C Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in UK MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by UK MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors (such term to have the same meaning as in the MiFID II Product Governance Requirements) should note that: the market price of the Ordinary Shares and/or C Shares may decline and investors could lose all or part of their investment; neither the Ordinary Shares nor the C Shares offer any guaranteed income and or capital protection; and an investment in the Ordinary Shares and/or C Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue and/or the Placing Programme. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt will only procure investors (pursuant to the Issue and the Placing Programme) who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of UK MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares and/or C Shares.

Each distributor (including the Intermediaries) is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and/or C Shares and determining appropriate distribution channels.

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