Triple Point, Round Hill exploring LSE listing

Triple Point is looking to raise £200m for the Triple Point Energy Efficiency Infrastructure, while Round Hill is exploring a public flotation

The post-Covid-19 investment trust IPO market is set to come alive, with competition for two current 'sole players' set to shake up their respective sectors.

Triple Point Investment Management confirmed on Tuesday (25 August) that it was seeking to list a closed-ended fund investing in energy efficiency assets.

The firm said it was looking to raise £200m for the Triple Point Energy Efficiency Infrastructure, with the aim to have shares trading on the London Stock Exchange by 19 October.

Impact investor Triple Point said it has over ten years' of experience in energy efficiency and decentralised energy generation project investing.

The fund, it added, would invest in a diversified portfolio of energy efficiency assets, which have a positive environmental impact and that facilitate the transition to a low-carbon economy.

It will focus on three areas specifically: low carbon distribution, such as CHP and heat networks; social housing retrofit and industrial energy efficiency including energy efficiency as a service; and distributed generation, such as hydro and solar.

With a near-term pipeline worth around £293m already identified, Triple Point said the fund would offer shareholders exposure to inflation-linked, long-term contracts with high-quality industrial, corporate and government counterparties. It has a longer-term pipeline worth around £675m.

The fund will target a total return of between 7% and 8% per annum, with a target dividend yield of 5% in its first financial year, seeking to adopt a progressive dividend policy thereafter.

Analysts noted the trust will provide competition for SDCL Energy Efficiency Income, currently the only trust investing in the area of energy efficiency and decentralised energy projects.

Given the direct comparisons between the two, it may take some of the heat out of SDCL's current c.10% premium to NAV, predicted Stifel's Sachin Saggar.

Meanwhile, QuotedData's James Carthew pointed out that while SDCL yields lower than Triple Point's target, at 4.9%, had the trust not been trading on such a chunky premium, it would be higher.

Elsewhere, Stifel speculated in its note than the prolific Hipgnosis Songs Fund could also find itself with a competitors soon, with reports from music industry magazine Music Business Worldwide that Round Hill Music was "in the early stages of exploring a public flotation" on the LSE.

Round Hill was described as an "acquisitive publishing and recording company and has been investing in music royalties since around 2010, so has built an experienced team with a proven track record.

The music royalties asset class… has displayed its uncorrelated qualities during recent months, Saggar and Max Haycock said.

"Given the large number of private funds already investing in music royalties, it is inevitable that some will be considering their options such as an IPO of their private vehicles as they approach the end of their investment period. We felt it was only a matter of time before competition increased within the listed music royalties space."

The analyst noted that Round Hill focuses on older vintage songs, which should "give their portfolios a lower risk-profile relative to Hipgnosis".

If Round Hill's IPO is indeed successful, it could provide interesting competition for Hipgnosis and in the process could improve previous concerns around the fund's transparency and catalogue vintage, they added.