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THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION.

24 March 2022 

SDCL Energy Efficiency Income Trust plc  

(the "Company") 

Proposed Placing

The Board of Directors (the "Board") of SDCL Energy Efficiency Income Trust plc announces a proposed Placing to raise £75 million through an issue of new Ordinary Shares in the capital of the Company ("New Ordinary Shares") (the "Placing").

The Placing will be non pre-emptive and will be launched immediately following this announcement, when Jefferies International Limited ("Jefferies") will commence a book-building process to determine the level of demand from potential investors for participation in the Placing. To bid in the book-build, investors should communicate their bid (or bids) by telephone to their usual sales contact at Jefferies. Each bid should state the number of Placing Shares for which the prospective investor wishes to subscribe and the price or prices that the prospective investor is offering to pay. Any bid price must be for a full pence or half pence amount.

Highlights:

·     Placing to raise £75 million pursuant to the Company's existing Share Issuance Programme.

·     The Company is in bilateral/exclusive negotiations involving approximately £100 million of investments in new investment opportunities and a wider pipeline of over £250 million of opportunities in due diligence. These investments would provide further scale and diversification to the existing portfolio

·     The Company has fully allocated and committed its current cash reserves of £135 million and the majority of its RCF to:

o  9 existing committed but unfunded investments involving approximately £95 million

o  6 follow-on projects involving approximately £155 million capital allocated

·      Investors in the Placing will have the right to receive all dividends and other distributions announced after the date of Initial Admission, starting with the fourth interim dividend in relation to the year ending 31 March 2022, expected to be announced by the Company in May/June 2022

·   The Company's portfolio as a whole continues to perform as expected since the 30 September 2021 interim report and subsequent acquisitions have further improved portfolio diversification

The Placing is being conducted through a book-building process under the Company's existing Share Issuance Programme in accordance with the Prospectus dated 2 September 2021 (the "Prospectus").

Tony Roper, Chairman of SDCL Energy Efficiency Income Trust plc said:

"The current crisis in energy supply and cost in Europe illustrates the increasingly urgent need for energy efficiency. Given the time and cost involved with generating new clean energy generation at scale, energy efficiency offers one of the largest and most cost-effective solutions by reducing some of the two thirds of energy that is wasted before or at the point of use. This further expands the market for energy efficiency solutions which can reduce energy demand, energy cost and carbon emissions on the one hand and that help improve energy security on the other hand.

SEEIT has a substantial pipeline of 'organic' follow-on opportunities, which arise from existing investments that it has made. These investments tend to benefit from pre-agreed rates of return and have the advantages of an existing track record with the projects and counterparties. There is also a large pipeline of new investment opportunities that can help to enhance SEEIT's prospects for income and capital growth, as well as further diversifying its portfolio.

SEEIT has committed or allocated substantially all of its existing cash and credit facilities and is now seeking to raise capital to invest in a number of attractive investment opportunities."

Background to the Issue 

SDCL Energy Efficiency Income Trust plc was the first UK listed company of its kind, in the energy efficiency sector and listing on the London Stock Exchange in December 2018.

The Company's current portfolio includes 44 different investments, diversified across several technologies, sectors and geographies. The Company currently has a market capitalisation of approximately £1.1 billion and continues to target a total return for shareholders of 7-8 per cent. per annum by reference to the IPO Share Price of £1.00 per Ordinary Share.

The Company remains focused on providing its investors with stable and long-term income, with a dividend target of 5.62 pence per Ordinary Share for the financial year to 31 March 2022. Investors in the Placing will be entitled to receive the next quarterly dividend declared by the Company, the fourth interim dividend for the year to 31 March 2022, which is expected to be declared in May/June 2022.

Trading Update

Portfolio update

As at 30 September 2021, the Company had a NAV of c.£950 million, diversified across technology, geography and credit counterparty. The Company's NAV per share as at 30 September 2021 was 104.5p. The Company's portfolio as a whole continues to perform as expected since the 30 September 2021 interim report with the Company's pro forma gearing currently at 40 per cent.⁽¹⁾

In September 2021, the Company raised £250 million via a placing of New Ordinary Shares pursuant to its existing Share Issuance Programme. Since 30 September 2021, the Company has acquired, or committed to acquiring the following investments:

1.   the remaining 35% equity interest that it did not already own in Primary Energy for a consideration of $92 million, approximately half of which was funded by third party debt;

2.   a £3 million investment commitment to implement, finance and own the replacement of an energy efficient chiller system at The LYCRA Company's Singapore facility; 

3.   a c.$5 million debt investment alongside other investment partners to fund the energy efficiency measures in the 303 Battery Street building in Seattle, US;

4.   $21 million in an operational portfolio of LED lighting projects across 42 states in the United States, together with a 50% interest in Future Energy Solutions Lighting Holdings LLLP;

5.   €12 million to acquire remaining equity interests that it did not already own in three investments within the Oliva Spanish Cogeneration;

6.   a c.£28 million incremental deployment into existing investments, Onyx, Biotown and Spark US Energy Efficiency II; and

7.   an 80% equity interest in a high-efficiency and operational biomass cogeneration plant, Sociedade de Iniciativa e Aproveitamentos Florestais - Energies, S.A., in Mangualde, Portugal for €22 million.

These acquisitions total approximately £125 million and together with nine existing committed but unfunded investments of approximately £95 million and six follow-on projects with a value of approximately £155 million mean that the Company has committed all the proceeds of its September 2021 equity raise.

All of the Company's projects benefit from contracted revenues with approximately 60 per cent (by pro-forma value⁽²⁾, excluding cash) of the Company's investments being in projects associated with investment grade or equivalent client counterparties. As noted in the Company's 30 September 2021 results, the Company has been increasing its correlation to long-term inflation, such that as at 30 September 2021, approximately 50% of the portfolio, by value, has revenues that are partly or wholly correlated with inflation.

Use of Proceeds

The Company continues to see an increasing number of 'organic' investment opportunities to make further or follow-on investments into projects or frameworks within its existing portfolio as well as specific asset management initiatives at an individual project level. In assessing these opportunities, the Company benefits from the increased visibility and access to the projects that it enjoys as an existing owner, as well as potentially transacting through existing pre-emption rights and/or options which may allow the Company to profit from pre-determined prices and increase the value of its investment.

The Investment Manager is currently in bilateral/exclusive negotiations involving approximately £100 million of investments in new opportunities. These investment opportunities are diversified across a range of technologies including lighting, solar, other on-site energy efficiency intervention in the UK, mainland Europe and North America. The investments, which are expected to complete over the next 3-6 months, benefit from long term contracted cashflows.

In addition, the Investment Manager has a wider pipeline of over £250 million of identified opportunities many of which are in negotiation or due diligence. A large number of these opportunities are being negotiated either privately or on a bilateral basis and hence outside of a competitive process. These include potential investments in heat pumps, behind-the-meter batteries, cooling, district heating, onsite generation and other solutions in the UK, mainland Europe and North America which will enable further technological and geographic diversification to the portfolio. Some of these opportunities require the Company to be able to execute transactions quickly to secure the assets on an off-market basis and at prices which the Investment Manager believes are highly attractive.

The Company has fully allocated and committed its current cash reserves of £135 million and the majority of its RCF to the nine existing committed but unfunded investments with a value of approximately £95 million and six follow-on projects involving approximately £155 million capital. Accordingly, the Company is seeking to raise £75 million to enable it to continue to diligence and acquire its current pipeline of opportunities over the next few months.

The Company has established a proven track record of sourcing assets in advance of a fundraise. As with prior fundraise pipelines, the Company does not intend to invest in all the opportunities it has identified however given the unique nature of the opportunities, the Company wants to ensure it has sufficient financial flexibility, including via the equity raised in this fundraise, as well as its existing debt facilities, to be able to secure these assets in the near term. The Company intends to fully invest the net proceeds of the Placing within the next 3-6 months.

Benefits of the Placing

The Board believes that proceeding with the Placing will have the following benefits for the Company:

§ Allow the Company to invest further capital in identified pipeline opportunities to enable it to further diversify its existing portfolio and secure value from new and organic follow-on investments;

§ Create the potential to enhance the NAV per share of the existing Ordinary Shares through the issuance of New Ordinary Shares at a premium to NAV, after the related costs have been deducted;

§ Spread the Company's fixed running costs across a wider base of shareholders, and benefit from the reducing scale of charges for the Investment Manager, thereby reducing the total expense ratio; and

§ Increase the size of the Company which should help make the Company more attractive to a wider base of investors and improve market liquidity in the Ordinary Shares.

Further details

Jefferies is acting as global coordinator and bookrunner in connection with the Placing (the "Bookrunner"). The number of Placing Shares to be issued and the price per Ordinary Share will be determined by the Company, in consultation with the Bookrunner, following the close of the book-build at 5.00 p.m. on Thursday 24 March 2022, and announced along with the results of the Placing at 7.00 a.m. on Friday 25 March 2022. The Placing will be capped at a maximum of £100 million in order to ensure alignment with the Company's use of proceeds.

The Placing is available to qualifying new and existing investors and will be launched immediately following the release of this announcement, in accordance with the authorities and terms and conditions set out in Share Issuance Programme Prospectus published on 2 September 2021 (the "Prospectus"). Jefferies may, in agreement with the Company, accept bids that are received after the book-build has closed.

Jefferies will choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with the Company, and may scale down any bids for this purpose on such basis as the Company and Jefferies may determine. It may be necessary to scale back applications under the Placing if the number of applications exceeds the number of Placing Shares available under the Placing. In such event, Placing Shares will be allocated at the discretion of the Company (in consultation with the Jefferies). The Company will consider various factors when making this scaleback decision, including the price per share being offered by a potential investor and whether this is above or equal to the final placing price, and whether existing shareholders wish to maintain their current percentage holding in the Company. The price per Placing Share will be accretive to NAV per Ordinary Share, after taking into account the costs of the Placing.

The Company will apply for admission of the Placing Shares to listing on the premium listing segment of the Official List of the Financial Conduct Authority (the "FCA") and to trading on the main market for listed securities of London Stock Exchange plc (the "London Stock Exchange") ("Admission"). It is expected that settlement of subscriptions in respect of the Placing Shares and Admission will take place and that trading in the Placing Shares will commence at 8.00 a.m. on Tuesday 29 March 2022.

The Placing Shares will, when issued, be fully paid and will rank pari passu in all respects with the existing Ordinary Shares in issue, including in respect of the right to receive all future dividends and distributions declared, made or paid. Based on the current expected timetable, Placing Shares issued under the Placing will qualify for the dividend relating to the period to 31 March 2022, which is expected to be declared in May/June. 

By choosing to participate in the Placing and by making an oral and legally binding offer to subscribe for Placing Shares, investors will be deemed to have read and understood this Announcement and the terms and conditions in the Prospectus in their entirety and to be making such offer on the terms and subject to the conditions in the Prospectus, and to be providing the representations, warranties and acknowledgements contained in the Prospectus.

Expected Timetable

The dates and times specified above are subject to change. In particular, the Directors may (with the prior approval of Jefferies) bring forward or postpone the closing time and date for the Placing. In the event that a date or time is changed, the Company will notify persons who have applied for Ordinary Shares by post, by electronic mail or by the publication of a notice through a Regulatory Information Service.

References to all times are to London times unless otherwise stated.

Dealing codes

Unless otherwise defined, capitalised terms used in this announcement shall have the same meaning as set out in the Prospectus published on 2 September 2021.

For Further Information

^1.  Company's pro-forma gearing ratio calculated as aggregated drawn debt across the group as at 28 February 2022 divided by 30 September 2021 NAV

^2.   Pro forma portfolio value is as at the latest published valuation date (30 September 2021) with subsequent investments included at cost.

Important Information

This announcement is not an offer to sell or a solicitation of any offer to buy the Shares in the Company in the United States, Australia, Canada, New Zealand or the Republic of South Africa, Japan, or in any other jurisdiction where such offer or sale would be unlawful.

This communication is not for publication or distribution, directly or indirectly, in or into the United States of America. This communication 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.

The Company has not been and will not be registered under the US Investment Company Act of 1940 (the "Investment Company Act") and, as such, holders of the Shares will not be entitled to the benefits of the Investment Company Act.  No offer, sale, resale, pledge, delivery, distribution or transfer of the Shares may be made except under circumstances that will not result in the Company being required to register as an investment company under the Investment Company Act. 

This communication is only addressed to, and directed at, persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(e) of the Prospectus Regulation ("Qualified Investors").  For the purposes of this provision, the expression "Prospectus Regulation" means Regulation (EU) 2017/1129. In the United Kingdom, this communication is being distributed only to, and is directed only at, "qualified investors" (as defined in the UK version of the Prospectus Regulation, which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended from time to time)): (i) who have professional experience in matters relating to investments who fall within the definition of "investment professional" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (ii) who are high net worth companies, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order, and (iii) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons").  Any investment or investment activity to which this communication relates is available only to and will only be engaged in with such persons. This communication must not be acted on or relied on in any member state of the European Economic Area who are not Qualified Investors or in the United Kingdom by persons who are not relevant persons.

The merits or suitability of any securities must be independently determined by the recipient on the basis of its own investigation and evaluation of the proposed investment trust. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities.

This announcement may not be used in making any investment decision.  This announcement does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment.  This announcement does not constitute and may not be construed as an offer to sell, or an invitation to purchase or otherwise acquire, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this announcement should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this announcement or its completeness.

Nothing in this announcement constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient.

The information and opinions contained in this announcement are provided as at the date of the document and are subject to change and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability or duty (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, SDCL, Jefferies or any of their affiliates or by any of their respective officers, employees or agents in relation to it. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this announcement or on its completeness, accuracy or fairness. The document has not been approved by any competent regulatory or supervisory authority.

The Company has a limited trading history. Potential investors should be aware that any investment in the Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. The returns set out in this document are targets only. There is no guarantee that any returns set out in this document can be achieved or can be continued if achieved, nor that the Company will make any distributions whatsoever. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the returns set out in this announcement. Past performance cannot be relied on as a guide to future performance.

The information in this announcement may include forward-looking statements, which are based on the current expectations and projections about future events and in certain cases can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereon) or other variations thereon or comparable terminology. These forward-looking statements, as well as those included in any related materials, are subject to risks, uncertainties and assumptions about the Company, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions.  In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. 

Each of the Company, SDCL, Jefferies and their affiliates and their respective officers, employees and agents expressly disclaim any and all liability which may be based on this announcement and any errors therein or omissions therefrom.

No representation or warranty is given to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any.  Any views contained herein are based on financial, economic, market and other conditions prevailing as at the date of this announcement.  The information contained in this announcement will not be updated.

This announcement does not constitute or form part of, and should not be construed as, any offer or invitation or inducement for sale, transfer or subscription of, or any solicitation of any offer or invitation to buy or subscribe for or to underwrite, any share in the Company or to engage in investment activity (as defined by the Financial Services and Markets Act 2000) in any jurisdiction nor shall it, or any part of it, or the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction.  This announcement does not constitute a recommendation regarding any securities.

Prospective investors should take note that the Company's Shares may not be acquired by: (i) investors using assets of: (A) an "employee benefit plan" as defined in Section 3(3) of US Employee Retirement Income Security Act of 1974, as amended ("ERISA") that is subject to Title I of ERISA; (B) a "plan" as defined in Section 4975 of the US Internal Revenue Code of 1986, as amended (the "US Tax Code"), including an individual retirement account or other arrangement that is subject to Section 4975 of the US Tax Code; or (C) an entity which is deemed to hold the assets of any of the foregoing types of plans, accounts or arrangements that is subject to Title I of ERISA or Section 4975 of the US Tax Code; or (ii) a governmental, church, non-US or other employee benefit plan that is subject to any federal, state, local or non-US law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the US Tax Code.

Jefferies is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Jefferies is acting for the Company and no one else in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Jefferies or for affording advice in relation to any transaction or arrangement referred to in this announcement. This announcement does not constitute any form of financial opinion or recommendation on the part of Jefferies or any of its affiliates and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities. Regulated services with respect to EU27 countries and EU27 investors shall be undertaken by such of Jefferies International Limited's affiliates as Jefferies acting in good faith thinks fit and references to Jefferies International Limited shall be read as references to such affiliate(s).

In accordance with the UK version of the Packaged Retail and Insurance-based Investment Products Regulation (EU) No 1286/2014 which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended from time to time), the Key Information Document relating to the Company is available to investors at www.seeitplc.com.