With 70% of global energy being wasted and energy efficiency emerging as a critical pathway to net zero, our latest Vantage interview explores an often-overlooked investment opportunity. SDCL Energy Efficiency Income Trust (SEEIT) targets investments in energy efficiency projects that deliver cheaper, cleaner and more reliable energy. Currently trading at a 40% discount to NAV with a 12% dividend yield, this UK 250 company offers exposure to: 1) a £1.5bn portfolio of assets operating across 10 countries; 2) 50 commercial projects from electric vehicle charging to district energy; 3) long-term contracted revenues from creditworthy counterparties; and 4) growing policy support. In this interview, fund managers Tamsin Jordan and Ben Griffiths explain how SEEIT is positioned to capitalise on what the International Energy Agency identifies as essential for achieving 2030 emissions targets.

SDCL Energy Efficiency Income Trust (SEEIT) reported robust H125 results. Its net asset value (NAV) increased marginally to 90.6p (90.5p at 31 March 2024), demonstrating resilience and stability despite the challenging market conditions. NAV was positively affected by portfolio valuation changes, but offset by FX movements. SEEIT paid a dividend of 3.16p in the six-month period (31 March to 30 September), 1.1x covered by cash inflows. Management also stated that the company is on track to deliver its FY25 dividend target of 6.32p (while maintaining its fully covered status). Based on the current share price, SEEIT offers a c 12% dividend yield and trades at a significant discount to NAV of c 43%.

SDCL Energy Efficiency Income Trust’s (SEEIT’s) interim update (for the six months to 30 September 2024) has highlighted that its operational assets, on a consolidated basis, are performing in line with management’s expectations and that the portfolio is well positioned for growth. SEEIT is actively pursuing additional financing, co-investment and disposal opportunities to support the capital needs of Onyx and EVN, which are growing ahead of budget. Surplus capital will be used to pay down SEEIT’s revolving credit facility (RCF). Management believes SEEIT is on track to deliver its target dividend of 6.32p per share for FY25 (10% current yield), which is fully covered by net operational cash received from investments.