Greencoat UK Wind capacity passes 2GW but still "has to be patient"
London, UK
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December 12, 2023 03:32 AM Eastern Standard Time
Greencoat UK Wind PLC (LSE:UKW) Investment co-Manager Stephen Lilly speaks to Thomas Warner from Proactive after the company announced it has completed the acquisition of a 49.9% interest in Kype Muir Extension wind farm from Banks Renewables.
Lilly provides more detail about this latest step in a long-term deal and says it has propelled Greencoat's capacity to over two gigawatts. Lilly also addresses Greencoat's cautious capital allocation strategy, acknowledging the challenges in raising equity and the importance of judicious investment decisions.
Despite opportunities for expansion, current market conditions limit their ability to acquire new assets. The company has prioritised shareholder value through strategies like buybacks and dividend increases, with the recent dividend being raised to 10 pence.
Furthermore, Lilly expresses frustration over the market's perceived undervaluation of Greencoat's return on investment. He stressed the significance of returns over yields, especially in a rising interest rate environment. Lilly believes the market has not fully appreciated the combined value of Greencoat's dividends and reinvestments but says Greencoat UK Wind is "well placed... so we're not unduly worried - we just have to be patient."
The interview also touched on personnel changes within Greencoat, specifically the transition of Laurence Fumagalli, a long-time colleague of Lilly. Matt Ridley, a familiar face in the UK wind sector and current Head of Private Markets at Schroders Greencoat, is set to succeed Fumagalli, ensuring continuity in the company's leadership.
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