Shareholders in the £82.7m (€102.9m) BlackRock New Energy Trust plc, the London-listed alternative energy vehicle run by investment giant BlackRock, are being offered a “cash exit” amid disappointing investment returns.
The fund was launched in October 2000 with a remit to generate long term capital growth by investing globally in companies which have a significant focus on alternative energy or energy technology.
But indifferent returns, market headwinds caused by uncertainty over government support for the sector, and the ongoing Eurozone crisis have proved problematic.
“The Board has for some time been concerned that the investment returns generated by the company have been disappointing and the discount at which the Company’s shares trade is too wide,” said trust chairman John Roberts.
He said shareholders would be given the opportunity to elect to receive an amount per share in cash of NAV [net asset value], less costs shortly after the trust’s annual meeting in 2014. The news emerged in the trust’s latest half-year report, he said, would give the investment management team time to “position the portfolio” to benefit from any recovery in the sector while safeguarding shareholders’ interests.
In relation to the change, an amendment to the trust’s articles of association is being proposed. The decision will be put to the vote at a general meeting on July 25.
The trust’s net asset value (NAV) fell by 2% in the six months to the end of April while the MSCI World Developed Markets Index rose by 5.7%. At the same time, the WilderHill New Energy Global Innovation Index was down 15% over the same period.
Since the end of April, the trust’s NAV has decreased by 5.4% and the share price has fallen by 0.8%.
“Given the continued headwinds facing the global economy and subsequent pressures on government budgets, we see little immediate respite for renewable energy technology providers and maintain limited exposure to the sub-sector,” said fund managers Poppy Allonby and Robin Batchelor.
A profitable move into natural gas – which now accounts for 11% of the portfolio – has seen the share of renewable energy technology companies held fall to less than 6%.