RE Royalties: Expanding in the US

An opinion piece by Fabian Lorenz (Apaton Finance GmbH).

RE Royalties also aims to capitalize on the exploding demand for electricity in the US. The Canadian company does not operate its own power stations, but instead finances developers of solar, wind, battery storage and other renewable energy projects, securing long-term, revenue-based royalties in return.

Most recently, there were reports of an expansion of the collaboration with Solaris Energy. RE Royalties is investing a further USD 1 million in royalties for a portfolio of 16 decentralized solar projects in the US, with a total capacity of around 15.24 MW. This brings the total investment in the Solaris portfolio to date to USD 4.8 million. At the same time, both companies have signed a non-binding letter of intent regarding a possible extension of their financing partnership to a total of up to USD 67.5 million. This includes, in addition to the USD 4.8 million already invested, a further USD 13.7 million for 13 solar projects totalling around 48 MW, as well as a potential USD 49 million for 83 development projects totalling around 142 MW. The terms of the Solaris royalties are adjusted in each financing round to ensure that RE Royalties achieves an agreed-upon minimum return for an initial 25-year period. Thereafter, payments continue for the remaining operational life of the projects.

At the same time, RE Royalties confirmed progress on the strategic review launched in March. Together with PwC, the Board is examining, amongst other things, a possible sale of the entire company, strategic partnerships, co-investments and new equity or debt financing. According to the company, discussions with various interested parties have already taken place and are continuing, although no conclusion can be reported at this stage.

The share price has been trading sideways since April this year. This is unlikely to last long. The market capitalization stands at under CAD 20 million.

Read the full article here.