RE Royalties: Small Valuation, Significant Financing Effect

An opinion piece by Stefan Bode (Apaton Finance GmbH).

The global power market is entering a new investment phase.Electrification, data centres, and AI are driving demand for reliable capacity, while in the US, approximately 86 GW of new power plant capacity is expected to come online by 2026. Of this, 51% will come from solar, 28% from battery storage and 14% from wind – meaning that 93% in total will come from technologies where specialized capital providers can find particularly attractive entry points. This is where RE Royalties (WKN: A2PN0F | ISIN: CA75527Q1081 | Ticker: Y2V) comes in: The company provides financing to project developers and, in return, secures long-term, revenue-based royalty payments without assuming the full risks of project development and operation.

The operational substance of this model is now evident. According to the company, RE Royalties has invested more than CAD 80 million since its founding and built a portfolio of more than 130 energy projects across several regions. The return on capital employed to date stands at over 19%, which appears high in the infrastructure and financing sectors but also reflects the greater complexity of smaller, specialized transactions. Added to this is a dividend of CAD 0.04 per share, which stands out significantly at the current valuation level of CAD 0.37.

Of particular importance at present is the expanded partnership with Solaris Energy. In early August, RE Royalties increased its existing investment by an additional USD 1 million to a total of USD 4.8 million; at the same time, it signed a letter of intent for additional financing of up to USD 62.7 million. Together, the potential volume would total USD 67.5 million and would encompass 16 already-financed facilities as well as a prospective 96 additional solar projects totalling approximately 190 MW. The agreed-upon cash flows are structured for a minimum of 25 years and continue thereafter for the remaining useful life of the plants, increasing the visibility of future cash flows—provided the project pipeline is converted into binding agreements.

So far, this potential has been reflected only to a limited extent in the stock market. A market valuation of only about CAD 17 million contrasts with an established portfolio, recurring revenues, and additional growth opportunities. Management therefore launched a strategic review in March 2026 and retained PwC Corporate Finance as an advisor; the review is examining partnerships, co-investments, financing optimizations, and, in extreme cases, even a sale of the company. At the same time, the company points to approximately CAD 20 million in short-term letters of intent, as well as an additional roughly CAD 200 million in potential investments currently under review. The bottom line is that RE Royalties remains a speculative small-cap stock whose investment thesis is based less on short-term euphoria than on the scalable monetization of the global expansion of renewable energy.

Read the full article here.