Edison issues update on Premier Miton Global
Source: RNS
London, UK, 1 September 2021
Edison issues update on Premier Miton Global Renewables Trust (PMGR)
Premier Miton Global Renewables Trust (PMGR) is arguably unique among UK investment companies for its broad global focus on renewable energy securities, aiming for both income (current yield c 5.5%) and capital growth. Fund manager James Smith believes that renewable infrastructure operators, in which the trust invests, are likely to greatly benefit from a sustainable potential upward shift in power prices. He views this as driven primarily by increasing demand for electricity as the world transitions to cleaner sources of energy. The trust changed its mandate in late 2020, having shifted in recent years towards renewable energy stocks from its previous wider focus on utilities, water and energy companies. Given that most closed-ended renewable peers trade at a premium, a narrowing of PMGR's discount over time could present an opportunity for investors.
Rising commodity prices and higher CO2 emission costs have led to higher power prices. Coupled with potential increase in electricity consumption, this should lead to higher demand for renewably generated electricity and increase expected investment returns on renewables. We agree with the manager that if power prices continue to climb into Q421, the likelihood of a scenario of higher power prices over the long term increases. If this scenario materialises, PMGR will continue to perform strongly. Its one-year performance (35.0% NAV TR versus 17.2% for peers to end-July 2021) has already benefited considerably from the strong recovery in renewable energy stocks bought during the March 2020 sell-off. While the dividend per share has come down by 3.2p, this was more than compensated for by the reduction in finance costs of c 3.6p, following the refinancing of zero dividend preference shares or ZDPs (see our initiation note for details).
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