The pain for backers of a green energy investment trust has deepened after the one-time stock market favourite axed its dividend and pressed ahead with plans to wind itself down.
Shares in SDCL Efficiency Income Trust fell by 11½p, or 25 per cent, to a record low of 34½p on Tuesday after the trust said it would not pay a fourth interim dividend for the last financial year and would suspend future cash distributions.
The move was disclosed alongside the trust’s blueprint for liquidating itself. It warned that it would concentrate on cutting debt and “preserving value” before returning any further cash to investors, in a wind-down that could run for years.
It is a further blow to the green vehicle’s beleaguered backers, who are already sitting on heavy losses and now face wiping out as much as half their money. It also comes after the trust fell into the sights of Saba Capital, the American hedge fund that has been shaking up the usually sleepy world of investment trusts. For readers weighing up the sector, our explainer on how investment trusts have changed the face of UK finance sets out how these vehicles are meant to work, and where the risks lie.
Saba has campaigned aggressively at a string of underperforming trusts for strategy changes and board overhauls since late 2024. With SDCL Efficiency Income Trust, known as Seit, the New York-based fund is understood to have been among the shareholders that opposed an alternative proposal under which the company would have carried on in a different guise. According to the Association of Investment Companies, the industry body, Saba has built positions across dozens of London-listed trusts, pressing boards to hand cash back to shareholders.
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