Thousands of small investors who piled into one of London’s best-known green investment vehicles are staring down the barrel of losses running well beyond 50 per cent, after the board of SDCL Efficiency Income Trust (SEIT) bowed to pressure from a New York activist and abandoned its rescue plan in favour of a managed wind-down.
The FTSE 250 trust, which has raised more than £1.1 billion from retail backers since its 2018 launch, confirmed today that it has shelved plans to convert itself into a conventional operating company and will instead begin selling off its portfolio of energy-efficiency assets.
SEIT becomes the latest London-listed trust to change course under the gaze of Saba Capital, the aggressive New York hedge fund run by Boaz Weinstein, which is understood to hold a stake of more than 10 per cent. Saba has built positions in dozens of British investment trusts over the past eighteen months, agitating for boards to be replaced and cash to be returned to shareholders.
For the army of private investors who subscribed to SEIT’s nine capital raisings between 2018 and 2022, the decision marks the bitter end of a story that once looked like a copper-bottomed route into the green transition. They were lured by an anticipated yield of 5 per cent or more at a time when base rates were on the floor, and placings were frequently several times oversubscribed. Their money went into projects ranging from rooftop solar arrays at Tesco supermarkets to electric-vehicle charging infrastructure and district heating schemes.
The trust’s fortunes reversed sharply once interest rates began their steep climb, and the market has grown increasingly sceptical about the values SEIT has placed on its unquoted holdings. The shares, which were issued at £1 or more, closed at 45p yesterday, a punishing 49 per cent discount to stated net asset value. If the portfolio is eventually liquidated anywhere close to recent market prices, the collective hit to shareholders could exceed £500 million.
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