In a significant move that underscores the growing global appetite for sustainable investments, Greencoat Renewables Plc (GRP), a prominent owner and operator of European renewable energy infrastructure assets, officially debuted its secondary listing on the JSE’s AltX on Monday. This strategic decision marks a new chapter for the Irish-based company, which maintains its primary listings on the Alternative Investment Market (AIM) in London and the Euronext Growth Market in Dublin.

This expansion onto the South African bourse is not just a procedural step; it’s a calculated manoeuvre designed to broaden GRP’s investor base, enhance the liquidity of its shares, and strategically position the company to capitalize on burgeoning growth opportunities within the rapidly evolving global energy transition. With a current market capitalization of approximately €850 million (R17.2 billion), GRP brings a compelling proposition to the JSE, offering local investors direct access to a diversified portfolio of established green energy assets across Europe.

Greencoat Renewables: A Deep Dive into Green Energy Leadership

Greencoat Renewables Plc stands as a testament to successful investment in sustainable infrastructure. The company prides itself on its robust and diversified Pan-European platform, comprising 40 renewable energy assets spread across five different countries. These assets collectively produce an impressive 1.5 gigawatts (GW) of clean energy, equivalent to powering hundreds of thousands of homes and significantly offsetting carbon emissions.

At its core, GRP’s portfolio primarily consists of mature wind farms and solar photovoltaic (PV) plants. These are not speculative ventures but operational assets that have been generating electricity for years. The company’s focus on high-quality and modern infrastructure means it invests in assets that are technologically efficient, well-maintained, and strategically located to maximise energy capture from natural resources. This disciplined approach ensures consistent performance and reliable output.

A key pillar of GRP’s financial stability lies in its long-term, European government-backed cashflows. This refers primarily to Power Purchase Agreements (PPAs) and Feed-in Tariffs (FiTs). PPAs are contracts between the energy producer (GRP) and a buyer (often a utility company or large corporation) for the sale of electricity at a pre-agreed price over an extended period, sometimes 15 to 20 years. Feed-in Tariffs, on the other hand, are government policies designed to accelerate investment in renewable energy technologies by offering long-term contracts for the electricity generated from renewable energy projects. These mechanisms provide a stable and predictable revenue stream, significantly de-risking the investment and making GRP’s financial outlook particularly attractive to income-focused investors. For instance, in 2024, GRP generated a net cash flow of €141 million, of which a substantial €74 million was distributed to investors as dividends, with the remainder wisely reinvested back into the business to foster further growth.

The operational philosophy at Greencoat is defined by what co-portfolio manager Paul O’Donnell refers to as “constant value-added asset management.” This isn’t just about passive ownership; it involves active strategies to optimise the performance of existing assets, extend their operational life, and identify opportunities for efficiency improvements. This meticulous approach ensures that every megawatt produced contributes optimally to the company’s financial health and its mission to deliver clean energy.

The Strategic Rationale for a JSE Listing: Bridging Continents with Green Capital

GRP’s decision to pursue a secondary listing on the Johannesburg Stock Exchange (JSE) is a multi-faceted strategic play. It reflects a deep understanding of global capital markets and a keen eye for opportunities.

One primary reason is the diversification of its shareholder base. For any large, publicly traded company, relying too heavily on a single market or region for capital can pose risks. By listing on the JSE’s AltX, GRP gains access to a new pool of institutional and retail investors, reducing its concentration risk and potentially increasing demand for its shares. This broader access to capital can support future acquisitions and expansion initiatives.

Furthermore, a secondary listing aims to enhance liquidity. Liquidity refers to how easily a company’s shares can be bought or sold without significantly affecting their price. Increased trading activity across multiple exchanges generally leads to higher liquidity, which benefits investors by allowing them to enter or exit positions more efficiently. For the company, better liquidity can make it more attractive to a wider range of investors, including large institutional funds that require the ability to trade significant volumes.

The decision to target the South African capital market is particularly insightful. Bertrand Gautier, co-portfolio manager at GRP, articulated this, stating, “We’re excited to be listing on South Africa’s preeminent bourse, which presents us with access to a deep capital market with sophisticated investors who are familiar with and attracted to GRP’s value proposition.” South Africa boasts a mature and well-regulated financial market with a considerable base of institutional investors – including pension funds, asset managers, and insurance companies – actively seeking diverse investment opportunities. These investors are increasingly focused on environmental, social, and governance (ESG) criteria, making GRP’s green energy focus highly appealing. Moreover, South African investors are uniquely familiar with the dynamics of large-scale infrastructure projects, given the country’s own significant investment in energy and infrastructure development. The ongoing energy challenges in South Africa, including persistent load shedding, have also heightened local investor awareness and interest in reliable and sustainable energy solutions.

The JSE’s excellent track record of supporting real asset companies also played a crucial role. The exchange has developed robust frameworks and investor appetite for infrastructure, property, and other tangible asset classes. This established environment provides a reassuring platform for a company like GRP, which deals in physical renewable energy assets, to attract and retain investment.

Europe’s Energy Transition: A Trillion-Euro Opportunity and AI’s Green Appetite

The macro-economic backdrop underpinning GRP’s growth strategy is the massive and undeniable shift towards sustainable energy in Europe. Paul O’Donnell highlighted this, stating, “The European energy transition will require €1.5 trillion in investment to 2030.” This isn’t merely an aspirational figure; it represents the monumental scale of transformation required to achieve the European Union’s ambitious climate targets, including significant reductions in greenhouse gas emissions and a greater reliance on renewable energy sources.

This transition entails several critical components:

• Decarbonisation of the Power Sector: Phasing out fossil fuel-based power generation (coal, gas) and replacing it with clean energy sources like wind, solar, and hydro.
• Grid Modernisation: Investing heavily in smart grids, energy storage solutions, and transmission infrastructure to handle the intermittent nature of renewables and ensure energy security across the continent.
• Electrification of Transport and Industry: Shifting from fossil fuels to electricity in sectors like transportation (electric vehicles) and industrial processes, further increasing demand for clean power.

A fascinating and increasingly powerful driver of this demand, as O’Donnell pointed out, comes from the tech sector: “When considered in the context of a material increase in demand for green electrons by data centres, which are fuelled by Big Tech and AI, the sector represents a unique and compelling long-term opportunity for investors.” Data centres are enormous consumers of electricity, and the rapid expansion of artificial intelligence (AI) technologies is set to dramatically escalate this demand. AI models require immense computational power, which in turn consumes vast amounts of energy. Major tech companies, under pressure from investors and consumers to meet stringent sustainability goals, are actively seeking to power their operations with 100% renewable energy. This creates a direct and growing corporate demand for “green electrons” that companies like GRP are uniquely positioned to supply, forming a powerful, symbiotic relationship between technological advancement and sustainable energy development. This convergence of big tech, AI, and green energy represents an unprecedented and enduring investment opportunity.

Investor Value Proposition: Predictable Income and Strategic Growth

Greencoat Renewables offers a compelling value proposition to investors, particularly those seeking stable income and exposure to the booming renewable energy sector. The company’s promise of “secure and predictable income” is rooted in the long-term, government-backed contracts (PPAs and FiTs) that underpin its asset portfolio, as discussed earlier. These contracts provide high visibility over future revenues, reducing the volatility typically associated with other equity investments.

GRP currently trades at a 9% Euro dividend yield. For South African investors, this translates into an attractive income stream, especially when considering the company’s dividend growth of 5.5% on a ZAR CAGR basis since its Initial Public Offering (IPO) in 2017. CAGR, or Compound Annual Growth Rate, provides a smoother, more accurate picture of average annual growth over a period, rather than simple annual percentage changes. A 5.5% ZAR CAGR on dividends since 2017 demonstrates consistent growth that has outpaced inflation in many periods, delivering real value to shareholders.

Diarmuid Kelly, GRP’s Chief Financial Officer, elaborated on this financial strategy: “We remain focused on delivering attractive risk-adjusted returns for shareholders through continued high cash generation and disciplined capital allocation. Our cashflows are proactively managed to provide a combination of security and opportunity which facilitates a progressive dividend that has grown 5.5% on a ZAR CAGR basis since IPO in 2017. In addition, cash generated over and above that required to service dividends is reinvested into the business to grow the net asset value. Our return profile is thus well aligned with long-term, income-focused investors.” This highlights a dual approach: providing steady income through dividends while simultaneously reinvesting surplus cash. This reinvestment strategy is crucial; by channeling profits back into acquiring new assets, enhancing existing ones, or reducing debt, the company aims to grow its Net Asset Value (NAV). A growing NAV per share means that the underlying value of the company’s assets is increasing, leading to potential capital appreciation for shareholders over time, beyond just the dividends received. This balanced approach caters to both income-seeking and growth-oriented investors looking for exposure to the tangible and essential infrastructure of renewable energy.

The Expertise Behind Greencoat Renewables: Schroders Greencoat

A significant factor contributing to GRP’s credibility and strong performance is its management by Schroders Greencoat, an experienced and specialised investment manager within the listed renewable energy infrastructure sector. Schroders Greencoat brings formidable expertise to the table, boasting over €16 billion in Assets Under Management (AUM) across more than 400 assets globally.

Their role as an “experienced and specialised investment manager” means they possess a deep understanding of the unique complexities and opportunities within the renewable energy market. This includes:

• Technical Expertise: Knowledge of different renewable energy technologies, from turbine efficiency to solar panel degradation.
• Market Insight: Understanding of energy markets, regulatory frameworks across various European countries, and long-term supply and demand trends.
• Financial Acumen: Proficiency in structuring deals, managing financial risks, and optimising capital allocation to maximise returns.
• Operational Management: Active oversight of the performance of each asset, ensuring they operate at peak efficiency and troubleshooting any issues promptly. This “constant value-added asset management focus,” as mentioned by Paul O’Donnell, involves continuous monitoring, maintenance, and strategic upgrades to enhance output and extend asset life.

The sheer scale of their AUM and the number of assets under their belt speak volumes about their capabilities. Managing a diverse portfolio of over 400 assets globally provides them with invaluable experience in identifying attractive investment opportunities, executing complex transactions, and navigating the operational challenges inherent in renewable energy infrastructure. This depth of expertise is a significant reassuring factor for potential investors, knowing their capital is managed by a team with a proven track record in this niche but crucial sector.

The Local Connection: Valeo Capital and the JSE’s Role

Bringing a foreign listing to a new market requires intricate local knowledge and expertise. This is where Valeo Capital plays a crucial role. As the South African corporate advisor and Sponsor, Valeo Capital has been instrumental in guiding GRP through the specific regulatory requirements and processes of the JSE’s AltX. Their responsibilities typically include ensuring compliance with listing rules, advising on market dynamics, and facilitating communication between the listed entity and local regulators and investors. Local expertise is indispensable for navigating cultural nuances, legal frameworks, and investor expectations within a new jurisdiction.

The JSE’s role in attracting listings like Greencoat Renewables is part of its broader strategy to remain a competitive and relevant exchange on the African continent and globally. By diversifying its offerings, the JSE provides its local investor base with exposure to international asset classes and growth sectors, which might otherwise be difficult to access. This also enhances the exchange’s profile, drawing more international capital and reinforcing Johannesburg’s position as a financial hub. The AltX, in particular, is designed to accommodate growing companies, making it an appropriate platform for GRP’s secondary listing.

Broader Implications: ESG and the Global Energy Transition

The listing of Greencoat Renewables on the JSE resonates far beyond the immediate financial implications for the company and its investors. It highlights several significant trends in the global economy:

• The Rise of ESG Investing: Environmental, Social, and Governance (ESG) factors are increasingly influencing investment decisions worldwide. Investors are not just looking for financial returns but also for companies that demonstrate a positive impact on the environment and society. Renewable energy assets, by their very nature, directly contribute to climate change mitigation and sustainable development, making them highly attractive to a growing cohort of ESG-conscious investors. GRP’s listing provides a tangible, large-scale opportunity for South African investors to align their portfolios with these values.
• South Africa’s Energy Context: While Greencoat Renewables operates in Europe, its listing on the JSE holds symbolic significance for South Africa. The country is grappling with its own acute energy crisis, characterized by an aging coal-fired power fleet and a pressing need to accelerate its own transition to renewable energy. While GRP won’t directly solve South Africa’s energy challenges, its presence on the JSE can foster greater awareness and confidence in renewable energy as a viable, profitable, and essential sector. It might also inspire local companies and policymakers to explore similar investment models and frameworks for their own green energy initiatives.
• Global Capital Flows for Green Transition: This listing exemplifies how global capital is increasingly flowing across borders to finance the energy transition. The sheer scale of investment required to decarbonise the global economy necessitates cross-border collaboration and diversified funding sources. A European company seeking capital in Africa to fund European green energy projects showcases the interconnectedness of global finance in addressing a universal challenge – climate change. It indicates a maturing market where clean energy assets are seen as reliable, long-term investments regardless of their geographical location, as long as robust regulatory and contractual frameworks are in place.

Conclusion: A Green Horizon for Investors and the Planet

Greencoat Renewables Plc’s secondary listing on the JSE’s AltX is a landmark event that signifies a powerful convergence of financial opportunity and environmental imperative. For Greencoat, it unlocks access to a sophisticated and growing investor base in South Africa, enhancing its capital-raising capabilities and strengthening its position for future growth within Europe’s vast energy transition market. For South African investors, it offers a compelling opportunity to gain exposure to a diversified portfolio of high-quality, income-generating renewable energy assets, backed by predictable, government-supported cashflows.

The mutual benefits are clear: Greencoat gains strategic capital and market diversification, while South African investors gain a reliable, green-focused investment avenue. This move also reinforces the JSE’s standing as a dynamic exchange, capable of attracting and facilitating investment in critical global sectors. As the world continues its urgent shift towards a greener, more sustainable future, innovative partnerships like this one between European green energy assets and African capital markets will be increasingly vital in achieving ambitious climate goals and securing long-term, attractive returns for investors who choose to be part of the solution. It’s a clear signal that investing in a sustainable future isn’t just about doing good; it’s about making sound financial decisions.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

10th June, 2025