Recent positive momentum accelerated in June, with the Fund recording a gain of 6.48% during the period. At the half-year stage, the strategy has returned 9.49% (C Accumulation GBP).

The vast majority of portfolio constituents contributed positively in June. UK-listed companies were notably strong, and among them Downing Renewables & Infrastructure recorded the greatest individual total return (+21.7%) following a takeover approach from its largest shareholder Bagnall Energy Ltd for 102.6016p in cash. While the uplift in the share price is very welcome, it remains a disappointment that the company’s board is supportive of a sale of the business at an approximate 7.46% discount to the latest (unaudited) NAV once adjusted for the Q1 dividend (of which the shares went “ex” in May). Momentum in the share price of Gresham House Energy Storage reasserted in June as the stock climbed 18.1% as the company finalised a third-party equity injection into one of its assets at NAV. This is a second positive catalyst for Gresham House Energy Storage following the recent takeover approach for its direct peer Harmony Energy Income and helps to validate the company’s valuation process. XPLR Infrastructure was the only notable detractor during the period, declining by 8.9% (GBP-adjusted).

The UK-listed renewables sector was given a boost as press reports suggested that the UK government is set to reject a move to a zonal pricing model following the Review of Electricity Market Arrangements (REMA). While the reports have not been corroborated by the government, if confirmed such a decision would remove a significant source of uncertainty for the renewable energy industry in general. It would be particularly beneficial to companies that own wind assets located in the north of England and in Scotland, where uncertainty over the future pricing environment (zonal pricing would reduce pricing in areas with high generation/lower demand) has undoubtedly provided a headwind to share prices. For developers, greater certainty should bolster the ability and willingness to deliver new renewable power generation capacity – indeed, Allocation Round 7, which will seek to procure sizeable renewable energy capacity for the UK, “opens” to bidders in August. It would seem reasonable to expect a final decision on zonal pricing to be announced beforehand. Finally, greater certainty could also help to reinvigorate the secondary market for transactions in portfolios of wind or solar assets, for example.

Foresight Group’s acquisition of Battery Energy Storage Solutions (BESS) owner Harmony Energy completed in June. Harmony was delisted and removed from the portfolio, with cash proceeds received by the Fund in early July. The strategy retains meaningful exposure to BESS assets via its exposure to UK-listed pureplay Gresham House Energy Storage, and via a number of other companies held in the Fund that have BESS assets (located globally) within the context of large, diversified energy infrastructure portfolios.

A number of positions were trimmed during the period. Innergex, which is subject to acquisition and therefore provides limited scope for upside before the transaction completes, was reduced most significantly. The Fund continued to build its position in recent addition Terna-Rete Elettrica.

Second quarter distribution announced

Income distributions for the second quarter of 2025, payable in July 2025, amounted to 1.5424p per C Income GBP unit and 1.3567p per I Income GBP unit. As noted in prior commentary, while it is anticipated that the Fund will continue to deliver attractive levels of income distributions in 2025, the absolute quantum is likely to be lower year-on-year in part owing to M&A activity within the portfolio. As at 30^th June, the Fund’s trailing 12-month yield was 6.06% for both the C Income GBP and I Income GBP units.