Shares of Glasgow-based Smart Metering Systems (SMS) rose almost 20% on Thursday after it announced the conditional sale of “a minority of the group’s meter assets” to funds managed by Equitix Investment Management Limited for £291 million in cash.
The business being sold is subsidiary Crail Meters Limited.
“The disposal will enable the implementation of an enhanced long-term, sustainable dividend payment policy and results in a significant reshaping of SMS’s capital structure,” said the Glasgow firm.
“As previously notified the group is announcing its FY2019 results on 17 March 2020 and can confirm FY2019 results continue to be in line with market expectations.”
Smart Metering Systems said it is now proposing a dividend “of 25p per share for FY2020, increasing at least in line with RPI p.a. until FY2024” and proposing a scrip alternative for up to 30% of dividend.
Smart Metering Systems CEO Alan Foy said: “This transaction realises considerable cash returns and demonstrates the substantial value of our smart meter portfolio.
“It also will enable us to enhance greatly shareholder value with significant and sustainable increase in dividends – underpinned by our asset-backed, inflation-linked, recurring revenue stream.
“With a strengthened balance sheet, we will also be in a much stronger position to invest in the sizeable UK smart meter rollout programme, which is central to the establishment of a decentralised and decarbonised energy system.”
Achal Bhuwania, deputy chief investment officer for Equitix, said: “We are very pleased to participate in the UK smart metering programme whilst creating a long-term partnership with SMS.
“This acquisition aligns with our business objectives of investing in the country’s sustainable energy transition initiatives, which we are excited to be part of.”