Gresham House Energy Storage Fund - Improving prospects suggest discount is overdone

At the recent capital markets day, Gresham House Energy Storage Fund (GRID) detailed positive developments in H224, including growing capacity and rising revenues. It also revealed a three-year plan to achieve further growth and triple earnings, from an estimated £45-55m in 2025, to £150m in 2027. Funding is expected to come from a new project finance style arrangement based on contracted revenues. Subject to the successful conclusion of related refinancing, expected in Q125, the company plans to reinstate fully covered dividend payments from Q325. GRID is also negotiating an equity investment in one of its sites. This deal would potentially serve to confirm GRID's valuation methodology, giving investors confidence that the current NAV is a realistic estimate of its true worth. GRID's share price is currently at a significant, historically wide discount to NAV, but this deal, combined with other positive recent developments and GRID's plans for further improvements in capacity and revenues, suggests the discount is excessive and likely to narrow significantly as the company's plans are rolled out (see chart below).

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