Drax: a key role to play in a low carbon future
Drax is a company that is truly “walking the walk” of clean energy transition: from pariah of coal-fired carbon emission, to messiah of bio-mass power generation and carbon capture and storage.
The Invesco UK Equities team’s investment process long ago identified the potential opportunity in radical plans to transform the Drax business. Subsequent detailed fundamental research involving modelling, meetings with the management and the Board, and analysis of complex ESG issues has supported the investment case, and valuations in our view look attractive.
In the competition for Capital – for a place in portfolios – we believe that Drax is able to offer:
- An attractive dividend yield, ahead of overall market yields
- Reasonable capital stability – even in our most adverse business scenario, the downside-risk to valuation is not in our view excessive
- An almost “free” option for potentially very substantial upside capital growth, in the event that an exciting opportunity to deliver one of the world’s first at-scale carbon negative electricity generation projects comes to full fruition.
As noted in our recent publication on the Energy sector “Oil Wells, that End Well”, we continue to invest in companies who each have important roles to play in energy transition. And Drax is one of them.
Investment risks
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The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Important information
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Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
This is marketing material and not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
For the most up to date information on our funds, please refer to the relevant fund and share class-specific Key Investor Information Documents, the Supplementary Information Document, the Annual or Interim Reports and the Prospectus, which are available using the contact details shown.
Issued by Invesco Asset Management Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority.
