12% fixed preferential return on VIC1 and SA1 is high but not that unexpected given they are providing 100% of the funding. In 2021 Unlevered IRR for those projects was 14% and 15%. However energy prices have gone up by a lot as have tip fees, but then again so has construction costs. So margins for DEL will likely be thin on those projects. That said looking ahead QLD1 had and Unlevered IRR of 17% and the Brickworks NSW builds were looking at 20%+. The fact Palisade is interested in locking down those project too is a great sign.
Palisade looks like a good investor choice for DEL. So long as DEL stays on track I can see them holding the shares they pick up from the conversion note. From their website:
"Palisade Impact was established in 2021 and is focused on unlisted investments that intentionally target solutions to environmental and social challenges while delivering strong risk-adjusted returns. Palisade Impact provides practical solutions to these issues, by investing in next generation infrastructure and infrastructure-like assets and businesses that provide essential services, supporting the future economy.
Palisade Impact takes a cross-sector approach to driving the race to zero: zero emissions, zero waste and zero inequality. These themes, together with changing technology and policy, provide a large opportunity to invest in a greener, smarter, more equitable, connected infrastructure of the future.
Palisade Impact is majority owned by the executive team, with 2% of the profits of the manager also being paid to a charitable foundation and a leading impact industry body, enabling dedicated funding to go towards charitable causes, advocacy and the growth of the impact industry.
The platform builds on Palisade’s strong ESG capabilities and its target of achieving net zero greenhouse gas emissions by 2030. It also leverages Palisade’s active management and development expertise in the waste management, digital infrastructure and renewable energy industries."
All in all its great to see things will be moving forward. Giddy up!
DEL Price at posting:
6.5¢ Sentiment: Buy Disclosure: Held
