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Assets under management (AUM)
Assets under management (or AUM) is the total value of all investments that a company is currently managing and reflects the size and scale of the investment operations. In the case of Octopus Energy Generation, ORIT's Investment Manager, AUM is calculated as the Gross Asset Value of the investments, plus the capital committed to existing investments, but does not include the capital committed yet to be deployed.
Capital Growth
Capital growth shows how much the value of an investment has increased over time considering only the change in its price or market value.
Discount rate
A discount rate helps factor in the time value of money ans risk associated with a project. It is used to adjust future cash flows to their present value, taking into account the idea that money available now is worth more than the same amount in the future.
Discounted cash flow (DCF)
Discounted cash flow (DCF) consists of a financial valuation method used to determine the present value of expected future cash flows generated by an investment, project, or business. DCF takes into account the time value of money by applying a discount rate to future cash flows, reflecting the oppotunity cost and risk of investing in the project.
A dividend is a payment made to the fund's shareholders from the income generated by the fund's investments. It’s a way for investors to receive a portion of the profits earned by the fund's holdings.
Dividend cover
"Dividend cover" is a financial ratio that helps assess a company's ability to pay dividends to its shareholders. It is calculated by comparing the company's earnings (usually its profit after taxes) to the total dividends it plans to distribute. In simple terms, dividend cover tells you if and by how much a company's profits are sufficient to cover the dividend payments it intends to make.
Dividend yield
Dividend yield measures how much income an investor receives from owning a share in the fund, expressed as a percentage of the investment's price.
Gross Asset Value (GAV)
Gross Asset Value (GAV) is the total value of all the underlyig assets the fund owns before deducting any liabilities (i.e. debt). It represents the overall worth of the fund's assets at a specific point in time. GAV helps assess the scale and financial health of the fund. GAV is used to calculate performance related metrics such as the NAV (see definition) of the fund and total return.
Hedged / Hedging
"Hedged" is a term used in finance to describe a strategy or position taken by an investor or company to reduce or mitigate the risk of adverse price movements in an asset or investment (e.g. Interest Rates and/or FX). Hedging is a risk management technique designed to protect against potential losses and to limit exposure to unfavourable price fluctuations to create a more predictable financial outcome.
Income returns
Income return shows how much income has been earned from the investment, expressed as a percentage of the investment's initial value. It reflects the money received from dividends.
Initial Public Offering (IPO)
An IPO (Initial Public Offering) enables a private company to become publicly traded by selling its shares on a stock exchange for the first time. It allows the company to raise capital from the public and gives investors the opportunity to buy a stake in the company.
Internal Rate of Return (IRR)
IRR is a financial metric that calculates the annualised rate of return an investor can expect to receive from an investment over a specified holding period. It takes into account the timing and amount of cash flows (both positive and negative) generated and required by the investment. The IRR is also equal to the discount rate at which the net present value (NPV) of these cash flows equals zero. In simpler terms, it represents the rate at which an investment breaks even in terms of returns.
Levered IRR
Levered IRR is an IRR calculation that specifically takes into account the impact of debt (i.e. 'leverage') on an investment. It measures the rate of return considering both the investor's own equity investment and any borrowed funds (debt) used to finance the investment. Leverage is commonly used to amplify potential returns. Levered IRR is generally higher than the standard IRR for the same investment because it reflects the effect of using borrowed money to reduce the equity investment size. However, it's important to note that while leverage can boost potential returns, it also increases the level of risk and can lead to larger losses if the investment does not perform as expected.
Market capitalisation
Market capitalisation shows how much a company is worth in the stock market. It is calculated by multiplying the number of shares of a company by its current share price. It is a guide to the company's size and value relative to others..
NAV per share
Net Asset Value per share indicates the estimated value of each share in the fund. Investors can use this value to understand how much their investment is worth at a specific point in time. By comparing NAV per share over different periods, investors can track the fund's performance. Regular reporting of NAV per share ensures transparency and accountability to investors.
Net Asset Value (NAV)
Net Asset Value (NAV) is the total value of all the assets the fund owns minus any debt. It represents the estimated worth of the fund at a specific point in time and is used to gauge its financial health and performance. By comparing the NAV at different points in time, investors can assess how well the fund's investments have performed and calculate the fund's investment returns over specific periods. An increase in the fund's NAV suggests that the value of its investments has grown, indicating positive performance. Regular reporting of NAV ensures transparency and accountability to investors.
Ongoing Charges Ratio (OCR) / Total Expense Ratio (TER)
The Ongoing Charges Ratio (OCR), also known as the Total Expense Ratio (TCR), is a financial metric expressing the total annual costs associated with managing and operating an investment fund as a percentage of the fund's average net assets. This ratio encompasses various expenses, including management fees, administrative costs, and other operational charges. Investors use the the OCR to evaluate the overall cost efficiency of a fund, with lower ratios generally indicating more cost-effective investment options.
Ordinary Share
An ordinary share, also known as common share, is a way to own a portion of a company. Owning an ordinary share gives the right to receive a portion of the company's profits as dividends. Owning a certain number of shares accounting for a certain percentage of the company will usually provide the right to vote on certain company decisions.
Price return
Price return refers to the change in the price of an investment or asset over a specified period of time. It measures the percentage increase or decrease in the asset's price without taking into account other factors, such as dividends, interest, or other income generated by the asset. Price return is often used as a simple way to gauge the capital appreciation or depreciation of an investment.
Revolving Credit Facility (RCF)
A Revolving Credit Facility is a financial arrangement between a borrower and a lending institution that provides the borrower with ongoing access to a predetermined line of credit. Unlike a traditional term loan, a RCF allows the borrower to borrow, repay, and re-borrow funds within the specified credit limit over an agreed-upon period. These facilities are commonly used for managing working capital, addressing short-term financial needs, and providing flexibility in handling fluctuations in cash flow.
Total shareholder return
Total shareholder return shows the overall change in value of an investment including both price changes and dividends received. It gives a complete picture of how well an investment has performed.
Uplift to NAV
Uplift to NAV refers to an increase in the reported or calculated NAV of a fund's investments. This increase can occur for various reasons, but typically represents the appreciatios in the value of the fund's portfolio of assets. The uplift to NAV can result from factors such as capital gains on investments, improved performance of portfolio companies, or revaluation of assets.