SDCL Efficiency Income Trust to wind down after share price collapse

SDCL Efficiency Income Trust has announced plans to wind itself down. The decision comes after its shares hit a record low of 34½p on Tuesday, dropping by 11½p or 25 per cent in a single day. The trust will now focus on reducing its debt and preserving value for investors. It has already stopped making new investments, except for follow-on capital in existing assets. No fourth interim dividend will be paid for the last financial year, and future cash distributions have been suspended.

At the end of September, the trust’s gearing stood at 71.9 per cent of net asset value, exceeding its 65 per cent limit. It currently owes about £190 million under a revolving credit facility. The liquidation process could take several years to complete.

Saba Capital, an American hedge fund, holds a 20 per cent stake in the trust. Since late 2024, it has pushed for strategy changes and board overhauls across underperforming trusts. The trust will prioritise repaying its borrowings before considering any further payouts to shareholders. The wind-down marks a significant shift after its share price collapse. Investors will now wait to see how the liquidation unfolds over the coming years.