Foresight Solar Fund - FSFL secures rights to development-stage pipeline
23/03/2023 07:00
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RNS Number : 9248T Foresight Solar Fund Limited 23 March 2023
23 March 2023
Foresight Solar Fund Limited
("Foresight Solar" or the "Company")
FSFL secures the rights to a 467MWp development-stage solar pipeline in Spain
Foresight Solar Fund Limited, a fund investing in a diversified portfolio of
ground-based solar and battery storage assets in the UK and internationally,
is pleased to announce it has secured a pipeline of development-stage solar
farms with a total potential capacity of 467MWp. The entire project rights
have been secured from Grupo Cuerva, a renewable energy company and
distribution network operator, and another Spanish developer.
This strategic investment - codenamed "Project Lynx" - is located across the
south and east of Spain and consists of the rights to six subsidy-free solar
development projects. Two of the sites have sought grid connections under the
existing application routes and one of those, totalling 57MWp, has already
secured grid access with the potential to reach ready-to-build status in 2024.
The remaining projects will apply for connections via the upcoming capacity
market auctions, which are estimated to take place over the next few years.
Foresight Group's knowledge of the Spanish market and its presence in the
country were instrumental in establishing the bilateral discussions that led
to this transaction. The Investment Manager's team in Madrid will oversee the
projects' evolution alongside the experienced developers responsible for
establishing them, who will continue the development under a services
agreement.
Development-stage projects are those that have secured land rights and have a
delivery plan but still require additional work to guarantee the necessary
permits to start construction. Under the structuring of this transaction, a
modest down payment has been made to the vendors at closing, with Foresight
Solar retaining preferential rights to increase the portfolio over time.
Full consideration for the assets is contingent on milestone achievements tied
to the projects securing grid connections and reaching ready-to-build status
over the next few years. Payments for the development rights are also
cross-collateralised, such that the initial outlay for any asset that fails to
progress may be offset from future milestone payments for successful ones.
This helps to protect the Company's risk adjusted returns regardless of the
total number of projects that are eventually successful in achieving planning
consent.
There is no guarantee that all projects will proceed, and, from an investment
planning perspective, the Company has taken a prudent view on the success rate
for the portfolio. If it outperforms the base case, Foresight Solar retains
the option to recycle capital via asset sales at the ready-to-build stage.
Commenting on the investment, Alexander Ohlsson, Chairman of Foresight Solar
Fund Limited, said: "Spain is an important market for the Company given the
government's commitment to significant deployment of solar to help achieve
ambitious decarbonisation targets. Alongside that, the country also enjoys
some of the highest irradiation levels in Europe.
"The Investment Manager has the expertise to take on these types of projects,
carefully pricing risk and capturing the increased financial upside for the
Company. This was demonstrated when our existing 125MW Spanish solar portfolio
was brought through to operations last year, resulting in approximately two
pence per share of NAV uplift in 2022. This acquisition now gives Foresight
Solar the opportunity to further deliver value for shareholders."
Commenting on the deal, Ross Driver, Managing Director at Foresight Group and
Co-Manager of Foresight Solar, said: "Our Madrid team has secured this
landmark transaction for Foresight Solar, and we are delighted to capitalise
on the recent change in investment policy to permit such investments. Securing
projects at this early stage allows the Company to capture the full benefit of
progressing assets through the value chain, where we can recognise NAV uplift
at both the ready-to-build and construction completion milestones, as well as
look to recycle capital along the way."
For further information, please contact:
Foresight Group
+44 (0)20 3911 2318
institutionalir@foresightgroup.eu
Matheus Fierro
Jefferies International Limited
+44 (0)20 7029 8000
Gaudi Le Roux
William Brown
Harry Randall
Citigate Dewe Rogerson
+44 (0)20 7638 9571
foresightsolar@citigatedewerogerson.com
Toby Moore
Laura Banks
Lucy Gibbs
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