REG - Foresight Solar Fund - Trading & strategic option considerations updates

Foresight Solar FundAnnouncement

21/05/2025 07:00

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RNS Number : 4915J  Foresight Solar Fund Limited  21 May 2025

21 May 2025

 

Foresight Solar Fund Limited

("Foresight Solar", "FSFL" or the "Company")

 

Trading and strategic option considerations updates

 

Foresight Solar, the fund investing in solar and battery storage assets to
build income and growth, announces its global portfolio performance to 30
April 2025 following the Q1 2025 Net Asset Value update earlier this month.

 

Electricity production in the UK was 9.4% above budget, reflecting strong
irradiation in March and April. Despite limited solar resource at the start of
the year and prolonged network outages at several large sites, the portfolio
in the Company's main market performed well in the two subsequent months to
deliver this outperformance. Excluding network outages, generation was 12.4%
higher than expected.

 

In Spain, grid outages added to poor weather conditions, resulting in
production 11.7% below forecasts. Lower irradiation also proved an issue in
Australia, where higher-than-expected curtailment combined to stifle
production, which was 11.1% below expectations. Overall, generation for the
global portfolio was 0.3% above budget to 30 April 2025 and is tracking ahead
of forecasts on projections for the full year. Excluding network outages,
global production was 1.9% higher than expected.

 

The investment manager continues to implement the Company's active hedging
strategy to secure advantageous prices, ensure income visibility and support
dividend cover. Price hedges at levels accretive to dividend cover, including
forward fixes and fixed volume financial derivatives, were agreed, bringing
the average hedged price for the UK portfolio to £85.48/MWh in 2025,
£82.50/MWh in 2026 and £79.80/MWh in 2027. Total contracted global revenues
have increased to 88% for calendar year 2025, 71% for 2026, and 62% for 2027.
This approach provides confidence in the 1.3x dividend cover target for this
year.

 

Divestment update

The sale of the Australian portfolio continues. Technical advisors are now due
to finalise the necessary forecasting assessments to support bidder due
diligence, a key consideration for the parties that have already signed up to
evaluate the portfolio. Given the delays to the process, the Company currently
believes targeting a deal before the end of the year is more realistic.

 

Elsewhere, in the process to divest of the additional 75MW+ of operational
solar projects, the investment manager has appointed advisors and remains on
track for the projects to be brought to market before the end of June, as
previously announced.

 

Capital allocation

The board and the investment manager have continued proactive efforts to prove
valuations, generate cash and return capital to shareholders. Despite these
actions, prevailing macroeconomic and market conditions mean share price
discounts in relation to net asset values in the sector remain - and Foresight
Solar is no exception. FSFL shares currently offer an attractive risk-adjusted
return, and, as the £50 million buyback programme nears completion, the
directors will continue to review the total allocation.

 

Strategic option considerations

In its recent full year results announcement on 20 March 2025, the board of
Foresight Solar highlighted the strategic challenges facing both the Company
and the wider listed renewables sector, and that its intention is to explore
all options available to provide the best outcome for the majority of its
shareholders in an efficient and effective manner. The board further cited its
view that consolidation is likely to be a major feature in the sector in the
year ahead and that the directors are fully aware of the benefits that
successful consolidation can deliver to shareholders, and this forms a
critical part of the ongoing strategic considerations.

 

It is against this backdrop that the board evaluated various opportunities
which culminated in a formal proposal which the FSFL board was unable to
ultimately advance, and those discussions were terminated. The board will
continue to evaluate all potential options that it believes will maximise
value for shareholders.

 

Alex Ohlsson, Chair of Foresight Solar, said: "Foresight Solar's portfolio has
been generating clean electricity, and income investors can rely on, for more
than a decade. We're confident our operational projects, combined with our
active power price hedging strategy, will continue to generate reliable cash
flow to support our dividend payments, delivering on the income aspect of our
investment objective - especially as negative power prices become more
prevalent.

 

"On the growth front, we expect our proprietary development pipeline to start
bearing fruit this year, with the first project in the Cuerva solar pipeline
reaching ready-to-build status in Spain and results from grid capacity awards
of 400MWp of applications from the Chelion BESS partnership to be announced in
the next few months. We're searching for projects in the UK that can enhance
the opportunities our proprietary development pipeline already offers in
Spain.

 

"The directors were pleased to see increased secondary liquidity in the
Company's stock over the last several weeks, allowing investors that believe
in Foresight Solar's strategy to increase their positions and for new ones to
come onto the shareholder register.

 

"The generalised disposal of assets among renewable infrastructure investment
trusts to return capital to shareholders will result in a smaller sector with
fewer participants. As previously outlined, the Board believes consolidation
will be a major feature in the year ahead to create larger, more liquid
vehicles that continue to provide investors with exposure to an appealing
asset class. The directors are fully aware of the benefits that successful
consolidation can deliver and have made a formal proposal that did not
advance. We will continue to evaluate all options with the potential to
maximise value for shareholders."

 

For more information, follow Foresight Solar on LinkedIn
(https://www.linkedin.com/showcase/foresight-solar/) or contact:

 

 Foresight Group                                                 +44 (0)20 3911 2318

 Matheus Fierro

 (fsflir@foresightgroup.eu (mailto:fsflir@foresightgroup.eu) )

 Jefferies International Limited                                 +44 (0)20 7029 8000

 Gaudi Le Roux

 Harry Randall

 Singer Capital Markets                                          +44 (0)20 7496 3000

 Alaina Wong

 Sodali & Co                                                     +44 (0)20 7250 1446

 Gilly Lock

 Madeleine Gordon-Foxwell

 JTC                                                             +44 (0) 1534 700 000

 Hilary Jones

 

LEI: 213800VO4O83JVSSOX33

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