Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Investment Companies
Foresight Solar Fund (FSFL) celebrated its 10-year anniversary of listing on the London Stock Exchange with decade-high cash distributions from assets of £120.4m in its FY23 results (year end 31 December). FY23 also saw FSFL’s divestment programme come to fruition with the sale of a 50% stake in its Spanish Lorca portfolio at a 21% premium to its holding value. The proceeds of this divestment, along with free cash, were used to pay down the fund’s variable rate debt via its revolving credit facility by £40m and to continue to deliver on the share buyback programme, with half of the £40m being deployed in 2023. FSFL released guidance of a 6% y-o-y increase in its dividend (33% dividend growth since IPO) for FY24 at 8p/share (FY23: 7.55p/share) with dividend cover of 1.5x (FY23: 1.6x). There is significant headroom in the dividend cover to operate further out, even in a falling power price environment.
Foresight Solar Fund |
Optimising capital allocation |
Investment trusts |
14 March 2024 |
Analysts
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foresight Solar Fund (FSFL) celebrated its 10-year anniversary of listing on the London Stock Exchange with decade-high cash distributions from assets of £120.4m in its FY23 results (year end 31 December). FY23 also saw FSFL’s divestment programme come to fruition with the sale of a 50% stake in its Spanish Lorca portfolio at a 21% premium to its holding value. The proceeds of this divestment, along with free cash, were used to pay down the fund’s variable rate debt via its revolving credit facility by £40m and to continue to deliver on the share buyback programme, with half of the £40m being deployed in 2023. FSFL released guidance of a 6% y-o-y increase in its dividend (33% dividend growth since IPO) for FY24 at 8p/share (FY23: 7.55p/share) with dividend cover of 1.5x (FY23: 1.6x). There is significant headroom in the dividend cover to operate further out, even in a falling power price environment.
FSFL generated a record amount (more than 1TWh) of renewable energy in FY23. However, this was 1.9% below budget due primarily to its Australian portfolio production, which was 9% below expectations because of unexpectedly high economic curtailment. Its Spanish portfolio was marginally (1.5%) below budget due to lower-than-expected irradiation, while its UK portfolio was 0.7% over budget for the year due to higher-than-expected irradiation in the UK.
2023 saw the start of FSFL’s buildout of a proprietary development pipeline that highlights the fund’s focus on total returns, a reliable yield and long-term NAV growth. The first investment in this pipeline was the acquisition of the rights to a 467MWp portfolio of development-stage solar projects in Spain. The first project is expected to reach the ready to build (RTB) stage in late 2024. Early-stage development can bring relatively high returns for de-risking early-stage assets with limited initial capital. FSFL is targeting 2–3GW across different geographies to provide a steady stream of RTB assets, with a significant number of these projects intended to be divested at higher multiples, potentially delivering gains and releasing cash for investments in new opportunities.
The sale of several large Renewables Obligation Certificate-backed solar portfolios in the UK provides a reliable benchmark for FSFL’s assets and what look like conservative management valuations. The latest sale of a UK solar asset indicates a value per megawatt roughly 15% above the valuation FSFL uses on its UK portfolio of £1.17m/MWh. This comes alongside the sale of two other UK solar portfolios in 2023, both at greater valuations than FSFL’s valuation per megawatt hour. We determine that there is a noticeable contrast between these private market transaction values, at premiums to holding values, compared to the market valuation of FSFL (23% discount to NAV). FSFL’s FY24 dividend target represents an 8.8% yield at the current share price with management forecasting 1.5x coverage.
|
|
Research: Investment Companies
BlackRock Latin American Investment Trust’s (BRLA’s) lead manager Sam Vecht and deputy manager Christoph Brinkmann remain optimistic about the prospects for the region. Interest rates are coming down as Latin American central banks have been more proactive than those in developed markets in raising interest rates to combat higher inflation, which should be supportive for economic growth and asset prices. Latin America has remained relatively isolated from global geopolitical conflict, enabling trade with both eastern and western nations. The region has been overlooked by global investors, which has led to very attractive valuations on both absolute and relative terms.