Edison Investment Research Highlights Foresight Solar Fund's Strategic Capital Allocation Achievements

On March 14, 2024, Edison Investment Research issued a flash note on the Foresight Solar Fund (FSFL), celebrating its a decade of successful operations and strategic capital allocation. Marking its 10-year listing milestone on the London Stock Exchange, FSFL reported a record cash distribution of £120.4m for the fiscal year 2023. This year also witnessed the successful divestment of a 50% share in FSFL's Spanish Lorca portfolio, fetching a 21% premium over its holding value. The proceeds from this sale, combined with additional free cash, were allocated towards reducing the fund's variable rate debt by £40m and supporting the ongoing share buyback program.

FSFL announced a 6% year-over-year increase in its dividend for FY24, reflecting a significant 33% growth since its IPO. The dividend, set at 8p/share for FY24, up from 7.55p/share in FY23, comes with a coverage ratio of 1.5x, suggesting ample room for sustainable payouts even amid declining power prices. Furthermore, recent sales of FSFL's UK-based Renewables Obligation Certificate-backed solar assets have demonstrated a valuation premium compared to the fund's internal assessments, underscoring conservative management practices and the potential undervaluation of FSFL's market price relative to its net asset value (NAV). FSFL's strategic initiatives and conservative valuation approach positions it for continued success and investor appeal in the renewable energy sector.