Ross Driver recently presented Foresight Solar’s total shareholder return (TSR) strategy at the Stifel Infra & Renewables Seminar. He explained how it’s an “and” approach, with FSFL targeting an element of net asset value (NAV) growth on top of the fund’s sustainable, progressive dividend policy.

With the operational portfolio reliably producing electricity and generating cash, the opportunity will come from building out the existing c.500MW pipeline to up to 3GW of development and ready-to-build-stage projects that are able to provide optionality, facilitate capital recycling and drive growth.

 

Changing macro environment has direct read across to real assets

Rapid rise in yields has eroded the spread in return offered by renewables

 

Negative correlation between surging gilt yields and investment company share prices

 

Foresight Solar Fund: Snapshot as at Q3 2023

Total Return focus viewed through a combination of fund actions 

 

Financial outlook:

FY dividend target of 7.55pps on track

• ~7.9% forward dividend yield
• 25% increase since IPO

1.5x target net dividend cover until at least 2025

 

Capital allocation

• c.200MW divestment programme: proceeds for reducing debt and returns-accretive investments
• Sale of 50% stake in the 99MW Spanish Lorca portfolio at 21% premium to holding value
• First development-stage investment: 467MWp pipeline of solar projects in Spain
• Started paying down RCF from extra cash
• Expanded share buyback programme allocation to up to £40m

 

FSFL approach to capital allocation is centred on income AND growth

Strategy involves prudence, focus on return accretion and optionality

 

Case study: Lorca construction, optimisation and partial exit provides multiple uplifts

Demonstrable track record of bringing assets through construction is key

 

Future growth: Building a strong, diversified pipeline across multiple markets

UK and Europe provide significant opportunities in solar PV and BESS