Bluefield Solar Income (BSIF ) has gained funding flexibility through a strategic deal with GLIL Infrastructure – a partnership of UK pension funds – which will allow the trust to pay down its debt, while providing capital for its pipeline.

The £1.4bn income fund focused on solar energy signed a memorandum of understanding with GLIL, which has a £3bn portfolio of infrastructure assets.

The deal has three phases, the first sees the pair acquire a 247MW portfolio of assets which are located in 58 sites in southern and central England. Bluefield is investing £20m or 9%, with GLIL investing the remainder. The income trust will fund this through earnings from the last financial year, ending 30 June.

BSIF will also use £10m to pay down its company’s revolving credit facility (RCF), bringing the balance to £167m, with long amortising debt of £430m. Overall, the company has total outstanding debts of £597m or 41% of gross asset value.

In the second phase, GLIL has ‘provisionally agreed’ to acquire a 50% stake in one of Bluefield’s portfolios at a price ‘in line with the company’s current valuation’. The deal is expected to close in the first half of 2024, and the proceeds of this will be used to further reduce the RCF.

The final phase will be the duo funding Bluefield’s development pipeline of assets that are expected to connect to the grid over the next two to three years.

John Scott, chair of Bluefield Solar, said the ‘current market conditions’ have made it challenging for the trust to raise new capital, as it sits on a 16% discount. As a result, he and his board have been ‘evaluating how best to continue our development programme, while maximising value for our shareholders over the long term’.

Scott added the partnership ‘creates the opportunity for both parties to invest in the sizeable renewable energy pipeline’ and respond to shareholder feedback to reduce short-term debt.  

Peel Hunt analyst Markuz Jaffe said the partnership is ‘a very welcome development’ as it offers BSIF ‘significant funding flexibility’.

Shares were up 1.2% at 116p on Friday morning.