Bluefield Solar Income (BSIF ) has formally hoisted the ‘for sale’ sign after shareholders snubbed its plan to internalise management and ditch its trust status.

The board of the £1.2bn portfolio of UK solar assets has initiated a strategic review and ‘formal sale process’ after failing to gain shareholder support for a move to an ‘integrated business model’. The shares jumped 5.4% to 76p on the news.

As part of the move, the fund would have merged with its manager Bluefield Group and integrated with the latter’s 140-person platform covering the development to operation of solar assets. The plan would have seen BSIF shed its trust status and reassess its dividend.

However, the plan has not even made it to the voting stage as BSIF said engagement with shareholders made it clear that ‘such a transition is unlikely to be the preferred strategic direction of shareholders as a whole’.

The board, which is chaired by Michael Gibbons, said support for the existing model remained but ‘a majority of shareholders expressed a clear preference for alternative value-maximising options, such as the potential sale of the company or its assets’.

BSIF is no doubt hoping its generation of 800,000 megawatts of clean energy – enough to power 300,000 homes – and its 1.4 gigawatt development pipeline, will catch the eye of a bidder.

Alongside its ‘robust dividend coverage and proven record in asset optimisation’, the fund said it is well-positioned under its existing model to deliver ongoing returns.

Over the past year, the net asset value (NAV) total return has slipped 0.6%, ahead of the 1.3% fall in the average Renewable Energy Infrastructure trust. Its share price, however, has tumbled 23%, more than doubling the 10.9% drop in the average peer’s share price.

The board said that despite the fund’s strengths, there were ‘challenges’ in the renewable space, and BSIF has traded at a persistent discount for over three years, with the current discount sitting at a hefty 37.3%.

The steep discount has starved the fund − and the sector more generally − of cash, constraining growth, and potentially forcing the fund to pay its dividend out of capital, therefore eating into the portfolio.

BSIF said this had left it ‘unable to fully benefit from its platform, proprietary pipeline and growth potential’.

It is not the first time BSIF has considered a sale and confirmed a private offer was discussed without resulting in a transaction.

However, it did ‘yield valuable insights into market perceptions of BSIF’s strategic positioning and potential’, with bidders preferring ‘integrated platforms that combine operational assets with the investment adviser’s platform and development expertise’.

This means that Bluefield Group is supporting the sale of its business alongside the BSIF portfolio and development pipeline in order to ‘optimise the potential value of a transaction and open the sale process up to the widest possible pool of potential acquirers’.

Winterflood analyst Ashley Thomas said a sale of the portfolio was the ‘right conclusion’ although the timing was ‘unfortunate’ given the UK government has recently announced a review of the inflation indexation of renewable obligation certificates (ROCs) and feed-in tariffs (FiTs) in favour of the consumer.

‘A sale process is likely to yield greater value than the other options given there are likely to be buyers,’ said Thomas, highlighting Renewables Infrastructure (TRIG ) and Foresight Solar (FSFL ) as potential buyers alongside large utility companies.