Gresham House Renewable Energy VCT 1 (GV10) has warned investors that its last remaining assets will likely be sold up to a quarter below their March valuation as market conditions remain very challenging.

In a stock exchange update, the £9.8m venture capital trust, which has been winding down its portfolio for three years, said the proceeds from selling its solar assets and micro wind assets were likely to be 20-25% below their valuation in March.

In its half-year results in September, the board said that while it had received several non-binding offers for the solar assets, these were below asset value as the higher interest rate environment meant investors’ return expectations were higher, compounded by falling power prices.

‘The age and relatively small size of the portfolio have proved an issue for some investors. The extant financing has also proved unattractive for others. Limited investor liquidity and the sheer range of investment opportunities also mean that prospective buyers with capital to deploy are being highly selective and/or opportunistic in pricing assets for sale,’ it said.

The net asset value of the portfolio was slashed from 55.7p per share to 46.1p, reflecting the payment of a dividend as well as the disposal of an asset alongside lower power price forecasts and inflation assumptions.

In the interims, Gill Nott, the company’s chair, apologised to shareholders for taking so long to sell a portfolio that began winding down in July 2021. The process of selling assets and returning cash to investors has been slowed down by technical issues with certain assets.

For example, the South Marston solar farm in Wiltshire sells its power to Honda, which is leaving the site and selling to a third party. The negotiations are proving complex and there is thus some uncertainty as to the contractual arrangements for the sale of power going forward.

The board decided to wind down the trust three years ago after several investors voted against continuation, while shareholders in its sister fund, the £10m Gresham House Renewable Energy VCT 2 (GV20), which is co-invested in 90% of the assets, voted against continuation.

The portfolio largely consists of ground-mounted solar assets, which make up 94.3% of the fund and had a valuation of £15.2m in March. Meanwhile, 5.7% is held in micro wind, which can be used to generate power at home and was valued at under £1m.

Morningstar data shows that since launch in January 2011, the VCT 1 has seen returns drop 10%, while the VCT 2’s have fallen 8%.

The discounted sale reflects a difficult time for the listed renewable infrastructure funds sector where shares on average trade 29% below net asset value. Many investment companies are under pressure to sell assets to repay debts, return capital to shareholders and validate valuations in their portfolios.

Last month NextEnergy Solar (NESF ) sold a 50-megawatt solar asset to a sister fund for £30.3m – a 21.5% premium to the September valuation. The sale marked the third of five potential transactions for the £400m investment company whose shares stand 30% below NAV. Analysts said this was a very slow pace and implied limited investor appetite for the assets. 

Gresham House Energy Storage (GRID ), the fund manager’s £289m listed battery fund, trails on a 54% discount as it endeavours to turn around its business after a challenging year.