Foresight Solar (FSFL ) is running out of time to narrow its 30% discount, with further delays to asset sales that have stalled the return of cash to shareholders. 

In a quarterly update, the £613m portfolio of solar and battery storage assets, acknowledged that the sale of its Australian operational solar and development-stage battery energy storage system (BESS) assets ‘has taken longer than expected’. 

The fund warned ‘there may be further knock-on effects on the deal timeline as the investment manager balances an expeditious sale with maximising shareholder value’.

The trust announced the start of the Australia sale in September 2024, expecting it to close in ‘the first half’ of this year. This marked the second phase of Foresight Solar’s divestment programme after it sold a 50% stake in its Lorca portfolio of Spanish assets the year prior.  

Panmure Liberum analyst Shonil Chande said the ‘execution on asset sales will be key for narrowing the wide discount and freeing up reinvestment capital’. He added that ‘Foresight Solar’s portfolio valuation...looks optically reasonable in the context of where transactions have taken place’.

The trust also confirmed the progression of an additional 75 megawatts (MW) of operational solar projects to be sold. These further divestments plans were revealed in annual results last year, with a promise that proceeds would be ‘prioritised for the return of capital to investors.’ 

With not long to wait before a continuation vote mid-June, the trust is keeping investors happy in the meantime through its buyback programme, repurchasing 5.6m shares over the first quarter, and returning £4.2m to shareholders.

Despite that, the trust has remained on a stubbornly wide discount of 30%.

Sun fails to shine 

The update showed a slight decrease in the fund’s net asset value (NAV) of 1.1p per share over the first three months of the year – ending March at 111p – as FSFL continued to be hampered  by lower power price forecasts in both the UK and Spain.

Further reductions came from poor irradiation – or levels of sunshine – in the UK in January and February leading to lower-than-forecast electricity generation, as well as network outages in Spain and curtailment in Australia. 

The trust added that ‘due to the timing of cash receipts, the positive impact of strong sunshine in March, and its associated revenue, will be captured post-period’.

Last year, the trust’s NAV fell 5.2% as the UK recorded its lowest annual number of sun hours since its launch in 2013. Commenting on the disappointing results at the time, chair Alex Ohlsson took a positive view on the increase in ‘successful consolidation’ in the sector, adding ‘our intention is to explore all options available’.