Foresight Solar Fund has announced a debt acquisition facility worth £100 million which will enable the fund to purchase further solar farm assets.
The company reached 100MW of managed UK solar assets in April, having floated an IPO worth £150 million in October of last year. The 100MW milestone also meant the company had invested 88% of the IPO funds raised. The imminent connection of the 10.7MW Hunter’s Race solar farm will bring that figure up to 100%.
Hunter’s Race will qualify for the 1.4ROC rate under the UK government’s subsidy scheme. Foresight claims the latest £100 million announcement will allow the company to double its operational capacity over the next 12 months. Among the first uses of the debt acquisition facility will be to acquire a 37MW farm in Oxfordshire, which will be the largest solar PV plant in Britain to date, when completed.
Foresight announced that it is on track to deliver a target dividend of £0.06 per ordinary share rising with retail price index (RPI) after the first year of the fund’s operation.
News of the debt acquisition has been expected for a while. Jamie Richards, a partner at Foresight, told Solar Power Portal’s sister publication Solar Business Focus in March that the company intended to increase the scale of the fund “significantly”. Richards said the success of the IPO was testament to the growing maturity of solar power generation assets as an investment class.
“We are seeing increasing institutional appetite for Solar investment as institutions are made aware of the low volatility and index linked yields that can be achieved,” Richards said.
“The fact that we were able to refinance our portfolio of UK solar assets 10 months ago with the listing of the £60 million index linked Solar Bond on the London Stock Exchange, fully subscribed by two leading financial institutions was indicative that the sector had come of age as offering the risk return profile that appeals to institutions.”
Although it seems unlikely assets purchased by Foresight will be retrospectively affected, it remains to be seen what kind of impact the move to contracts for difference mechanism for large-scale solar development in the UK will have on the aforementioned growing popularity of solar, and renewable energy generation assets, as an investment class.