NextEnergy Solar Fund Ltd (LSE:NESF) (NESF) said it plans to sell off a 236MW portfolio of subsidy-free UK solar assets to expedite the next phase of its growth, including reducing gearing, buying back shares and investing in new assets.
The investment trust, which is focused on solar and battery storage said subsidy-free solar assets in its portfolio, said it has created additional value throughout construction and energisation that its board and investment adviser “do not consider to be truly reflected in the company's recent share price”.
So, as part of a "capital recycling programme", it has launched a sales process to find buyers for a portfolio of five subsidy-free assets – Hatherden, Whitecross, Staughton, The Grange and South Lowfield – over the coming months.
This, the investment company said, will boost net asset value by realising the value generated through these investments.
Once the divestments are completed, the company will retain two operational subsidy-free assets and said it “remains committed to its remaining subsidy-free solar pipeline”.
Proceeds from the asset sale are expected to be used to reduce the amount of drawn debt from its revolving credit facilities, with NESF having roughly £39mln undrawn and available for deployment as of 31 March 2023 out of a total of £205mln available. Cutting draw debt will strengthen free cash flows and further increase dividend cover, NESF said.
Proceeds will also create capacity for the company’s next phase of growth, it added, including into energy storage, where there are exclusivity agreements or owned project rights for most of a £500mln pipeline of UK and international assets solar and energy storage.
The board also confirmed its commitment to buy back shares if the share price continues to trade at a material discount to asset value (NAV) per share.