Foresight Solar Fund Ltd (LSE:FSFL) offers potential around M&A, said RBC Capital, as it updated estimates following 2024 results.
Analysts at the bank forecast a net asset value per share of 110.4p, roughly flat on last year.
FSFL said in its results that it expects to maintain around a 10% dividend yield, covered 1.3 times, but noted that total NAV return may decline due to limited reinvestment.
Australian assets, which make up around 9% of NAV, are now targeted for disposal in the third quarter of this year.
Following the launch of FSFL's strategic update and amidst growing takeover activity among alternative funds, RBC said it thinks investor focus is on the potential for M&A.
"However, there remains plenty of M&A targets among renewable funds, and we think a full disposal of the underperforming Australian assets remains an important catalyst in making FSFL's portfolio more attractive to any potential bidder.
"Furthermore, FSFL's strategic update is currently more focused on consolidation with a peer in the first instance, as opposed to a being acquired, despite the latter likely being a more material share price event."
RBC reiterated a ‘sector perform’ rating and reduced its price target to 95p per share from 100p.