Bluefield Solar Income Fund's (LSE:BSIF) proposed transition to an independent power producer (IPP) model would involve significant structural changes, RBC Capital Markets said, but more precise details on the pivot are still awaited.
The new strategy, which follows the collapse of a recent sale process, was unveiled alongside the company’s full-year results yesterday and would include internalising investment manager Bluefield Partners and removing investment trust status
At this stage, with no details confirmed, the analysts supposed that a dividend cut and a capital raise to fund photovoltaic and battery energy storage system (BESS) developments would both be likely.
RBC said: "This involves significant short-term pain for current income-focused investors, but would enable the funding of its current ~1.4GW solar and BESS development pipeline."
The analysts said the proposed strategy would remove both BSIF's fund gearing limits and its inability to raise equity below NAV, "providing much-needed capital" for the long-term benfits of the model to be enjoyed.
An immediate structural re-rating from turning into an 'op-co' is far from guaranteed, the RBC team believes, with BSIF trading in line with peers on a 2026 EV/EBITDA multiple of 8.7x.
An update on the feasibility of the move is expected within a month, the analysts said, with the potential level of equity issuance and the terms of internalising Bluefield Partners still up in the air.
Transformation would require approval from 75% of shareholders.