Shares in NextEnergy Solar Fund Ltd (LSE:NESF, FRA:5NE) rose 5% to 50.13p on Wednesday after the company launched a formal sale process, with Jefferies saying a sale appears the best way forward.
The investment bank pointed to the valuation implied by Drax's offer for Bluefield Solar Income Fund as evidence of what solar assets are worth to trade buyers.
Jefferies also noted that a sale would allow NextEnergy to repay its preference shares, avoiding potential dilution to ordinary shareholders at a later stage.
The broker flagged several complications in sourcing bids.
The make-whole terms attached to the preference shares could be one obstacle.
So too could non-core parts of the portfolio, including the NextPower III fund and co-investment interests, the battery storage asset and the Italian assets.
More positively, Jefferies said the notice period under the management contract is only 12 months.
NextEnergy Solar Fund, which invests in operating solar power plants, announced the formal sale process on Wednesday, inviting expressions of interest for the entire issued share capital.
The board said it was not in active discussions with any potential offeror and had not received an approach as of the date of the announcement.
NextEnergy Capital, the fund's investment manager, supports the decision.
The move follows a strategic review whose results were announced in March and reflects a share price discount to net asset value that has persisted for several years.
