Foresight Solar Fund Limited (FSFL), part of London-based asset management company Foresight Group, has signed a £100 million debt acquisition deal with a group of banks aimed at financing the acquisition of additional operational solar PV plants in the U.K.
FSFL signed the agreement with the Royal Bank of Canada, the Royal Bank of Scotland and Santander.
The first asset to be purchased using the £100 million debt facility is the 37 MW Kencot, Oxfordshire, photovoltaic farm, which is currently under construction and once completed will be one of the U.K.'s largest operational PV park. The Kencot plant is expected to qualify for the 1.4 ROC rate under the U.K.'s Renewables Obligation Certificates (ROC) program, which provides a stable 20-year revenue stream.
Overall, in the coming twelve months, Foresight expects to double its U.K. operational capacity, which today has reached a 100 MW installed capacity.
The fund operator said the facility was expected to “be repaid through utilization of excess dividend cover, further equity issuance and/or refinancing with a long-term debt facility.” FSFL aims to deliver a target dividend of £0.06 per ordinary share, rising with retail price index (RPI) after the first year of the funds operation.
The £100 million debt facility was initially outlined about nine months ago, when Foresight announced its plans to launch an initial public offering on the London Stock Exchange with shares priced £1 each. The asset manager went on to raise £150 million pounds in October in the IPO for the FSFL fund focusing on solar power investments.
To date, the Jersey-registered FSFL has invested 88% of its £150 million IPO proceeds. A recent deal to purchase the 10.7 MW Hunter's Race solar PV project once it is completed will result in 100% of the company's net IPO proceeds being invested.
In May last year, two institutional investors a British pension fund and an insurance company had also invested £60 million in Foresight's index-linked listed solar bond.
Foresight's £100 million debt facility shows that the U.K. solar photovoltaic market remains very active and dynamic. However, should the group aim for its new assets to qualify under the country's Renewables Obligation Certificates subsidy scheme, it will need to hurry purchasing plants that become operational before April next year, when the government has proposed to replace the current ROC regime for plants larger than 5 MW with the less generous Contracts for Difference payments.
Foresight Group funds currently manage more than £650 million in 27 separate photovoltaic plants in the U.K., the United States, Italy and Spain.