UK Foresight Solar Fund to raise up to £100 million

The U.K.’s Foresight Solar Fund Limited (FSFL), part of the London-based asset management company Foresight Group, has announced plans to raise up to £100 million through an initial placing and offer for subscription of new ordinary shares.

Initial placing and offer proceeds will be used to complete the acquisition of two projects that the Group has already contracted to acquire. The two assets are the 37 MW Bournemouth solar power plant in Dorset, and the 37 MW Kencot, Oxfordshire, asset, both of which are now connected to the grid, according to FSFL.

Furthermore, FSFL’s board has announced its intention to create a placing program in relation to its new ordinary shares in order to fund further solar PV assets acquisitions. This, FSFL said, will provide its investment manager with the necessary flexibility to act as opportunities arise due to the growth of the U.K.’s solar market.

FSFL launched an initial public offering (IPO) on the London Stock Exchange last October, raising £150 million with the aim of acquiring a portfolio of eight U.K solar PV parks.

In May this year, FSFL also 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.

To date, FSFL has acquired, or agreed to acquire, subject only to the assets receiving Renewable Obligation Certificates (ROC) accreditation, nine operational assets with an aggregate value of approximately £239 million.

Key dates for FSFL’s financial products

Details about the initial placing, offer for subscription and placing program for new ordinary shares can be found here.

In short, the initial placing and offer price will be announced on October 13 and the application deadline is October 15 (11 am). Results of initial placing and offer will be announced on October 17.

Following the initial placing and offer, the FSFL will open its placing program on October 22. Under the program, FSFL intends to issue up to 200 million new shares (which includes new shares issued under the initial placing and offer) with September 24, 2015, being the last date for new shares to be issued.

Investments under the CfD scheme?

A crucial detail concerning FSFL’s investment plans is that based on the rules of its successful IPO last year, the company only acquires utility scale solar PV assets that are eligible to receive ROC accreditation.

The requirement is necessary in view of the ROC scheme’s stable 20-year revenue stream, according to Jamie Richards, partner and head of Infrastructure at Foresight Group. Questions have therefor emerged with regard to FSFL’s investment plans under the Contracts for Difference (CfD) scheme — the U.K.’s new subsidy program for solar PV plants larger than 5 MW — coming into force in April.

FSFL expects to continue to invest in ROC accredited solar PV projects larger than 5 MW after March 2015 on the secondary market, Richards told pv magazine. "The company would also expect to invest in aggregated portfolios of sub 5 MW assets that will continue to qualify for subsidy under the ROC accreditation," he added.

However, given that "the new CfD scheme will tend to favor larger scale assets, where economies of scale will apply, and because the company is the largest solar focused investment company with gross assets of some £250 million, it will be well-placed to bid and acquire such assets as they become available, Richards said, adding that the single asset cap of 30% of gross assets means the company could acquire single assets up to a value of around £75 million.

Richards commented that "the U.K. solar PV market is estimated to grow from the present 5 GW (at the end of July) to about 7 GW by the end of March 2015. This will see the solar market at roughly the same size as that for onshore wind, where funds have been able to acquire assets on the secondary market. We envisage the same dynamics as applying to the solar market."