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Foresight Solar Fund Ltd on Thursday expressed disappointment over its declining valuation, as it warned of potential cuts to net asset value from tax charges and legislative changes. The Guernsey-registered investment fund targets environmental infrastructure, with assets in the UK and Europe. Its shares fell 6.5% to 66.28 pence on Thursday morning in London. Net asset value stood at £564.5 million at the end of the third quarter, down roughly 6.5% from £603.8 million a year earlier. NAV per share was 102.1 pence at September 30, compared with 108.5p on-year, reflecting a decline of 5.9%. Foresight Solar cited lower electricity production among its investees for reducing NAV by 0.4 percentage point. It attributes the slowdown to unplanned distribution network operator outages in the UK, alongside ‘curtailment’ for Spanish and Australian producers. Barring these interruptions, it said that quarterly production ‘would have been in line with forecast’. Electricity generation across the global portfolio was 6.3% below budget for the three months ended September 30. In the UK, it was 1.8% under budget. It missed the budget by 18% and 4.4% in Spain and Australia, respectively. For the year-to-date, operational performance is in line with budget, which Chair Tony Roper said has given the firm ‘confidence’ in meeting its dividend cover targets. Foresight Solar has ‘paused’ plans to divest its Australian portfolio, as none of the offers received were deemed ‘deliverable’. It is looking at ways to reposition these assets, before returning to a potential sale process. ‘In the meantime, the investment manager is focused on refinancing the portfolio and progressing the two co-located BESS projects,’ Foresight Solar added. Its manager, London-based Foresight Group LLP, also is overseeing a disposal process for further solar assets with 75 megawatts of capacity. Foresight Solar warned of an expected rise in tax charges, with ‘the current best estimate’ indicating that this will lead to a 3.6% reduction in NAV. Separately, the company noted UK government proposals to revise the inflation indexation of the Renewable Obligation and Feed-in Tariff schemes, with two possible options currently under review. The first of these is to switch to the consumer price index from the retail price index in April 2026 - rather than in 2030, as previously planned. Foresight Solar sees this lowering NAV per share by 1.7%. The second ‘more aggressive’ option, according to Foresight Solar, is a temporary freeze on indexation, allowing it to realign gradually with CPI, a process the company suggested will take until the mid-2030s. This option would cut Foresight Solar’s NAV by about 10%, it estimated. ‘These changes have the potential to impact future revenues for operating UK solar projects and dampen investor confidence in the country’s renewable energy sector,’ the investor added. Foresight Solar plans to ‘urge the government to carefully assess’ the proposals. It joins a cohort of London listings concerned about how the legislation could hurt earnings, such as Foresight Environmental Infrastructure Ltd, Bluefield Solar Income Fund Ltd and NextEnergy Solar Fund Ltd. Chair Roper commented: ‘The valuation reductions and the tax review are disappointing for us and shareholders. This quarter’s challenging news compounds a difficult year for the renewable energy investment trust sector, with a difficult macro environment, a volatile regulatory landscape and frustrating share price performance. ‘We continue to analyse options available to deliver the best potential outcome for investors. In the meantime, we are focused on addressing the share price discount to NAV. Divestment processes are ongoing, with the aim of unlocking capital, we continue to return cash to shareholders via one of the largest buybacks in the sector relative to NAV, and we are committed to paying down debt further.’ As of Thursday, Foresight Solar has returned around £2.8 million via buybacks in 2025. Total outstanding debt amounted to £404.9 million at September 30, which is roughly 42% of the firm’s £969.4 million gross asset value. This is within the firm’s 50% limit, and compares to £401.8 million in debt, or 40% of GAV at June 30. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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