In a surprise move, US Solar Fund has announced a strategic review. The announcement notes that the fund has successfully executed its strategy of delivering a sustainable dividend for shareholders, but laments problems with growing its asset base. The board says that it maintains strong conviction in the value of the assets, the business plan, and the US solar sector.
The board will consider all options available, including, but not limited to, a sale of the company which will be conducted under the framework of a “formal sale process” in accordance with the Takeover Code, selling the portfolio and returning funds to shareholders or changing the investment management arrangements.
There is no certainty that any changes will result from the review. The board will make further announcements in due course.
The company is not in receipt of any approach, nor in any discussions with any potential offeror, at the time of this announcement.
[With a market cap of £245m (a perfectly reasonable size), on a discount of just 13% and offering a yield of 6.7%, this announcement is just bizarre. It really isn’t obvious why the board feels the need to press the self-destruct button on a fund that is only just three years old and meeting its objectives. The logical next move would be to offer invesors a choice of cash or a combination with Ecofin US Renewables. However, that fund needs to clarify its management arrangements. Both funds are designed to offer a stream of predictable long term cash flows. The value that investors put on those cash flows was always going to vary relative to the level of long term US interest rates. The current discounts reflect that in our view. If the funds can’t grow, so be it, a slimmed down board and manager could operate these funds for decades to come.]
USF : US Solar announces strategic review