USF continues its quest to unlock shareholder value

US Solar Fund

US Solar Fund (USF) has provided an update on its strategic review, which it undertook in October 2022 to maximise shareholder value. USF currently trades on a 16.5% discount, and has traded on a sustained, downward trending, discount since the start of 2022.

The board has so far rejected an offer for the purchase of the trust, an offer which would have represented a significant discount to the last reported NAV.  The board is no longer in receipt of any possible offers, and has terminated the formal sale process.

Two other avenues remain open: a new investment manager, and individual asset sales. The board remains in active discussions with potential new investment managers. The board has yet to receive any formal proposals for sales of USF’s assets that it considers in the interest of shareholders. It continues to be in discussions with interested parties, but comments that there is “no certainty that such discussions will result in any proposals that it considers acceptable ultimately being forthcoming.”

QD comment: [“It is always encouraging to see boards proactively trying to improve shareholder value; it is a key reason for why they exist in the first place. However, while acknowledging USF has developed a persistent discount (it has been on a downward trajectory since 2022), we have struggled to understand why the board was considering throwing in the towel at this stage. The US renewables market is well established and well understood and the US solar sector is also facing clear, near-term tailwinds thanks to a renewed focus on renewables under the current administration – President Biden’s inflation reduction act offers some US$370bn in renewable tax credits, and funds such as USF should be well positioned to benefit from this. The board says that the discount reflects recent difficulties in the US solar sector, which is possibly why it has struggled to find private buyers willing to pay above the market price for USF’s assets currently. Given this, we are pleased to see that USF is off the market for now. We think the board should now focus its efforts on getting the message out about the scale of the opportunity in the US and making investors aware of USF, which should hopefully help bring down its discount in time.”]

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