In a wide-ranging update, Gore Street Energy Storage Fund (GSF) has announced a material overhaul of its fee arrangements with investment manager Gore Street Investment Management, following a recent shareholder consultation. Effective 1 October 2025, the management fee will be reduced and calculated on a blended basis – 1% per annum of the average of NAV and market capitalisation, subject to a cap of 1% of NAV – and performance fees as well as takeover-related termination fees, will be removed entirely. Based on 2024 share prices, the board estimates a cost saving of around £1.14m per year, excluding further gains from the fee removals.
Alongside this, GSF has declared a quarterly dividend of 1.0p per share for the period to 31 March 2025 and flagged its intention to pay a special dividend of 3.0p per share once proceeds from the sale of investment tax credits (ITCs) linked to the Big Rock project become available later this year.
Strategic review and capital allocation
Informed by shareholder feedback gathered during a recent roadshow, the board confirmed it has appointed an independent adviser to assess mid-term strategic options and guide capital allocation planning. Until the review concludes, excess cash from the ITC proceeds will be directed toward repaying GSF’s revolving credit facility, while preserving flexibility for future capital expenditure.
The board indicated that future dividend distributions will be linked to operational cash flows rather than a fixed target, marking a shift toward greater financial sustainability.
Strong operational progress in the US
GSF also noted that its two most recent US projects have reached commercial operations, and that the sale of Dogfish ITCs has completed, with Big Rock’s ITC sale expected to follow shortly. Combined, these sales are expected to generate proceeds at the upper end of the previously guided US$60–80m range.
Unaudited NAV and financials
The unaudited NAV as at 31 March 2025 was reported at 102.8p per share, down 4.2p year-on-year. However, inclusive of dividends paid, this equates to a total NAV return of 1.1% over the year and 48% since IPO.
Breakdown of NAV movement includes:
- Dividends paid: -5.5p
- Revenue curve impact: -6.1p
- Inflation adjustment: -1.0p
- Discount rate and net portfolio return contributions: +8.4p
Board succession and results outlook
Three directors are expected to retire over the next two years, and the board has begun its succession planning. The first new director is expected to be announced before the end of 2025.
The company plans to publish its full audited results for the year ended 31 March 2025 on 17 July 2025. A virtual analyst presentation and a live investor presentation via Investor Meet Company will be held on the same day.
[QD comment MR: We reiterate our view that the takeover of Harmony Energy Income by Foresight Group, which also saw strong interest from Drax Group, highlights that GSF’s current c 41% discount to NAV looks significantly overdone. Clearly there have been well-documented challenges for all of the battery storage funds, which have contributed to the discount that has likely precipitated this strategic review from GSF. However, these headwinds appear to be abating and the outlook improving as the balancing mechanism is adjusted to better utilise BESS assets. These are increasingly important against a backdrop of growing renewables within power generation, which are intermittent in nature.
GSF’s decision to revise its management fee structure and remove performance-related charges are shareholder friendly moves that should bring about helpful cost savings. The flexibility built into its revised dividend policy and capital allocation strategy make sense at the current time.
Operationally, the completion of two US projects and monetisation of ITCs should help the trust’s growing cash generation and, while the NAV decline over the year is not insignificant, the portfolio should be resilient. It will be interesting to see what other measures the strategic review could bring. At current discount levels, we think that allocating some cash to share buybacks could make a lot of sense.]
