NextEnergy Solar (NESF), a high-yielding renewables fund languishing on a 39% share price discount, has put itself up for sale and complained of the short-term horizons of some investors.
The £268m investment company this morning invited bids from “bona fide parties”, saying that despite “the performance of its underlying portfolio of assets, NESF continues to have a challenging experience as a listed company”.
This included a share price that had trailed below net asset value (NAV) for several years and restricted its ability to raise capital to fund future growth.
“The board of NESF also believes that it is challenged by the increased focus on shorter-term investment horizons by some parts of the public equity markets compared to the longer-term nature of its investments.”
NESF is being advised by Rothschild & Co. It said its fund manager NextEnergy Capital supported the decision and that there were no current discussions with potential bidders. It ended a strategic review in March, announcing a cut in its dividend from 8.4p to 4p-4.6p per share to fund a “re-set” for growth after failing to find a buyer. At annual results last month it appealed for shareholders to vote for the company’s continuation at the annual general meeting in August.
Our view
QuotedData senior analyst Matthew Read said: “While NESF has previously argued, with some justification, that this is not the right market in which to sell renewable energy assets, the persistent discount to NAV is hard to ignore, as is the greater value that private markets are placing on these sorts of assets versus listed markets. We suspect the board has also been encouraged by the success of Bluefield Solar Income Fund’s formal sale process, which culminated in the acceptance of an offer from Drax. There is no guarantee that NESF will attract a bid at an acceptable price, but NESF’s board finds itself in a difficult position and testing the market looks sensible although, like BSIF, we’d be sorry to see NESF go.”
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