Foresight Solar Fund (FSFL) has stepped up its efforts to address its persistent discount to NAV, with the board saying change needs to be accelerated and that it is considering all strategic options to maximise shareholder value.
The comments accompanied half-year results showing NAV per share fell 4.3% from 99.2p at the end of December to 94.9p at 30 June 2026. The decline primarily reflected higher discount rates, regulatory changes and reductions to UK electricity price forecasts.
FSFL’s board has considered strategic options before, having launched a review last year in response to its wide discount and differing shareholder demands. However, today’s language marks a notable escalation, with chair Tony Roper saying the board does not believe a meaningful improvement in market sentiment is likely within a reasonable timeframe and must therefore “act decisively”.
The board will canvass shareholder views over the coming weeks on possible outcomes.
The tougher stance follows a difficult period for FSFL, including problems with its tax forecasting. Historical tax payments weighed heavily on cash generation during the first half, with cash flow from operations falling to £0.6m from £14.8m a year earlier. Further historical and current-year tax liabilities are due to be settled later this year and in 2027, funded through working capital and other sources of capital.
Operational performance was mixed. Generation across the portfolio was 5.6% below forecast at 543GWh, despite irradiation coming in marginally ahead of expectations. Spain was the main weak spot, with generation 30.7% below the base case, while UK generation was 2.7% behind despite irradiation being 2.8% ahead.
However, EBITDA of £57.7m was in line with budget. FSFL’s UK assets were particularly important, generating 95% of EBITDA despite accounting for 68% of electricity production.
Meanwhile, efforts to release capital from the portfolio continue. A targeted disposal programme is progressing, with one operational solar asset reaching preferred bidder stage.
FSFL previously attempted to sell its Australian portfolio but paused the process last year after receiving a small number of bids that it did not consider deliverable.
The company is also investing in improvements to nine sites representing 150MW of capacity. The programme is expected to be completed by summer 2027 and could add up to £2.5m to annual revenue once fully implemented, providing additional support for dividend cover.
Despite the NAV decline, FSFL’s shares rose 10% during the six months to 70.8p, helping deliver a shareholder total return of 17.1%.
The annual dividend target remains unchanged at 8.10p per share.
Our view
QuotedData’s Richard Williams said: “The tone from Foresight Solar’s board has clearly hardened. Eighteen months after launching its strategic review, the persistent discount remains unresolved while NAV has continued to fall, and the unsuccessful attempt to sell the Australian portfolio highlights the difficulty of realising assets at acceptable prices. With the board now saying it cannot rely on market sentiment improving and needs to act decisively, pressure is building for a more fundamental solution.”
