Foresight Solar (FSFL) is assessing two consultations issued by the government since last week’s budget. These are on the proposed wholesale contract for difference (WCfD) scheme to allow low-carbon generators like FSFL to exchange variable wholesale power revenues for a fixed strike price. The budget-day document was followed yesterday by a consultation on replacing tradeable renewables obligation certificates (ROC) with fixed price certificates to provide a centrally set, inflation-linked price from April 2028. FSFL said its investment manager was assessing the proposals and their “potential implications for revenue certainty, future WCfD bidding strategy and shareholder returns.” A third quarter update showed net asset value fell £6.8m to £511.1m in the three months to 30 September with NAV per share off 1.1p at 93.8p. This follows half-year results in September when NAV per share fell 4.3% and the board stepped up consideration of its strategic options to address the 28% share price discount.
QuotedData’s senior analyst Matthew Read said: “Foresight Solar’s operational performance is encouraging, with third-quarter generation comfortably ahead of budget and year-to-date EBITDA 8% above expectations. Active power price management also appears to be paying off, with UK realised prices well ahead of budget and strong revenue visibility through to 2028. However, rising discount rates continue to weigh on NAV, more than offsetting the benefits of higher power price and inflation forecasts. Proposed changes to renewable energy support mechanisms could improve revenue certainty, although their implications remain unclear. The progress on asset disposals is also welcome and a sale at or above carrying value would help validate valuations, release capital to reduce gearing or fund buybacks, and could potentially help narrow FSFL’s persistent discount.”
International Public Partnerships (INPP), the £2.5bn infrastructure investment company, is to invest a further €26m (£21.7m) in German regional rail business BeNEX after it won a new concession to upgrade and run the Rhin-Ruhr-Express Teilnetz B (RRX-B). The investment takes the total committed by INPP to BeNEX this year to €72m. The latest capital injection will expand BeNEX with a network in North Rhine-Westphalia and Lower Saxony of up to 5.1m train km journeys a year. Upon completion, the number of annual train kilometres served by BeNEX will increase to over 80m and annual passenger numbers to more than 160m. INPP first invested in BeNEX in 2007 and took 100% control in 2009. BeNEX was valued at £117.2m by INPP at 30 June when it accounted for 4.3% of the portfolio.
Matthew Read, QuotedData senior analyst, said: “BeNEX’s award of a new 15-year German regional rail concession highlights the growth opportunities available within INPP’s existing portfolio. The anticipated low-to-mid-teens IRR is attractive, comfortably exceeding both the portfolio discount rate and the implied return from share buybacks. However, with INPP’s shares trading at a substantial discount to NAV, the balance between reinvestment and capital returns remains important. The £440m of realisations achieved or committed since June 2023, with completed sales all at or above carrying value, provides welcome validation of valuations. The challenge is translating this value creation into improved shareholder returns and a narrower discount.”
Supermarket Income (SUPR) increased yesterday’s share issue from £50m to £60m due to strong demand. SUPR said 73.1m new shares will be issued at 82p, increasing the total in the market by 5.4%. After costs this will raise £58.5m for £65.2m of new investments.
