US Solar Fund – Making hay
US Solar Fund Plc (USF) is a newly established closed end investment company that is focused on the large and growing solar market in the US. It invests in utility scale solar farms and sells the electricity generated to creditworthy counterparties through long-term power purchase agreements (PPAs).
From 31 March 2020 or when its assets are operational, USF is targeting a yield of at least 5.5% per annum (paid quarterly), prior to this, it is targeting an initial annual dividend yield of 2 to 3%. It is also targeting a total return in excess of 7.5% per annum (after fees and before tax) over the life of its assets.
USF’s shares will be listed on the main market of the London Stock Exchange. The investment manager has an active pipeline of USD4.8bn of assets and it expects to have fully committed the proceeds of its IPO within six to nine months of admission; be fully operational within a further 12 months; and pay its first dividend in November 2019.
Income from utility scale solar farms in the US
USF’s investment objective is to provide investors with attractive and sustainable dividends, with an element of capital growth, by investing in a diversified portfolio of solar power assets in North America and other OECD countries in the Americas. USF will predominantly generate revenue by selling the electricity generated through long-term PPAs (a target weighted-average in excess of 15 years) with creditworthy (predominantly investment grade) counterparties. It may also invest in battery storage and may derive revenue from this as well.
The company will target construction-ready, in-construction, or operational solar power assets that are designed and constructed to have an asset life of at least 30 years and are expected to generate stable electricity output and revenue over the lifespan of the asset.
The details of the share issue, including the risk factors that investors should take into consideration, are more fully described in the prospectus published on 26 February 2019 and we urge readers to read this before making any investment decision.
USF : US Solar Fund – Making hay