Foresight solar has completed the sale of a 50% stake in its 99MW Lorca portfolio to EB-Sustainable Investment Management (EB-SIM), a subsidiary of Evangelische Bank.
It is the first asset sale in the company’s 10-year history.
The divestment generated “significant upside” on the Spanish solar asset with the sale at a 21% premium to their third quarter holding value, representing an exit IRR of 12.1% on funds invested to date in the stake sold.
The deal is part of the first stage of Foresight Solar’s divestment programme and the €26.9m raised from the partial sale will be fully used to pay down the company’s variable rate revolving credit facility further, lowering gearing and reducing interest expense.
Foresight Solar also reported £707m in unaudited net asset value (NAV) as at 30 September 2023, compared with 726m as at 30 June 2023.
The investor also reported record cash generation from underlying assets of £87.8m, driven by favourable price fixes, despite production being slightly below budget.
The discount rate for UK levered solar assets increased by 50bps to 8%.
Rates for the Australian and Spanish assets also increased by 25bps to 8.3% and 7.6%, respectively.
Global revenues are 85% contracted for 2024, insulating the company from falling near-term power prices.
Prices for Renewable Energy Guarantees of Origin (REGOs) have consistently traded above the company’s estimates, which had remained conservative.
Having locked in materially higher prices for the portfolio’s green certificates in coming years, Foresight Solar has revised its pricing forecast to £5/MWh until 2028 and then £2/MWh for the remaining life of the assets.
This resulted in a positive uplift to the NAV of 1.9 pence per share.