Foresight Solar, a sustainability-focused fund investing in solar and battery storage assets in the UK and internationally, has sold a 50% stake in its Lorca portfolio in Spain.
A specialist Luxembourg-based fund advised by EB-Sustainable Investment Management (EB-SIM), a subsidiary of Evangelische Bank, paid €26.9m for the assets, a 21% premium to their third quarter holding value. This represents an exit IRR of 12.1% on funds invested to date in the stake sold, Foresight said.
The fund added that proceeds from the transaction will be used to pay down the company’s variable-rate revolving credit facility, lowering gearing and reducing interest expenses. EB-SIM is in talks to finalise the divestment of the announced 200MW of operational assets and the process will continue into 2024.
Lorca is a 99MW subsidy-free portfolio that includes three assets: Las Salinas (30MW), Los Llanos (49MW) and Los Picos (20MW). Purchased at the ready-to-build stage three years ago, Foresight Solar took the projects through construction, realising a 2p per share NAV uplift when they became operational in 2022.
The portfolio has a 10-year fixed price power purchase agreement (PPA) with Statkraft, one of Europe’s largest renewable energy providers. Signed in 2021, the PPA provides long-term revenue visibility for approximately 70% of the assets’ annual production and contributes to dividend cover. In the nine months to September 2023, the sites generated 138GWh of electricity.
Alexander Ohlsson, chair of Foresight Solar, said: “After a comprehensive analysis of our portfolio, we concluded these assets were the ideal option to start our divestment process. This deal clearly exemplifies our strategy: we acquired Lorca at the ready-to-build stage and capitalised on the investment manager’s expertise to construct the assets and bring them to operations, realising the full financial upside for the company.
“We are now selling a stake at a premium to crystallise value and recycle capital into other options while maintaining exposure to an asset that will continue to deliver long-term revenues and contribute to dividend cover.”
Bernhard Graeber, managing director and head of alternative assets at EB-SIM, said: “Spain enjoys some of the highest irradiation levels in Europe, and the Lorca portfolio is operationally set up to maximise electricity production. The revenue visibility from the PPA makes it even more appealing.
“Now that we are well established in Central Europe, we are increasingly turning our attention to Southern European countries and are glad to have found the right partner in Foresight Solar.”
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