Ross Driver presents FSFL's total shareholder return (TSR) strategy

Ross Driver recently presented Foresight Solar’s total shareholder return (TSR) strategy at the Stifel Infra & Renewables Seminar. He explained how it’s an “and” approach, with FSFL targeting an element of net asset value (NAV) growth on top of the fund’s sustainable, progressive dividend policy.

With the operational portfolio reliably producing electricity and generating cash, the opportunity will come from building out the existing c.500MW pipeline to up to 3GW of development and ready-to-build-stage projects that are able to provide optionality, facilitate capital recycling and drive growth.

Changing macro environment has direct read across to real assets

Rapid rise in yields has eroded the spread in return offered by renewables

Negative correlation between surging gilt yields and investment company share prices

Foresight Solar Fund: Snapshot as at Q3 2023

Total Return focus viewed through a combination of fund actions

Financial outlook:

FY dividend target of 7.55pps on track

~7.9% forward dividend yield
25% increase since IPO

1.5x target net dividend cover until at least 2025

Capital allocation

c.200MW divestment programme: proceeds for reducing debt and returns-accretive investments
Sale of 50% stake in the 99MW Spanish Lorca portfolio at 21% premium to holding value
First development-stage investment: 467MWp pipeline of solar projects in Spain
Started paying down RCF from extra cash
Expanded share buyback programme allocation to up to £40m

FSFL approach to capital allocation is centred on income AND growth

Strategy involves prudence, focus on return accretion and optionality