Foresight Solar, a sustainability-focused fund investing in solar and battery storage assets, sold a 50% stake in Spain’s 99 MW Lorca solar portfolio. A Luxembourg-based fund advised by EB-Sustainable Investment Management (EB-SIM), a subsidiary of Evangelische Bank, paid €26.9 million (~$29.2 million) 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.
The Lorca subsidy-free solar portfolio consists of Las Salinas (30 MW), Los Llanos (49 MW), and Los Picos (20 MW) projects. Three years ago, all the projects were purchased at the ready-to-build stage; Foresight Solar took them through construction, realizing a 2 pence per share NAV uplift when they became operational in 2022.
The proceeds from the transaction will be fully used to pay down the Company’s variable rate revolving credit facility further, lowering gearing and reducing interest expense. 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 138 GWh 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 capitalized on the Investment Manager’s expertise to construct the assets and bring them to operations, realizing the full financial upside for the Company. We are now selling a stake at a premium to crystallize 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.”
According to Mercom’s 9M and Q3 2023 Solar Funding and M&A Report, in the first nine months (9M) of 2023, there were a total of 166 project acquisitions for 31.6 GW compared to 207 projects acquired for 52.1 GW in 9M 2022.