NextEnergy Solar Regulatory News (NESF)

14 May 2020

NextEnergy Solar Fund Limited

("NESF" or "Company")

Smaller Related Party Transaction with subsidiary of NextPower Development Ltd

NESF announces that it has agreed to sell two subsidy free assets under development with a capacity of 115MW for a combined total consideration of £11.5m to a subsidiary of NextPower Development Ltd ("NextPower") (the "Transaction"). The Transaction is expected to simultaneously exchange and complete later today.

The Transaction will result in a net IRR (after NESF's Transaction costs) significantly in excess of NESF's annualised target return of 7 - 9% p.a.

The disposal of these assets is in line with the Company's current strategy of adding up to 150MW of operational subsidy-free capacity to the portfolio, by building those projects which are expected to generate a rate of return in line with or in excess of NESF's target equity annualised return range of 7% to 9%. The Company will consider divesting those subsidy-free development assets in its portfolio that are in excess of that capacity or that are not expected to generate financial returns that are in line with the Company's target range.

Following a review by the Board and its independent advisers, the Board concluded that these two subsidy free development assets, amounting to 115MW, no longer meet the Company's financial targets.

NESF may sell further subsidy free assets under development from its portfolio to subsidiaries of NextPower or to other third-party buyers as the secondary market for subsidy free assets develops and matures. All related-party disposals are at the Board's discretion and, in the case of any related party transaction, compliance with the FCA's Listing Rules, and there are no exclusivity arrangements in place between NESF and any member of the NEC Group in relation to the Transaction or future disposals.

NextPower, which was appointed as Developer by NESF at the time of the Company's IPO in April 2014, and its subsidiaries are under the common control of the wider NEC Group along with NextEnergy Capital Limited (Investment Adviser to NESF) and NextEnergy Capital IM Limited (Investment Manager to NESF) and as such is a related party of the Company. Based on the amounts involved, the Transaction constitutes a smaller related party transaction as set out in Listing Rule 11.1.10R.

For further information:

 Notes to Editors[i]:

A constituent of the FTSE 250 Index, NextEnergy Solar Fund ("NESF") is a renewable energy infrastructure investment company that invests primarily in operating solar power plants in the UK (it may invest up to 15% of its gross assets in other OECD countries). The Company is committed to ESG principles and responsible investment and makes a meaningful contribution to reducing CO2 emissions through the generation of clean solar power. NESF has been designated a Guernsey Green Fund by the Guernsey Financial Services Commission and has been awarded the London Stock Exchange's Green Economy Mark.

NESF has a diversified portfolio comprising 90 operating solar assets, primarily on agricultural, industrial and commercial sites, with a combined installed power capacity in excess of 755MW. As at 31 March 2020, the Company has gross assets of £993 million, of which 89% is invested in the UK, and net assets of £579 million. The majority of long-term cash flows from its investments are inflation-linked.

NESF's investment objective is to provide ordinary shareholders with a sustainable and attractive dividend that increases in line with RPI over the long term, while delivering an element of capital growth through reinvesting net cash generated in excess of the target dividend. The dividend is payable quarterly and the Company has announced a total dividend for the year to 31 March 2020 of 6.87p per ordinary share. 

NESF is differentiated by its access to NextEnergy Capital Group ("NEC Group"), its Investment Manager, which has a strong track record in sourcing, acquiring and managing operating solar assets. WiseEnergy is NEC Group's specialist operating asset management division, which since its founding has provided operating asset management, monitoring, technical due diligence and other services to over 1,300 utility-scale solar power plants with an installed capacity in excess of 1.6 GW.

Further information on NESF, NEC Group and WiseEnergy is available at nextenergysolarfund.com, nextenergycapital.com and wise-energy.eu.

[1] Note: All data is unaudited as at 31 March 2020, being the latest date in respect of which NESF has published financial information.