Bluefield Solar Income Share Discussion Threads

[williamcooper104] 24/8/2020 11:51

Those long dated swaps can really really hurt

[18bt] 24/8/2020 10:21

Muted reaction to something that is earnings accretive and enhances or at least protects dividend yield.

[masurenguy] 24/8/2020 07:37

Looks like a good, earnings enhancing, acquisition !

On 20 August 2020, the Company completed the acquisition of the portfolio for an initial cash consideration of £106.6m including working capital. The final consideration may be increased by up to £2.1m, contingent on securing asset life extensions. The Company will receive the economic benefit of all cash flows from the portfolio from 1 January 2020. The portfolio consists of 15 ground-mounted operational solar PV plants, with 8 sites clustered in the south west of England, 2 in west Wales and a further 5 across central and eastern England. The portfolio benefits from attractive subsidies; 13 of the projects are accredited under the Renewable Obligation Certificate ('ROC') regime with tariffs ranging from 1.4 - 2.0 ROCs, while two of the projects are accredited under the feed-in-tariff ('FiT') scheme. Including the FiT projects, the weighted average tariff for the portfolio is equivalent to circa 1.8 ROCs/MWh. In the period 2021-2033 (2033 being the year in which the subsidies on the earliest plants begin to expire), the proportion of regulated revenues from this portfolio is projected to be approximately 66% (compared to 57% for the Company's existing portfolio).

The acquisition has been financed by a bespoke three-year, interest only, re-drawable term loan at an effective all in cost of circa 1.41% (being margin and swap rate). Furthermore, the Company has elected to hedge 75% of the loan over a notional 18-year period, at a swap rate of circa 0.31% until 2038, to provide underlying rate certainty in anticipation of a refinancing scenario in or before August 2023. Following the transaction, the Company's total outstanding debt has increased to £332.0m and the total installed capacity of its portfolio has grown to 543 MWp. Using the Company's 31 March 2020 unaudited net asset value ('NAV') of £418.7m as a reference, the leverage level of the Company will rise from circa 34% to circa 44% of Gross Asset Value ('GAV').

[gateside] 18/8/2020 16:23

Poor NAV update from JLEN may have affected this today. Beginning to look like a tempting buy if it falls much further.

[masurenguy] 24/7/2020 11:05

Topped up this morning.

[18bt] 24/7/2020 10:04

As a reminder, this is what the July EGM notice said re wind:

The widening of the Investment Policy is deliberately focused on the renewable technologies that are closest to solar in terms of risk and return. Operational subsidised wind has a complementary generation profile to the Company’s existing portfolio and the regulated revenues attached to such assets lowers the power exposure. The secondary market for wind is deep and certain segments are less competitive than others. The Investment Adviser has recruited a highly experienced wind professional to be the investment director to oversee wind acquisitions. The ability to acquire solar and wind portfolios together is also viewed as a competitive advantage in an increasing number of purchase opportunities the Investment Adviser is seeing. Another complementary technology is subsidised hydro, albeit the market is much smaller compared to solar and wind.

The Investment Adviser continues to evaluate non-subsidised solar projects and is also undertaking an assessment of non-subsidised wind. Both have attractive return characteristics, with solar playing to the Investment Adviser’s investment, technical and operational capabilities and wind offering the potential for higher returns using synergies from the Investment Adviser’s asset management infrastructure. The recent drop in UK power prices puts pressure on the Company’s model but the cost reduction dynamic of both technologies would indicate that subsidy free investments will continue to be a viable, and economically attractive, option over the long term. As the Company already has a proven and successful power sales strategy and technical asset management capability in place, the Company expects to be able to deliver attractive risk weighted returns.

[18bt] 24/7/2020 09:22

Agreed - actually the Baiju Devani announcement was 8/7 and I wondered then whether they are teeing up shareholders for a further change in investment policy (possibly accompanied by a deal and/or fund raising) to move into onshore wind. That could be interesting as it will give more even cashflows throughout the year. It seems to me unlikely that they can locate onshore wind on or close to solar farms as solar tend not to be on hills and there would be issues with shading, but that might work in places (some the solar farms are close to coasts)and being able to use existing infrastructure would be a huge saving. I shall be very interested to see what the Chairman says with the finals in September.

The policy agreed at the July EGM is: "The Group will continue to be, primarily, invested in long life UK solar energy infrastructure alongside a minority exposure to other renewable energy assets (including non-subsidised assets) and energy storage assets. Such minority exposure will be limited to a maximum of 25 per cent. of the Company’s Gross Asset Value calculated at the time of investment".

Anyway, still yielding just under 6% and broadly inflation-linked. Very happy to hold.

[masurenguy] 24/7/2020 08:09

Two very positive announcements today!

Interesting New Appointment

New appointment Baiju Devani joins Bluefield Partners from Ingenious, where he was a fund manager within its infrastructure division from August 2013 to December 2019 responsible for the EIS Funds and leading on UK onshore wind transactions. Prior to this, Baiju was a member of the Commercial Team at one of the UK's largest independent renewable energy developers, RES, between 2008 and 2013. James Armstrong, Managing Partner at Bluefield Partners, commented: "We are delighted to announce the appointment of Baiju Devani as UK Investment Director at Bluefield Partners, which will add significant wind expertise alongside our team's solar experience. Baiju has long and relevant M&A experience in the UK onshore wind sector where we see an increasing number of attractive opportunities for Bluefield Solar following the broadening of the Company's mandate." Baiju Devani commented: "It is fantastic to join the Bluefield Partners team and I am keen to add my experience in the UK wind sector to the well-known solar expertise at Bluefield Partners."

Dividend Announcement and 2021 Target

The Third Interim Dividend of 1.95p per Ordinary Share (August 2019: 1.90p per Ordinary Share) will be payable to Shareholders on the register as at 7 August 2020, with an associated ex-dividend date of 6 August 2020 and a payment date of 21 August 2020. The Board is pleased to reconfirm its guidance of a full year dividend of 7.90p per Ordinary Share for the financial year ending 30 June 2020 compared to a full dividend of 7.68p per Ordinary Share for the financial year ending 30 June 2019. This will be covered by earnings and is post debt amortisation. Furthermore, the Board reconfirms the Company's target dividend of 8.00p per Ordinary Share for the financial year ending on 30 June 2021.

[18bt] 19/6/2020 16:21

This from the announcement this morning:

The performance of the portfolio, although unaudited at the date of this Circular, indicates that the Company is forecast to deliver earnings significantly ahead of the target dividend of 7.9 pence per share for the financial year ending on 30 June 2020.

This seems an upgrade from the last report on performance on 30 Apr and should allow one of 1) A special div 2) retaining some funds for developments or 3) Being able to smooth up dividends in future years:

Furthermore, the Board is pleased to reconfirm its guidance of a full year dividend of 7.90 pence per Ordinary Share for the financial year ending 30 June 2020. This will be covered by earnings and is post debt amortisation.

The portfolio continues to perform extremely well. As at 31 March 2020, generation was 4.8% above target.

Lastly there is the proposal in the EGM notice to allow up to a 20% fund raise without preemption. Having now read again, it is clear that there is likely to be a further fund raise on the back of acquisitions, planned enhancements or possibly a greenfield development. Suspect that's the reason for the share price fall. But it just makes a more attractive entry point.

[rustle2] 19/6/2020 12:22

The other Solar funds have also hinted that they will de-link from the RPI measure.

[masurenguy] 19/6/2020 11:12

Good move in my view. Diversification into other renewable energy sources such as Wind and energy storage technologies makes good sense going forward, especially since new government subsidised solar projects are no longer available. I also think that the proposed change in dividend criteria to enable them to accommodate these additional investments is appropriate as a long term policy.

"The Board is expecting to set a target dividend of not less than 8.0p per Share for the financial year starting 1 July 2020. The Board will seek to maintain this level of dividend, or grow it progressively where appropriate thereafter, but there will no longer be a formal dividend policy targeting an annual increase in the dividend in line with RPI."

If they hit their targets, yield levels should continue to remain extremely positive in the current low interest rate climate.

[stevegrass777] 19/6/2020 09:41

I like the changes, it looks to me like they have a purchase in mind that means that they need to change the conditions of investment criteria.
Just some of the wording makes me think that.
The trouble is without a new Fit program building massive new solar systems in the UK is probably not financially viable and all the ones that are available have been bought.
So for the growth and sustainability of the company something needs to be done and these changes probably open up new purchases,maybe that's why they need to change the dividend policy to help with the purchase.

[18bt] 19/6/2020 07:56

At first sight, the change in investment policy is sensible - energy storage at these sites could be provided relatively cheaply (as the Grid connections are there already) and help maximise power prices (and more useful for the Grid). Suspect some will not like the new dividend policy, but put this together and we have a sensible value-enhancing announcement. The detail requires more scrutiny time than I have this morning, but as usual the communication from the Board should be commended.

[masurenguy] 12/6/2020 10:06

BSIF has held up well with the shareprice back at 133p, which is the pre-COVID crash level 3 months ago. The dividend increase of 2.6% has been paid for the first two quarters and "the Board is pleased to reconfirm its guidance of a full year dividend of 7.90 pence per Ordinary Share for the financial year ending 30 June 2020. This will be covered by earnings and is post debt amortisation."

[rustle2] 30/4/2020 11:08

probably seeing some knockon across the sector as updated power curves kick in.
That's about what I expected and why I highlighted a few days ago.

Although FSFL are dropping due to ex-div they will likely suffer 1% worse fall than BSIF with updated power curves and then at some stage we will also get announcements regarding RPI yearly increases.

I see these funds as popular for maintaining their dividend but in general I see mostly downside risk here at present so don't see them as a long term hold just at the moment.

But then the year also started off with above average sun and wind generation ...

[18bt] 30/4/2020 08:50

I don't think particularly unexpected - we knew power pricing was weak going into 2021 and we knew we were headged for a lot of this year. The issue is whether power pricing will recover and when.

[11_percent] 30/4/2020 08:47

Well....that was not very good.

NAV decrease by 6.7%...….sp down 6.5%.

[masurenguy] 30/4/2020 07:50

Unaudited NAV 31 March 2020 and Second Interim Dividend
30 April

The Company's unaudited NAV as at 31 March 2020 was £418.7m, or 113.02p per Ordinary Share, compared to the audited NAV as at 31 December 2019 of £447.4m, or 120.75p per Ordinary Share. The impact on the Company's NAV from adoption of the latest power curves is a reduction of 6.7p per Ordinary Share, reflecting the reduced independent revenue estimates, particularly in the period 2021-2024. The Company has 100% of its revenues contracted until 30 June 2020, 88% until 31 December 2020 and 77% until 30 June 2021.

For the avoidance of doubt, the 31 March 2020 NAV does not include a liability for the second Interim dividend of 1.95p per Ordinary Share as this has been declared post 31 March 2020. All other core valuation assumptions have remained consistent with the NAV issued in the Company's Interim financial statements for the period ending 31 December 2019. The Second Interim Dividend of 1.95p per Ordinary Share (April 2019: 1.90p per Ordinary Share) will be payable to shareholders on the register as at 11 May 2020 with an associated ex-dividend date of 7 May 2020 and a payment date of 29 May 2020. Furthermore, the Board is pleased to reconfirm its guidance of a full year dividend of 7.90p per Ordinary Share for the financial year ending 30 June 2020. This will be covered by earnings and is post debt amortisation.

The portfolio continues to perform extremely well. As at 31 March 2020, generation was 4.8% above target. In respect of the Covid-19 pandemic and business continuity, the Company reconfirms that its investment adviser, Bluefield Partners, and its technical asset management provider, Bluefield Services, and its operation and maintenance provider, Bluefield Operations, are all successfully remote working and there are no foreseen issues around business continuity. As indicated in previous announcements, the Company is reviewing the policy of increasing the dividend in line with RPI.

[rustle2] 24/4/2020 16:28

Do I have it right that we are expecting the next dividend declaration next Thursday and this will also include the NAV ending 31 March, presumably using updated forward power prices?

[masurenguy] 21/4/2020 12:54

"it would be difficult to justify going back to oil with the global shift towards greener power."

Quite agree but some peoples perception is not always based upon an understanding of the facts or a rational perspective of the energy market.

[steve73] 21/4/2020 12:17

Oil is probably competitive with Renewables at the current prices, but it's not a big contributor to global electricity supply, and it would be difficult to justify going back to oil with the global shift towards greener power.

Coal & Gas are the big fossil fuel sources.

[gateside] 21/4/2020 10:11

Yes, all renewables seem more sensitive to changes in the oil price

[masurenguy] 21/4/2020 10:10

A 5% drop today on a very modest trading volume. This possibly reflects some peoples concerns that solar demand might be affected by the current very low oil price.

[masurenguy] 08/4/2020 10:55

"I've just sold mine."
Looks like you made a quick 20% on a short-term trade - well done !

This is one of my two largest long term holds (17%) in my ISA Equity portfolio. The price has held up well during the COVID crash and it is currently yielding me 7.1%

[spittingbarrel] 07/4/2020 14:54

I don't know but I've just sold mine.