BLUEFOLD SOLAR INCOME FUND (BSIF)
Renewables have grown to a large investment trust sector in a relatively short period of time.
They have unique characteristics (RPI linked dividends, high proportion of regulated cash flows, direct exposure to power prices) and have delivered good total returns to investors, often bearing little correlation to other asset classes. Their geographical remit is predominantly/exclusively UK.
A rapidly growing % of UK energy needs are being met by renewable output.
Common key cash flow, and ultimately dividend, drivers tend to be the natural resource, the plant availability and performance, the business mix (usually RPI linked subsidies and sale of electricity), gearing and cost control.
Being live quoted investment trusts, they are liquid, transparent and usually pay dividends at least twice yearly
The sector currently comprises a few funds in the solar, wind and waste areas.
Currently, my sector favourite is Bluefield Solar Income Fund, code BSIF, ISIN GG00BB0RDB98, which produced another set of fine figures on September 27th, www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BSIF/13806229.html
This company (BSIF), is a Guernsey based closed ended investment fund, which invests in a diversified portfolio of solar energy assets, each located in the UK.
- In the five years since the IPO,total returns for shareholders on an NAV and total return basis have exceeded 50%.
- At the end of June,2018, the fund had a total of 45 large solar assets,39 micro solar assets and 2 rooftop assets, with an estimated generating capacity of 460.3MWp.
- Energy generation for the year ended June 2018 was above target with both plant performance and solar irradiance exceeding expectations.
- An independent valuation of the Company’s portfolio at £1.29/MWp leads to a NAV per share of 113.3p as at the end of June.
- In September 2016, the fund agreed £187 million 18 year fully amortising debt with Aviva. Part of this debt is fixed at a cost of 2.875% and part price at 0.7% plus RPI.
- There is a highly disciplined approach to acquisition policy due to “the present high transaction values evident in the secondary market for solar assets”.
- The company has negligible foreign exchange exposure and does not expect to be significantly affected by BREXIT-whatever the outcome.
- The fund has a full pay-out model and declared a dividend of 7.43p for the year just ended, with a company objective of increasing the dividend in line with RPI each year. At current prices, the yield is around 6.2%, paid quarterly.
- BSIF is recommended as part of the alternative income allocation offering an above average inflation protected yield, low market correlation and having live, transparent pricing on the LSE and negligible sterling/Brexit issues.
- A significant percentage of the shares are held by longer term institutions and there is growing interest from ESG funds.
Ken has over 35 years of investment management experience, working for two major City institutions between 1976 and 2002.
Since then he has been engaged as a self-employed investment consultant. He has worked with investment trusts, unit trusts, pension funds, charities, Life Fund,hedge fund and private clients. Individual asset managed have included direct equities and bonds pooled vehicles currencies, derivatives and commodities.
Projects undertaken in a number of areas including asset allocation, risk control, performance measurement, marketing, individual company research, legacy portfolios and portfolio construction. He has a BSc(Mathematics/Statistics) and is a Fellow Member of the UK Society of Investment Professionals.
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