British generator Drax has announced it will acquire Bluefield Solar Income Fund (BSIF) in an all-cash deal that values BSIF at £548 million.
Through Drax Bidco, a vehicle specifically designed for such deals, the generator will acquire the entire issued share capital of BSIF. The fund’s shareholders will receive 92.574 pence per BSIF share, payable in mid-June.
The deal will see Drax acquire BSIF’s portfolio of approximately 900 MW of operational and under construction solar and wind assets, along with the 2.9 GW development pipeline.
According to a notice on the London Stock Exchange, BSIF was put up for sale in November.
Commenting on the acquisition, Michael Gibbons, Chairman of BSIF, explained: “Since autumn 2022, a changed interest rate environment has contributed to BSIF shares trading at a consistent double-digit discount to net asset value. Without fresh capital to invest in new projects, the portfolio’s quarterly net asset values have naturally declined due to the payment of dividends.
“Against this changed backdrop, following an earlier review of strategic options and shareholder feedback that indicated a clear preference for value-maximizing options, the BSIF board has acted decisively to initiate a formal sale process. The BSIF board is pleased with the completion of this process.”
Drax said the acquisition is an “attractive opportunity” to grow its renewable energy business in the UK and is “highly complementary” to the wider existing Drax Group business and ‘FlexGen’ portfolio.
Drax CEO Will Gardiner noted that “BSIF could potentially be the largest acquisition our company has ever made.”
The Drax Group has committed up to £2 billion of investment in flexible and renewable energy between 2025 and 2031. The BSIF acquisition is supported by “strong cash generation, a disciplined approach to capital allocation and attractive returns for Drax shareholders”.
The company saw this too acquires UK flexibility energy activator Flexitricity in a £42 million transaction which closed in March this year. In recent months it has also taken on operational projects, the acquisition of three battery energy storage systems (BESS) projects from York-based developer Apaturawith a combined capacity of 260MW.
Last year the group made one A £200m offer for Harmony Energy Income Trust but withdrew from a bidding war against Foresight Group, which bought the fund and took it private.
