High-yielding renewable energy infrastructure fund Bluefield Solar Income (LON:BSIF) soared after accepting a £548 million all cash bid from Drax (LON:DRX). The offer price sits below Bluefield Solar’s last reported net asset value (NAV).
However, it represents a 31% premium to the undisturbed share price back in November, before Bluefield Solar put itself up for sale. Considering the headwinds facing renewable energy trusts, the takeover provides Bluefield Solar’s shareholders with a clean cash exit.
Shares in peers including NextEnergy Solar Fund (LON:NESF), Foresight Solar Fund (LON:FSFL), Greencoat UK Wind (LON:UKW) and Octopus Renewables Infrastructure (LON:ORIT) gained ground on the positive read-across.
Drax owns the biomass-fuelled Drax Power Station in Yorkshire, Cruachan Power Station in Scotland and pellet production plants in North America. It will grow its UK renewable generation business through the acquisition of Bluefield Solar, which operates photovoltaic plants, wind farms and small scale wind turbines.
Upside price surprise
Six months after hoisting the ‘for sale’ sign, Bluefield Solar has accepted an offer from Drax at 92.574p per share. Including a 2.25p interim dividend, shareholders will receive a total of 94.824p or £561 million.
That represents a 31% premium to Bluefield Solar’s 72.2p share price when it entered an offer period on 4 November 2025. In addition, it is only a modest 9% discount to the NAV of 104.52p as of 31 March 2026.
Time to cash out?
Bluefield Solar’s chairman Michael Gibbons explained that since autumn 2022, ‘a changed interest rate environment has contributed to BSIF Shares trading at a consistent double digit discount to NAV.
‘Without fresh capital to invest in new projects, the portfolio’s quarterly NAVs have naturally declined with the payment of dividends,’ he added.
The board believes the acquisition at a 31% premium represents ‘a highly attractive outcome for BSIF shareholders and a compelling opportunity to crystalise value in cash’.
Drax CEO Will Gardiner said: ‘BSIF could potentially be the biggest acquisition our business has ever made. It represents an attractive opportunity to substantially grow our renewable generation business, while being highly complementary to the wider Drax Group’s existing operations and FlexGen portfolio.’
In our opinion, this bid is a positive outcome for Bluefield Solar shareholders and the wider renewable energy infrastructure sector.
Firstly, the offer price is higher than expected. Winterflood anticipated a deal to be done at a 20% discount to NAV. In part, that is because the broker expected a bid from private equity rather than a strategic buyer.
Bluefield Solar has built a substantial UK renewables portfolio and has a sizeable development pipeline. Sadly, persistent sector discounts, higher financing costs and limited access to fresh equity have made it difficult for the fund to grow and for the market to recognise its value. For shareholders, the certainty of cash today looks preferable to waiting patiently for the discount to narrow.
Read the press release here: https://www.londonstockexchange.com/news-article/DRX/offer-for-bluefield-solar-income-fund-limited/17615593
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