Bluefield Solar says merger with fund manager and dividend cut are needed to prevent fund being starved of capital

• 21 October 2025
• QuotedData

John Scott, the outgoing chair of Bluefield Solar Income (BSIF), has warned shareholders in the renewables fund that the “business as usual” option is unavailable as he held out the prospect of the double-digit yielder merging with its fund manager Bluefield Partners and cutting its payout.

Delivering his last annual report, Scott said the £493m investment company had responded well to the challenges of the last three years when interest rates had soared and capital markets had effectively closed to the sector with its shares sliding to a 30% discount to net asset value (NAV), preventing conventional fund raising.

While a partnership with pension funds had enabled the company to recycle capital from its portfolio, supporting a high dividend, a £20m share buyback programme and reinvestment in the portfolio, he said shareholders needed to be aware that the absence of additional equity and cheap debt would require the sale of its pipeline assets.

“Such disposals will gradually starve the company of growth opportunities and confine BSIF to its current position, namely the steady erosion of the company’s NAV, reflecting attrition of our capital base, with returns delivered only in the form of income,” he said.

Following earlier efforts to sell the company, Scott said it was clear there was widespread investor support for renewables – despite efforts by right-wing politicians to reverse the move to clean energy – and that BSIF’s value lay in the combination of its operational solar portfolio combined with the development platform of Bluefield Partners.

“The board is therefore considering other paths for the future of BSIF, including options that could see it move towards a more integrated business model which is better placed to capture the growth opportunity that eludes shareholders in the company’s current form, but is more readily available in an integrated Bluefield model,” said Scott.

Initial discussions with Bluefield showed this could be attractive to both the company and its investment adviser.

“Integrating the Bluefield Group’s 140-person platform, covering development activities through to operations, would create a UK-focused green independent power producer, one that with the appropriate capital structure, corporate debt and dividend policies could be a largely self-funded growth model,” he added.

Scott said the transition would require a thorough re-examination of the 10.7%-yielder and its dividend policy to assess how much of its income “we would be able to distribute if we are to fund our pipeline from retained earnings and additional borrowings”.

The shares fell 3.2% to 80.6p

The results showed that despite a second half recovery in irradiation, the net asset value of the portfolio of 122 solar plants, six wind farms and 109 small scale onshore wind turbines fell to 116.56p per share at 30 June from 129.75p a year earlier. Total underlying earnings per share dipped from 10.57p to 10.4pp covering 8.9p of dividends, raised from 8.8p in the previous year. A target of 9p has been set for the current 2026 year.

Our view

James Carthew, head of investment company research, said: “At QuotedData, we have been discussing amongst the analysts what is the way forward for the renewable energy sector. It felt to us as though BSIF was the most likely of the companies in the sector to transition from an investment company to a trading company.

“That seems to be the board’s preferred path. The chairman’s statement makes it clear that one of the casualties of this might be the current high dividend, although the board has indicated that the dividend will rise slightly to 9p for the current financial year.

“We want to see the sector used as an engine to drive the process of decarbonising the UK economy. The government could have done more to encourage this but issues such as the cost disclosure problem have actively frustrated it. BSIF’s proposals will need careful scrutiny, to ensure that BSIF shareholders are not disadvantaged relative to the managers. We await the next step with considerable interest.”