NextEnergy Solar Fund Ltd (LSE:NESF) is continuing to weigh up its strategic options, as the London-listed renewables investor seeks to bolster shareholder value.
In an update alonside its annual results, it said it is actively reviewing multiple paths forward and has appointed independent advisers to guide its considerations.
Any significant developments will be put to major shareholders. A key area under review is the fund's investment management fee, which the board is discussing with the company's adviser with a view to making changes.
In parallel, NextEnergy is pressing ahead with its capital recycling programme, which involves selling older assets to reinvest in higher-return opportunities.
So far, the company has completed the sale of around 145 megawatts of capacity, generating proceeds of £72.5 million. The disposals have added an estimated 2.76p per share to the company's net asset value. The final 100MW in this phase is currently being marketed, with updates expected in due course.
The company said these sales support a more disciplined capital structure. NextEnergy recently consolidated its revolving credit facilities into a single line at a rate of 120 basis points above the Sterling Overnight Index Average (SONIA), a benchmark interest rate.
Results for 12 months ended 31 March paint a mixed picture. Net asset value fell to 95.1p per share, down from 104.7p a year earlier.
The total NAV dropped to £547.4 million, reflecting both asset sales and a lower valuation environment. Gross asset value also declined to £1.06 billion.
The fund's generation portfolio, spanning 101 operating assets, produced 830 gigawatt-hours of electricity over the year, 5.3% below budget.
This underperformance occurred despite irradiation levels being broadly in line with forecasts, suggesting operational or site-specific challenges.
Despite the headwinds, NextEnergy declared a total dividend of 8.43p per share for the year, marginally ahead of the previous year's 8.35p.
That payout was covered 1.1 times by earnings after debt repayments. The board reaffirmed its guidance for the coming year, targeting the same dividend level with coverage expected between 1.1 and 1.3 times.
As of mid-June, the fund's dividend yield stood at around 12%, supported in part by its share buyback programme.
"NESF has delivered an attractive, cash covered dividend in the face of operational challenges and continued macroeconomic pressures and volatility across the UK equity markets," said chief investment officer Ross Grier.
"The company's ordinary share price continues to trade at a material discount to its net asset value per share which is frustrating given this progress but with oversight from the board, the team has taken action to narrow this discount through a combination of strategic activities and continues this work actively."
The company has repurchased over 15.6 million shares to date, using £11.5 million of a £20 million authorised pool, which has contributed modestly to NAV per share.