Drax’s agreed BSIF bid provides a relevant public transaction comparable in a sector that has struggled to sell ROC assets in the recent past. Drax’s bid price (est. £0.96m/MW) provides a clear indicator that FSFL’s 31 December valuation (£0.97m/MW) was accurate. While FSFL’s discount has narrowed (35% sixmonth average) following the transaction, the fund continues to trade at a significant discount (27%) with an attractive 11.2% dividend yield. We expect further discount narrowing over time, driven by renewed confidence in asset valuations. A key catalyst will be the successful completion of the planned disposal of 75MW of UK solar PV assets.
