Does Bluefield’s £130 million solar fund mark solar’s step into the mainstream?

Earlier this month, the £130 million Bluefield Solar Income Fund started trading on the London Stock Exchange.

The investment fund, which will focus on large-scale agricultural and industrial solar assets, outperformed all predictions in its initial public offering (IPO) where it raised £130 million – significantly more than the minimum target of £75 million.  

The fund is the first of its kind for solar in the UK and its success hints that institutional investors are beginning to recognise the value of solar assets. Right now there is just one other renewable fund listed on the stock exchange and it focuses on wind. Bluefield’s solar fund represents a pivotal moment in the industry’s development as attracting the interest of hard-nosed investors remains key to unlocking solar’s potential in the UK.    

Speaking to Solar Power Portal, James Armstrong a managing partner of Bluefield LLP explained why solar PV is becoming more attractive to investors. He said: “The nature of the solar asset lends itself well for investment – it’s classic infrastructure: the irradiation is very stable, the technology to capture it is very stable; therefore you have a very stable income and that’s the nub of it. Solar works very well for what investors are looking for today.”

Asked whether the success of the IPO took Bluefield by surprise, Armstrong responded: “The reason why the IPO was so successful is that the solar industry has established itself.”

He continued: “There is a general perception that there is very good legislation. As an investment team we have invested across Europe historically and we think the UK has very good established legislation. I think that there is also potential for very significant growth which needs a lot of capital – so you have that scale point.”

Armstrong was keen to credit the much-maligned energy minister Greg Barker for the role he played in shoring up solar’s policy landscape as well as investor confidence by publicly reiterating his 20GW by 2020 ambition.

The fund’s flotation attracted a number of high-profile investors but it was the diversity of those that came in that proved crucial. Armstrong explained: “The interesting thing for the market is that there was a broad base of investors so we knew that we were not going to be reliant on a few, even though we have some very big investors who came in. Investors included income funds and ethical funds, right through to big wealth management groups and private finance groups – so a very broad range.”

To illustrate the point, ethical investors CCLA Investment Management snapped up 25 million shares worth 19.2% while investment heavyweights Blackrock managed to get hold of almost 10% of the solar fund. 

The fund’s projects will all be UK-based with a clear focus on large-scale solar. “The first wave will largely be ground-based; a mixture of large-scale agricultural-sited arrays and commercial projects,” explained Armstrong.

He added: “We are working with some of the key contractors in the ground mount market with a very significant pipeline. In order to deliver that £130 million there is a pipeline that is significantly in excess of that.

“There is also the industrial/commercial side which is one we like – we think it’s a really good model. They tend to be smaller as an asset size simply because of availability of land. Again, it’s something that we like and will have within the portfolio.”

Bluefield will be working with contractors between now and March in order to deliver the fund but doesn’t plan on stopping there, with the fund aiming to get £300 to £400 million in the next two to three years.     

Asked whether the fund would open the door for more institutional investors in the UK solar market, Armstrong concluded: “For me it marks a very important milestone in the development in the industry. To attract very significant institutional investors is imperative if we are to build on the 2.5GW we currently have and get anywhere near Greg Barker’s ambition of 20GW by 2020.”