Foresight Environmental Infrastructure Limited (LSE:FGEN) has agreed to sell its remaining 49% interest in a portfolio of six gas-to-grid anaerobic digestion facilities to Future Biogas for £104.0 million, completing the disposal of assets in which it initially reduced its ownership in 2024.
The transaction represents a 7.5% premium to the portfolio’s valuation at 30 June 2026, equivalent to an uplift of £7.2 million or 1.2 pence per share. The sale price also reflects a 38% increase in the valuation of FGEN’s remaining interest since the initial disposal in August 2024.
FGEN reported that the investment generated an internal rate of return (IRR) of 12.9% from inception and a multiple on invested capital (MOIC) of 1.9 times.
The company intends to use the net proceeds to reduce borrowings under its revolving credit facility (RCF), increasing its capacity to meet existing investment commitments and consider further acquisitions.
Disposal Completes Two-Stage Sale to Future Biogas
FGEN acquired the six anaerobic digestion facilities between 2017 and 2019 for a combined £100.4 million, with Future Biogas acting as developer, operator and strategic partner.
In August 2024, FGEN sold a 51% interest in the portfolio to Future Biogas for £68.1 million, retaining a minority stake while continuing to participate in the assets’ development.
During the subsequent period of joint ownership, the companies invested in system upgrades, operational improvements and initiatives intended to extend the facilities’ operating lives beyond the expiry of Renewable Heat Incentive support.
The programme also included progressing opportunities related to carbon capture.
The latest agreement transfers FGEN’s remaining interest to Future Biogas, bringing the combined consideration from the two transactions to £172.1 million.
FGEN said the final sale price reflects the valuation changes achieved during its ownership of the assets.
The company continues to own five additional anaerobic digestion facilities, with an aggregate valuation of £76.9 million, which are not included in the transaction.
Sale Proceeds to Reduce Borrowings and Support Investment Plans
FGEN plans to apply the net disposal proceeds towards reducing drawings under its revolving credit facility.
The reduction in borrowing is expected to increase the company’s financial flexibility and provide additional capacity to fund existing commitments and potential investments.
The investment manager is currently evaluating acquisition opportunities across FGEN’s principal investment sectors, including renewable energy generation, other energy infrastructure and sustainable resource management.
According to the company, any new investments will be assessed under its existing capital allocation framework, taking into account prospective returns and alternative uses of available capital.
The approach is consistent with the strategic priorities outlined in FGEN’s June 2025 update and its 2026 Capital Markets Day.
The company has not announced specific acquisitions or allocations of the disposal proceeds beyond the planned reduction in RCF borrowings.
FGEN Maintains FY27 Dividend Target of 8.04 Pence Per Share
Alongside the disposal announcement, FGEN reaffirmed its dividend target of 8.04 pence per share for the financial year ending in 2027.
The company said the targeted distribution is fully covered by portfolio cash flows, with dividend cover expected to remain between 1.2 and 1.3 times during FY27.
FGEN also anticipates a similar level of dividend cover in FY28, before accounting for any potential reinvestment of the disposal proceeds.
The company reiterated its objective of maintaining a sustainable, progressive dividend while managing its investment portfolio and capital commitments.
Management Comments on Portfolio Disposal
Stephanie Coxon, Chair of FGEN, said the transaction provides evidence of the valuation of the company’s infrastructure assets, with the consideration exceeding their June 2026 carrying value.
She also highlighted the expected reduction in borrowing and the additional flexibility available for future capital allocation.
Charlie Wright, Investment Manager for FGEN, said the company had worked with Future Biogas throughout the portfolio’s development and subsequent period of joint ownership.
He noted that FGEN had supported operational improvements and initiatives intended to extend the assets’ long-term value during its investment period.
Management said the proceeds would allow FGEN to reduce leverage, meet existing commitments and evaluate further investment opportunities under its capital allocation framework.
The disposal marks the completion of FGEN’s ownership of the six facilities, while the company retains exposure to the anaerobic digestion sector through its five remaining assets.
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