Harmony Energy Income Trust set for £191m takeover by Foresight

Harmony Energy Income Trust [HEIT] is in discussions with a major renewables investor over a possible takeover bid worth £191million.

The investment manager, which manufactures and operates lithium battery storage plants, revealed that a potential cash offer from Foresight Group had gatecrashed ongoing sale discussions with another third party. 

HEIT kickstarted a sales process last year with the aim of disposing of some or all of its renewable energy battery storage portfolio. 

FTSE 250-listed suitor Foresight held £12.4billion of assets under management as of last September, with a significant focus on green energy and infrastructure.

At 84p per share, its proposal for HEIT represents a 29 per cent premium to the firm’s closing share price of 65.2 pence on 14 March 2025.

It also constitutes a 76 per cent premium to the company’s closing share price of 47.8p on 29 May last year, just before HEIT announced its asset sale process.

While HEIT said it had achieved ‘substantial progress’ in nearing a deal to sell its entire portfolio to a third party, its bosses believe Foresight’s bid ‘delivers a superior outcome for shareholders.

The London-based business said its battery energy storage system portfolio was ‘highly complementary’ with Foresight’s current renewable energy and storage investments.

It added that ‘should a firm offer be made on the financial terms set out above, it would be minded to recommend such an offer to HEIT shareholders, subject to the agreement of the other terms of the offer.

‘Accordingly, the HEIT board is engaging in discussions with Foresight to finalise those terms.’

Following the announcement, HEIT shares climbed by 21.9 per cent to 79.5p on Monday morning, taking their gains over the past six months to around 54 per cent.

HEIT raised £210million when it floated on the London Stock Exchange in October 2021 at £1 a share.

Another capital raise a year later was far less successful, bringing in just £15million of a potential £130million amid the fallout from the mini-Budget and massive volatility in energy prices caused by the Ukraine war.

The group runs eight battery storage projects across England and Scotland, including three in Yorkshire: Pillswood, Rusholme, and Wormald Green, which can store and discharge electricity for up to two hours at a time.

Offer made at discount to NAV 

Markuz Jaffe, an analyst at Peel Hunt, said: ‘This is a strong outcome, both in terms of price achieved and the potential liquidity offered to shareholders through a simple cash acquisition for the entire plc.’

He added: ‘Whilst we would expect shareholder support for the cash offer to be strong, if a firm offer is made by Foresight, we are also mindful that a counter-offer could be made, should the party progressing through the asset sale process remain interested.’ 

But Matthew Read, senior analyst at Quoted Data, noted the offer is at a discount to net asset value of around 9 per cent, based on Morningstar data. 

He added: ‘It seems like Foresight could be getting quite a bargain or, if the other third party transaction is even less attractive, this raises some questions over the quality of the HEIT’s NAV calculation in the first place. 

‘Other transactions in this space seem to be coming at small premiums to NAV and therefore underpinning the NAV calculation.’