FGEN’s £104m anaerobic digestion sale strengthens balance sheet and fuels investment plans
Proactive - Interviews for investorsSummary
Foresight Environmental Infrastructure announces the sale of its remaining 49% interest in six anaerobic digestion plants to Future Biogas for £104 million, achieving a 7.5% premium. This transaction completes a two-stage realization of these investments, following the initial sale of a 51% stake in 2024. The company has focused on operational improvements and system upgrades since acquiring the assets between 2017 and 2019, which contributed to the uplift in value.
The proceeds from the sale will be used to significantly reduce debt, enhancing Foresight's financial flexibility. This positions the company to fund commitments within its existing portfolio and to reinvest in new environmental infrastructure projects that offer attractive risk-adjusted returns. Foresight still retains five anaerobic digestion plants, which are considered prime candidates for further investment to enhance their value.
Foresight reaffirms its dividend target of 8.04 pence for the financial year ending March 2027, with an expected dividend cover of 1.2 to 1.3 times. The company emphasizes its ability to balance immediate income delivery with future growth investments, viewing the recent transaction as a positive step towards strengthening its balance sheet and capital allocation strategies.
Show Notes
Foresight Environmental Infrastructure (LSE:FGEN) investment manager Ed Mountney spoke with Proactive's Stephen Gunnion about the company’s £104 million sale of its remaining 49% stake in six anaerobic digestion plants, debt reduction and plans to reinvest in environmental infrastructure.
Mountney explained that the deal with Future Biogas completes a two-stage disposal, following the sale of an initial 51% stake in 2024. The latest transaction secured a 7.5% premium to the assets’ June 2026 valuation, reflecting value created through operational improvements, system upgrades and plant life extensions.
He said the proceeds would substantially reduce borrowings under FGEN’s revolving credit facility, strengthening the balance sheet and creating greater financial flexibility to fund existing commitments and pursue new investments offering attractive risk-adjusted returns.
The interview also explored opportunities across FGEN’s remaining five anaerobic digestion plants, including operational improvements and portfolio diversification.
Mountney reaffirmed the company’s 8.04p dividend target for the financial year ending March 2027, with expected cover of 1.2 to 1.3 times. A similar level is anticipated in FY2028, before any impact from reinvesting the sale proceeds.
Watch the full interview for more on FGEN’s capital allocation strategy, dividend outlook and growth plans.
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