Drax Group plc (LON:DRX) has announced the recommended cash acquisition of Bluefield Solar Income Fund Limited (BSIF) by Drax Smart Generation Holdco Limited (Drax Bidco), a wholly-owned subsidiary of Drax Group plc to be implemented by means of a court-sanctioned scheme of arrangement under Part VIII of the Companies (Guernsey) Law, 2008 (as amended)
Summary
· The boards of directors of each of BSIF and Drax Bidco are pleased to announce that they have reached agreement on the terms of a recommended all cash acquisition by Drax Bidco of the entire issued share capital of BSIF. The Acquisition is to be effected by means of a court-sanctioned scheme of arrangement under Part VIII of the Companies Law.
· Under the terms of the Acquisition, BSIF Shareholders will be entitled to receive 92.574 pence in cash per BSIF Share. In addition, BSIF Shareholders will be entitled to keep the second interim dividend of 2.25 pence per BSIF Share payable to qualifying BSIF Shareholders on or around 15 June 2026. Accordingly, BSIF Shareholders (where they qualify for the Permitted Dividend) will be entitled to receive a total value of 94.824 pence per BSIF Share.
· The Cash Consideration values the entire issued share capital of BSIF at approximately £548 million, and represents:
o a premium of approximately 28 per cent. to the Closing Price of 72.20 pence per BSIF Share on 4 November 2025 (being the last Business Day prior to the commencement of the Offer Period); and
o a premium of approximately 19 per cent. to the one-month volume weighted average price of 78.06 pence per BSIF Share on 4 November 2025 (being the last Business Day prior to the commencement of the Offer Period).
· Including the Permitted Dividend, the terms of the Acquisition value the entire issued share capital of BSIF at approximately £561 million, and represent:
o a premium of approximately 31 per cent. to the Closing Price of 72.20 pence per BSIF Share on 4 November 2025 (being the last Business Day prior to the commencement of the Offer Period);
o a premium of approximately 21 per cent. to the one-month volume weighted average price of 78.06 pence per BSIF Share on 4 November 2025 (being the last Business Day prior to the commencement of the Offer Period); and
o a discount of approximately 9 per cent. to the unaudited 31 March 2026 net asset value of 104.52 pence per BSIF Share announced by BSIF on 14 May 2026.
· The terms of the Acquisition represent an enterprise value for BSIF of approximately £1,082 million.
Background to and reasons for the Acquisition
· Drax believes the Acquisition of BSIF offers an attractive opportunity to grow its UK renewable generation business whilst being highly complementary to the Wider Drax Group’s existing operations and FlexGen portfolio. The Acquisition offers Drax direct access into a c.0.9GW renewable portfolio, comprised of operating and under construction solar and wind assets, plus a >1GW (2.9GW gross capacity) development pipeline to be constructed across the next decade. These assets can complement the Wider Drax Group’s existing portfolio of c.2.2GW of FlexGen assets and developments and 2.6GW of biomass, creating a broader base of UK generation assets and associated earnings.
· The Acquisition aligns with the Wider Drax Group’s strategic and capital allocation priorities to allocate up to £2 billion of incremental investment (between 2025 and 2031), primarily in flexible and renewable energy to create value and growth in the short, medium and long-term, and to support delivery of the UK’s objectives of energy security, affordability, and decarbonisation. Drax believes that the Acquisition is underpinned by strong cash generation, a disciplined approach to capital allocation, and attractive returns for Drax shareholders.
· BSIF, a publicly listed investment company which operates a portfolio of UK based renewable energy infrastructure assets (including photovoltaic plants, wind farms and small-scale wind turbines), supports Drax’s core UK generation focus and, as an acquisition, represents a compelling opportunity to add operating assets with predominantly contracted cash flows, in addition to under construction and development assets to the Wider Drax Group’s existing portfolio, with a focus in particular on the following key benefits:
o Significant expansion of the Wider Drax Group’s renewable generation capabilities;
o Optimising Drax’s generation mix, complementing FlexGen assets and biomass with solar and wind generation;
o For the financial year ended 30 June 2025, BSIF generated underlying earnings of c.£95 million, EBITDA of c.£130 million and operating free cash flow of c.£118 million. BSIF will provide an opportunity to grow Drax’s EBITDA from renewables, offering greater predictability and visibility of cash flows from a large operational portfolio that reduces the Wider Drax Group’s earnings risk from grid connection delays. With an operational portfolio underpinned by long-term investment schemes and certificates, BSIF maintains a highly contracted revenue base, with 57 per cent. of revenue generated from FiT, ROCs, CfDs and REGOs, and the remaining 43 per cent. derived from PPAs in the six months to 31 December 2025;
o Combining BSIF’s portfolio with Drax’s existing flexible generation assets, alongside Drax’s marketing and trading capabilities, will create a broader renewables platform. This could enable Drax to improve revenues from renewable certificate trading, improve routes-to-market, and make better use of the Wider Drax Group’s trading platform. It could also allow the combined portfolio to be dispatched more efficiently on a 24/7 basis, driving optimisation and market access cost savings;
o Provides a significant development opportunity, allowing Drax to continue to sustainably increase the scale of solar and BESS capacity. As at 31 December 2025, 545MWs of BSIF’s solar development portfolio is underpinned by long-term 15-to-20 year CfD contracts, secured in Allocation Rounds 4, 5, 6 and 7;
o Offering the potential to unlock significant synergies across the Wider Drax Group’s trading, operations and energy sales activities in addition to potential cost savings associated with listing costs and lower trading costs by utilising Drax’s existing route-to-market platforms (including providing a route-to-market for over 2,000 embedded generators) and trading operations; and
o Accelerating Drax’s contribution to the UK’s national climate targets and ambitions for a clean power system and net zero objectives.
Drax expects that return on invested capital from the Acquisition will significantly exceed the Wider Drax Group’s target weighted average cost of capital.
Recommendation
· The BSIF Directors, who have been so advised by Deutsche Numis and Rothschild & Co as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their advice to the BSIF Directors, Deutsche Numis and Rothschild & Co have taken into account the commercial assessments of the BSIF Directors. Deutsche Numis and Rothschild & Co are providing independent financial advice to the BSIF Directors for the purposes of Rule 3 of the Code.
· Accordingly, the BSIF Directors unanimously intend to recommend that BSIF Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting, as the BSIF Directors who hold BSIF Shares have irrevocably undertaken to do in respect of their own beneficial holdings of 176,800 BSIF Shares, representing, in aggregate, approximately 0.03 per cent. of the issued share capital of BSIF on 29 May 2026 (being the latest practicable date prior to this Announcement).
· Further details of these irrevocable undertakings are set out in Appendix III to this Announcement.
Information on Drax Bidco and Drax
· Drax is a renewable energy company engaged in renewable power generation, the production of sustainable biomass and the sale of renewable electricity to businesses.
· Drax operates a generation portfolio of sustainable biomass (c.2.6GW), hydro-electric and pumped storage hydro assets (c.560MW) in England and Scotland. At Drax’s Cruachan Power Station, a project which will add 40MW of additional capacity is progressing. Drax is constructing three open cycle gas turbine assets, two in England and one in Wales which, when commissioned, will provide capacity of c.900MW in aggregate. Drax is also developing a pipeline of battery energy storage system investment opportunities comprising physical assets and capabilities to optimise third-party assets with the provision of route-to-market, floor and tolling structures. In October 2025, Drax agreed to acquire three BESS projects across Scotland and England from Apatura Limited which, when fully commissioned, will provide capacity of c.260MW in aggregate. The Wider Drax Group also has in place agreements for 450MW of tolling contracts, comprising 250MW from a 10-year tolling agreement with West Burton C Limited, a company owned by Fidra Energy, entered into in January 2026, and 200MW from a 15-year tolling agreement with Zenobē Coalburn Limited, entered into in February 2026.
· In March 2026, Drax completed the acquisition of Flexitricity Limited, a UK-based optimiser of flexible energy assets, with a scalable platform expected to support the Wider Drax Group’s ambition to develop a GW scale pipeline of BESS opportunities.
· The Wider Drax Group continues to evaluate opportunities to maximise value from the Drax Power Station site, including the potential for a c.100MW data centre, as well as other generation sources.
· Drax’s Energy Solutions business sells renewable electricity to industrial and commercial customers in the UK.
· The Wider Drax Group also operates a biomass pellet production business with 14 operational sites for a combination of own-use and third-party sales. As at 31 December 2025, the Wider Drax Group employed over 2,900 people in the UK, US, Canada and Japan. The Wider Drax Group reported total revenue of £5,391 million and Adjusted EBITDA of c.£947 million in the financial year ended 31 December 2025.
· Drax Bidco is a wholly-owned subsidiary undertaking of Drax. It owns the UK generation portfolio of Drax, being Drax Power Station, the hydro-electric and pumped storage hydro assets, the three OCGT assets and the three BESS projects under development acquired from Apatura Limited.
Information on BSIF
· BSIF was established in 2013 as the first UK-listed investment company focused primarily on UK solar energy infrastructure. At the time of its IPO, there was no listed vehicle dedicated to this sector and BSIF was therefore a pioneer in creating a new asset class within the UK investment company landscape.
· BSIF has grown into a scaled and established participant in the UK renewable energy market, building a high-quality portfolio of operational assets alongside a substantial proprietary development pipeline. This growth has been underpinned by the experience, stability and disciplined investment approach of its investment adviser, Bluefield, whose management team has been central to sourcing, developing and operating BSIF’s assets.
· As at 31 December 2025, BSIF had total assets of £639 million.
· As at 31 December 2025, BSIF owned an operational solar portfolio of 121 photovoltaic plants (consisting of 79 large scale sites, 39 micro sites and 3 roof top sites), 6 wind farms and 109 small scale UK onshore wind turbines, all 100 per cent. owned by BSIF, with a total capacity of 748.7MW. BSIF also has a 25 per cent. stake in a joint venture portfolio of UK solar assets in partnership with GLIL Infrastructure, who own the remaining 75 per cent. The total capacity of the joint venture portfolio is 412.1MW. BSIF’s total operating capacity was therefore 851.8MW as at 31 December 2025, composed of 793.5MW of solar and 58.3MW of onshore wind.
· In addition to the operational portfolio, BSIF benefits from its own proprietary development pipeline. As at 31 December 2025, this consisted of 946MW of solar projects and 1,915MW of BESS projects; 25MW of the pipeline was under construction, 1,204MW was fully consented, 47MW was in planning and 1,585MW was under development.
· In the year ending 30 June 2026, BSIF is expected to generate some 880 GWh of clean energy, enough to power around 326,000 homes, and avoid over 155,000 tonnes of CO₂e emissions.
Drax Board Statement
· The Acquisition constitutes a “significant transaction” for Drax for the purposes of the UK Listing Rules and this Announcement constitutes a notification pursuant to Chapter 7 of the UK Listing Rules.
· Certain further information required to be notified by Drax pursuant to Chapter 7 of the UK Listing Rules will be set out in the Scheme Document.
· The Drax Directors believe that the Acquisition is in the best interests of Drax Shareholders as a whole.
Timetable and Conditions
· It is intended that the Acquisition will be implemented by way of a court-sanctioned scheme of arrangement under Part VIII of the Companies Law (although Drax Bidco reserves the right to implement the Acquisition by way of a Takeover Offer, with the Panel’s consent and compliance with the Code).
· The Acquisition will be put to the BSIF Shareholders at the Court Meeting and the General Meeting. In order to become Effective, the Scheme must be approved by a majority in number of the Scheme Shareholders present and voting (and entitled to vote) at the Court Meeting, either in person or by proxy, representing at least 75 per cent. of the votes cast by those Scheme Shareholders. In addition, a special resolution implementing the Scheme and amending the articles of incorporation of BSIF must be passed by BSIF Shareholders representing at least 75 per cent. of votes cast at the General Meeting. Following the Court Meeting, the Scheme must also be sanctioned by the Court.
· The Acquisition is also subject to the Conditions and terms set out in Appendix I to this Announcement, including the UK National Security and Investment Condition.
· For the purposes of Rule 29.1(d) of the Code, a valuation of BSIF’s portfolio will be included in the Scheme Document (or, if applicable, the Offer Document).
· The Scheme Document, containing further information about the Acquisition and the Scheme and notices of the Court Meeting and the General Meeting will be distributed to BSIF Shareholders (along with the Forms of Proxy for use in connection with the Court Meeting and the General Meeting) as soon as reasonably practicable and, in any event, within 28 days of the date of this Announcement (or such later time (if any) as Drax Bidco, BSIF and the Panel agree and, if required, the Court may approve).
· Subject to the satisfaction or (where applicable) waiver of the Conditions, the Acquisition is expected to become Effective during Q3 2026.
Commenting on the Acquisition, Michael Gibbons CBE, Chair of Bluefield Solar Income Fund Limited, said:
“BSIF was a pioneer in creating the first UK-listed investment trust focused primarily on UK solar energy infrastructure. Since its IPO in 2013, BSIF’s operating portfolio has grown with the UK Solar PV market to c.850MW, including an expansion into the onshore wind and battery storage asset classes. In that time, BSIF has delivered a total shareholder return of 122 per cent. and, as at BSIF’s most recent results, generates enough green electricity to power over 326,000 homes with renewable energy. None of this would have been possible without the resources and considerable expertise of Bluefield Partners, the investment adviser whose management of this company has established them as one of the leading experts in the renewables industry.
However, since autumn 2022, a changed interest rate environment has contributed to BSIF Shares trading at a consistent double digit discount to NAV. Without fresh capital to invest in new projects, the portfolio’s quarterly NAVs have naturally declined with the payment of dividends. Against this changed backdrop, following an earlier evaluation of strategic options and shareholder feedback which indicated a clear preference for value maximising options, the BSIF Board acted decisively to initiate a Formal Sale Process. The BSIF Board is pleased with the conclusion of this process and believes the Acquisition at a 31 per cent. premium (including the Permitted Dividend) to the closing share price on 4 November 2025, represents a highly attractive outcome for BSIF Shareholders and a compelling opportunity to crystalise value in cash. The BSIF Board unanimously recommends that BSIF Shareholders vote in favour of the Acquisition.”
Commenting on the Acquisition, Will Gardiner, CEO of Drax, said:
“The UK’s energy system is rapidly evolving and to meet its changing needs Drax is transitioning too. We are excited about the opportunities we have to invest in growing our business and supporting the country’s long-term energy security by adding new sources of generation and storage to our portfolio.
BSIF could potentially be the biggest acquisition our business has ever made. It represents an attractive opportunity to substantially grow our renewable generation business, while being highly complementary to the Wider Drax Group’s existing operations and FlexGen portfolio. This deal can help meet the UK’s energy goals of security of supply, affordability and decarbonisation as rising levels of renewable electricity are expected to meet growing national power demand.
The Acquisition is part of our plan to allocate up to £2 billion into flexible and renewable energy through the decade, and can deliver a step change in Drax’s EBITDA and contracted cashflows and synergy benefits, which supports returns significantly in excess of Wider Drax Group target WACC. There is no change to our capital allocation policy as a result of the potential transaction. We remain committed to our balance sheet targets, including returns to shareholders.”
