Foresight eyes £190.8m acquisition of Harmony Energy Income Trust

Foresight Group LLP is in discussions to acquire Harmony Energy Income Trust plc (HEIT) in a deal that would value the UK-based battery storage fund at £190.8 million. Under the proposed agreement, HEIT shareholders would receive 84.0 pence per share, representing a 29% premium over the company’s closing price of 65.2 pence on 14 March 2025 and a 76% increase compared to 47.8 pence on 29 May 2024, the last trading day before HEIT announced its asset sale process.

This potential HEIT acquisition aligns with Foresight’s strategic focus on renewable energy and battery energy storage systems (BESS). As a specialist investment manager with a portfolio spanning infrastructure, real assets, and energy transition projects, Foresight views HEIT’s assets as complementary to its existing holdings. The move reflects broader industry trends, as investors increasingly look toward grid-scale energy storage to support the UK’s transition to low-carbon power sources.

How Does HEIT Fit Into the Battery Storage Sector?

HEIT is a UK-listed fund specializing in grid-scale BESS assets, which are essential for stabilizing electricity supply as the country increases its reliance on renewable energy sources like wind and solar. The company currently operates 395.4 MW / 790.8 MWh of BESS capacity, including the Bumpers project, which, as of September 2024, was the joint-largest operational battery storage system in Europe.

The importance of BESS investments has grown as the UK energy market faces challenges related to renewable intermittency. Unlike traditional power plants, solar and wind farms produce electricity inconsistently, making large-scale battery storage critical for ensuring a stable and efficient power grid. By acquiring HEIT, Foresight aims to expand its position in battery storage investments, a sector expected to see significant growth as the UK accelerates efforts to achieve Net Zero emissions targets.

Why Is HEIT Considering a Sale Instead of an Asset Divestment?

Before entering discussions with Foresight, HEIT had been pursuing a portfolio sale strategy, aiming to divest its battery storage assets to a third party. However, after evaluating the Foresight acquisition, the HEIT Board determined that a full company sale would deliver a superior outcome for shareholders.

The board’s position reflects current market conditions, where institutional investors and infrastructure funds have shown growing interest in battery storage consolidation. With the UK electricity grid evolving and more companies looking to secure strategic energy assets, HEIT’s management likely saw Foresight’s bid as an opportunity to provide immediate value to investors while ensuring the assets remain part of a long-term, well-funded portfolio.

HEIT has confirmed that negotiations are ongoing, though no formal offer has been finalized. The company also emphasized that there is no certainty that a deal will proceed. However, the Board has indicated it would be inclined to recommend the offer if terms remain favorable.

What Does This Mean for HEIT Shareholders?

The prospect of an 84.0 pence per share cash offer represents an attractive premium for HEIT shareholders, particularly given the stock’s performance over the past year. Before the potential acquisition was announced, HEIT’s shares had struggled to regain momentum, largely due to uncertainty surrounding its asset sale strategy and broader market challenges in the renewable energy sector.

Investor sentiment has since shifted positively, with HEIT’s stock price climbing to 79.00 pence as of 21 March 2025. The strong market response suggests that shareholders anticipate a formal bid, though trading activity will likely remain volatile until a definitive agreement is reached.

Additionally, Harmony Energy Limited, a significant shareholder in HEIT, has already provided an irrevocable undertaking to support the acquisition. This commitment covers 12.04% of HEIT’s issued share capital, strengthening the likelihood of shareholder approval should Foresight proceed with the transaction.

How Has Foresight’s Stock Responded?

While HEIT’s share price has rallied, Foresight Group Holdings Limited (FSG) has experienced more mixed investor sentiment. Over the past year, FSG shares hit a high of 544.99 pence in September 2024, before declining to 354.00 pence on 13 March 2025. Since the announcement of its interest in HEIT, FSG has shown modest recovery, with shares closing at 363.00 pence on 21 March 2025.

The market reaction reflects a measured response from investors, as large-scale acquisitions in the renewable infrastructure space often raise concerns about capital deployment and integration risks. However, long-term investors may see Foresight’s acquisition strategy as a means to strengthen its position in the growing battery storage market, potentially driving future stock value appreciation.

Should Investors Buy, Sell, or Hold?

For HEIT shareholders, the offer price provides a significant premium, making it an attractive exit opportunity. While some may hold in anticipation of a formal bid, others may opt to sell at current levels to lock in gains. For investors in Foresight Group, short-term fluctuations are expected, but the company’s expansion into grid-scale battery storage could enhance long-term growth prospects. Investors with a long-term outlook might view the current stock price as a buying opportunity, provided they are comfortable with the risks associated with large-scale acquisitions.

What’s Next for the HEIT Acquisition?

While discussions continue, regulatory approvals and shareholder voting will be key factors in determining the outcome. Given HEIT’s strategic importance in the UK battery storage sector, the acquisition could set a precedent for further consolidation in the industry.

Foresight’s move underscores the broader shift in investment strategies, where institutional investors increasingly target energy storage infrastructure as a means to capitalize on the transition to low-carbon power grids. Whether or not the HEIT acquisition finalizes, the deal signals strong confidence in the long-term value of battery storage assets, a sector that remains integral to the UK’s energy transition strategy.