This page provides a deeper look at the key sectors within Fern A shares – the company new investments into the Octopus Inheritance Tax Service (OITS) and OITSPlus are likely to have exposure to – and the factors influencing performance and valuations.
Renewable energy: cash generative assets
- A large diversified renewable energy portfolio with a value of around £1.1bn, comprising over 200 assets across four countries and six generation technologies.
- The portfolio generates strong long term cash flows, a significant portion of which is government backed and index linked.
- Wholesale energy prices have shown significant volatility since 2020, with extreme spikes driving periods of relative outperformance, followed by some underperformance as prices normalised.
- Active asset management, including a French windfarm re-powering project, which is extending asset life and materially increasing output, adding both long term value and durability of income.
Real estate: focus on residential living
- Real estate exposure is focused on residential living sectors, through both owned housebuilding and integrated retirement living and a residential lending business.
- Structural demand for high-quality UK housing remains strong, driven by population growth.
- Recent years have seen lower sales volumes due to higher interest rates, but activity is now recovering, supported by recovery in mortgage activity.
- Elivia Homes and Rangeford Retirement Villages are building in areas of high demand and low supply and are operationally mature, with experienced management teams.
- The lending business continues to generate strong returns and actively manages credit issues where they arise, supported by a large, multi-skilled team.
Enterprise fibre infrastructure: focused on business connectivity
This share class includes Vorboss, an enterprise fibre network serving businesses across London.
Vorboss is focused on providing high-speed, reliable connectivity to businesses through its dedicated fibre network.
The continued shift towards full-fibre connectivity provides a long-term structural opportunity for businesses with established fibre infrastructure and strong customer demand. Fern A has no exposure to Fern Fibre Trading Limited (FFTL), which is in Fern B (for more information on this see here).
How the sectors work together
Fern A brings together businesses with different drivers of performance and different stages of development. The portfolio spans renewable energy, real estate and enterprise fibre infrastructure. A diversified portfolio that can generate sustainable income and support long-term growth.
Key risks to bear in mind
- Investments made through OITS and OITSPlus are high risk. The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest.
- Tax treatment depends on individual circumstances and tax rules could change in the future.
- Tax relief depends on portfolio companies maintaining their qualifying status.
- The shares of unquoted companies could fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell.
