MIDAS SHARE TIPS: Climate action movement is gaining momentum and Foresight Group is a Green fund aiming to make profits sustainable too
Gaylord Nelson was a relatively unknown American senator when an oil spill off the coast of California polluted vast swathes of the Pacific Ocean, killing thousands of sea creatures and coating beaches with black slime.
It was 1969 and the scale of the disaster gave Nelson an idea. A year later, he led the first Earth Day, when 20 million Americans took to the streets to protest against environmental damage to their country.
Last Thursday, Earth Day celebrated its 51st anniversary, as more than a billion people around the world participated in climate and environment-related events.
Wind of change: Foresight Group is poised to benefit from action on climate change fuelled by Earth Day last week.
US President Joe Biden was one of them, launching his first Leaders Summit on Climate, to show his commitment to a greener world.
Like it or loathe it, the climate action movement is gaining momentum and Foresight Group is well placed to benefit.
Founded in 1984, the group listed on the market in February at £4.20. Today the shares are £4.25, but should move substantially higher over time. Chairman Bernard Faiman is highly ambitious, determined to succeed and has decades of experience behind him.
Now 71, Faiman co-founded Foresight in 1984, as an asset management business specialising in technology. Faiman spotted the green trend early on and shifted towards renewable energy almost 15 years ago. Foresight now operates 33 funds, including Foresight Solar, Foresight Global Real Infrastructure and a host of others.
These funds own around 300 infrastructure projects, capable of powering nearly two million homes with renewable energy.
Most of the funds focus on wind and solar but there are other areas too, including forestry, energy from food waste and battery storage. Alongside all these green assets, a number of Foresight funds invest in small businesses in the regions. Often run by a single person or family, these firms can face problems when the founder wants to retire and senior managers cannot afford to buy him or her out.
Foresight steps in with money – and advice, helping these businesses to grow and develop. Faiman sees this as an integral part of the group, a way of supporting entrepreneurs, as he once was.
Firms are many and varied. Lancashire-based Hedges Direct supplies shrubs and hedging online. Hertfordshire-based Equus Products offers specialist clothing for horse-riding enthusiasts. Manchester-based DA Languages offers interpreting and translation services and is currently helping to deliver the NHS Track and Trace system for people who cannot speak English.
Foresight has been making strides over the past year. A trading update earlier this month revealed that assets under management increased by 60 per cent to £7.2billion in the year to March 31.
Faiman is keen to increase that by another £1.5billion in the current year and brokers expect the business to reach £10billion of assets under management in the next two to three years.
The group makes most of its money from annual management fees and brokers predict sales of £64million for the year to March 2021, rising to £76million next year. Profits are likely to rise from £19.5million to £25.2million over the same period.
Foresight is expected to become a decent dividend stock too. The payout is likely to be a nominal 1p for the year just ended, as the business floated just a few weeks previously. However, a payment of 10p is expected in the year to next March, rising to around 16p in 2023.
Faiman made more than £90million from the flotation but he still owns 29 per cent of the shares. Around 200 staff have participated in a share scheme so they are also motivated to make the listing a success.
Top managers hope that the flotation itself will turbocharge growth, raising Foresight’s profile, so the group can develop new funds, attract more customers to existing funds and make selective acquisitions.
Midas verdict: Many 71-year-olds with £90million in the bank might decide to hang up their hat. Not Faiman. Having built Foresight into a successful private business, he is determined to do even better in the public arena. The signs are encouraging. Green energy is all the rage among big institutional investors so demand for Foresight funds should be strong. And the group’s support for small businesses has widespread appeal as well. At £4.25, the shares are an attractive long-term buy.
Traded on: Main market Ticker: FSG Contact: foresightgroup.eu or 020 3667 8100