According to recent media reports, a UK-based asset management group is planning to raise £40 million from wealthy individuals in order to pay for a tax-sheltered venture capital trust that will invest in small-scale British solar power projects.
Bloomberg news reports that the fund will look to take 100% equity control of projects so that it can dictate the best time to sell the assets. Jamie Richards, partner at Kent-based Foresight Group said, “We are looking to become an aggregator of projects with enough critical mass to interest pension funds and other institutional investors.”
By using debt equivalent to about 80% of the total project cost, Foresight could, “leverage up a £40-million fund to own £200 million of assets,” Richards said.
“People say the sun doesn’t shine in the UK but it doesn’t shine much in Germany either and that country has installed 4.9GW of solar already this year,” he said. “In the UK there certainly should be a return for investors from a combination of the feed-in tariff and solar irradiation.”
“There is now a logjam of planning applications starting to be released,” Richards said. “The first project approval happened in Cornwall a couple of weeks ago.” He expects an increase in momentum in the next 12-18 months ahead of March 2012, when the level of the tariff is scheduled to be reviewed by the government.
Venture capital trusts allow UK investors a number of tax advantages, including income tax relief on their initial commitment and no income tax on dividends paid. Each investor can commit £3,000 to £200,000.
