The company is targeting a return of at least £1.45 for every net 70 pence invested, which equates to a 17% internal rate of return or 107% over the probable five-year life of the fund.
The fund will also offer downside protection – protecting up to 70 pence in the pound – by investing the majority of its assets in highly cash-generative projects with secure revenues.
These investments could be businesses benefiting from index-linked government tariffs, contractually-bound power supply deals and so on.
Any yield from the investments will be accumulated over the period of the fund or paid out as an annual dividend that is expected to be 5% per year and will start at the end of year two.
Sustainable Technology Investments (Guernsey) Limited will invest its own assets alongside those of the fund, committing a sum equal to 10% of the targeted fund size.
The fund will be managed by Gordon Power, STIL chairman, and Jim Totty, STIL managing director. Stephen Lansdown, co-founder of Hargreaves Lansdown, is also a backer of the business having established STIG with Power in 2009.
Totty said: “The investment case for renewable energy and sustainable technology in the UK is compelling. China and other emerging industrial powers are increasing the competition for natural resources, driving up prices and reducing availability. Oil and gas suppliers will ultimately supply to the highest bidder.”
