Winds of change from Ventus
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RAM Capital and Climate Change Capital are looking to raise up to £10m through a joint offer for C-shares in the Ventus and Ventus 2 venture capital trusts.
These specialist VCTs invest in firms that own and operate small to medium sized UK renewable energy generating projects. Projects will use wind, water, landfill gas and biomass to generate clean, sustainable energy which is typically sold under long term contracts to credit rated utilities.
New investment opportunities have been coming through since the credit crunch because firms in the renewable energy sector are finding it more difficult to gain financing from banks. As a result, many are looking to raise money from investors.
The Ventus directors believe that continued Government support for UK renewable energy projects, and increasing targets for renewable energy generation, create an attractive investment opportunity.
Once the Ventus C share funds are fully invested, the directors intend to provide investors with tax-free dividends of 8p a year for each C share on average, but are expected to fluctuate between 6p and 10p.
The VCTs will focus on companies involved in community projects, projects initiated by small-scale developers, small industrial sites and projects that are too small to be of interest to big development companies. The portfolio will contain projects at different stages, but projects with full planning consent will form the bulk, while early stage projects will be limited up to 10 per cent.
Renewable energy is seen as an investment theme for the future and not only of interest to ethical investors. This, along with the tax advantages of investing in a VCT, could make Ventus an attractive proposition.
However, risks of investing in alternative energy include variable wind speeds that could mean it takes longer than anticipated for companies to become profitable, and the failure of wind turbines.
VCT investments can also be difficult to realise so some investors may prefer a limited life VCT, as these focus at the outset on achieving an exit after a set period of time.
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