Guinness says the current economic climate of low interest rates, volatile stockmarkets and high property prices is challenging for investors because it is hard to know where to invest for attractive returns without exposure to
high risks. It intends that the EIS fund 3 will provide attractive risk-adjusted returns by investing in unquoted companies that develop, build, own and operate sustainable infrastructure projects in the UK.
Guiness says investment opportunities in sustainable infrastructure projects are being driven by high and rising energy costs, environmental and climate change policy and ensuring security of energy supply rather than being wholly dependent on oil from the Middle East and natural gas piped from Russia.
The Guinness EIS previously tapped in to the benefits of combining feed-in tariffs with EIS tax reliefs with its first two ETF funds. This third EIS fund will identify companies with similar characteristics to FITs projects, such as highly predictable revenues, contracting with blue chip companies, proven technologies with established operating history and low correlation with other asset classes.
The fund is targeting returns in excess of £1.20 net of fees for each £1 invested and expected to have a life of four to five years. To reduce risk, the EIS team aims to invest after planning consents and will avoid funding early stage project development. It also intends to work only with good quality developers and contractors with a consistent track record of delivering projects on time and on budget.
Renewable energy and energy efficiency are popular sectors among EIS funds and Guinness is known as an energy investment specialist, which could be attractive. However, competition could be provided by the Sustainable Technology Investors EIS fund, plus the forthcoming renewable energy and energy efficiency EIS funds expected from Ingenious.