Iona Capital, formerly Acuity Capital Management, is a specialist in providing investment for waste projects that have a renewable element, such as the production of methane gas for conversion into electricity or heat.
Acuity became Iona earlier this year after making changes to its investment team and positioning itself as a specialist in the waste renewables sector. Acuity had previously been replaced by Foresight as manager of two other VCTs due to poor performance.
Iona is raising up to £10m through a B share offer for its environmental venture capital trust, formerly the Acuity environmental VCT. This was established in 2009 with a focus on anaerobic digestion and in-vessel composting plants. Waste such as food, card and paper is recycled to produce biogas that generates electricity and heat, or compost that can be turned into soil fertilisers.
The B share issue has a broader investment remit in its focus on environmental infrastructure projects that use local authority waste to generate renewable energy. The VCT targets a 10 per cent tax-free running yield once the fund is fully invested, which represents a gross equivalent yield of 13.3 per cent for a 40 per cent taxpayer and 15.65 per cent for a 50 per cent taxpayer.
Iona Capital will invest in cash generative companies with well-defined business plans, quality management, adequate capital resources and strong demand for their products and services. These firms are likely to have lower risks and to provide a reliable source of tax-free income for investors.
Iona Capital has been working with firms such as Biogen Greenfinch, which designs, builds, owns and operates commercial AD plants for processing food waste.
Iona Capital believes that recycling organic waste could make a significant contribution towards meeting the UK’s renewable energy targets for 2020. The legislation that underpins the need for an alternative to landfill sites, and the need for renewable energy sources, support the investment case for the recycling of organic waste
However, there are potential risks such as delays in planning permission for the plants and construction risks.