The company installs solar panel systems free of charge on carefully selected homes in the UK and homeowners can then use the electricity generated at no cost, with the surplus fed into the national grid.
Under the government’s feed-in tariffs scheme, A Shader Green is paid a guaranteed index-linked return for 20 years on all the electricity produced by the panels.
This is the first retail bond offering for the company, which has carried out more than 25,000 installations across the country and has previously been financed by more than £250m from banks, pension funds, and investment houses.
A Shader Green’s chairman, Stewart Davies, said there are no construction risks attached to the solar panels.
He said: “The panels are fully insured and the income stream is guaranteed by government. The return is attractive given the security of income and the current low interest rates available on cash deposits.
“The proceeds of the Greener Bond issue will be used to purchase solar panel systems that are already installed and operational, so investors are not exposed to construction risk.”
Charges:
The minimum investment in the Greener Bond is £1000. The full three years’ interest of 18 per cent gross can be paid upfront to investors within 30 days of investing. This money can be paid upfront because Stewart Davies, the chairman of A Shade Greener, has personally put £1.8m into a reserve account to be used solely for the purpose. However if investors want to stay in the bond after the three-year term, they will have the opportunity to remain invested and continue to receive 6 per cent gross a year, paid six monthly in arrears.
Provider View:
Stewart Davies, chairman of A Shade Greener, said: “We have a well-established network of institutional investors who have long appreciated the strong returns offered by investing with us, as well as valuing the environmental dimension of our business. Now by launching a retail bond we are providing another option for advisers seeking solutions for clients who are interested in ‘green’ investments. The decision to pay the interest upfront demonstrates our confidence and makes the investment even more attractive.”
Adviser View:
Mark Hoskin, partner of London-based Holden & Partners, said: “Investors need to be aware if they opt to have their interest paid upfront of course that they will be liable for tax on all of it in year one, but aside from that the key issue looks to be the re-financing risk of the original loan in three to four years’ time. The first three years of interest is underwritten by the chairman himself and the company has an extremely impressive track record in raising money from banks when required. The reason that it has offered this bond is that it’s looking to widen out its financing channels and not have to depend on bank finance for all its funding needs.”
Verdict:
A rare chance for fixed income exposure with an ethical dimension and a guaranteed attractive rate of return.
