October 7, 2014
Sharing the fund raising
Seems there’s some real momentum building around the latest mechanism for communities to raise funds. At a time when banks are showing absolutely no interest in attracting people’s savings, a community share issue can seem a pretty attractive proposition – not only to local people who have a bit of spare cash and an active interest in the project in need of funding, but also to the general public who might interested in making a social difference, as well as a small return, with their money. Two more share issues went public last Friday.
Community Share Offer 1. – Sunart Community Renewables
The community development charity (Sunart Community Company) has set up a co-operative (Sunart Community Renewables) to build a 100kw hydro scheme and we are looking for investors! We are thinking long term as we have also identified two other locations for similar schemes!
Shares are £50 each, and we aim to offer 4% per annum interest – far better than many savings accounts ! The minimum investment is 6 shares (£300) and the maximum £100,000, and the offer closes in February.
The project will run for at least 40 years or so but our financials are based on the next 20 years, as this is the period during which we will attract a Feed In Tariff (subsidy) from the government.
We intend to generate green power, sell it to the grid, pay off any loans, pay interest to all our investors, eventually buy back all the shares AND invest all net profits in community projects in and around the local area. The project has been three years or so in the making and all permissions and approvals are in place and we now need to raise the £850,000 required to build the scheme. (We have already spent circa £70,000 in feasibility and planning using various grants etc.)
We know this is achievable as other communities in the UK have already established similar schemes and on the Isle of Mull, (a project I initiated in 2010) has just raised over £450,000 in community shares and is finalising finance and preparing to build!
We have decided we want to raise as much of the £850k as we can from community shares, (our minimum target is to raise circa £260,000) both locally and from the wider ‘community of interest’, to maximise engagement in the project and minimise finance charges from commercial lenders. Anyone who wants to invest in this scheme can (individuals as well as companies) . You don’t have to have a connection with Strontian, although clearly by buying community shares (as opposed to ordinary shares on the stock market), you accept that the shares will not go up in value, and the interest they attract is modest because we are using the other surpluses to fund community initiatives in this beautiful area of the Highlands!
To that end we are launching a ‘community share’ offer. Full details are in the attached share prospectus, including information about community shares (as they are not the same as the company shares we are more used to hearing about).If you are interested in investing in our project, you can do so online from 3 October via the Microgenius website, or if you prefer to pay by cheque you can apply immediately – details are on the attached application form. All applications remain confidential (A list of investors may be made public, but the AMOUNT invested remains confidential.)
We are encouraging applications from individuals and from companies. Individuals paying income tax can offset the investment against their tax liability at a rate of 30% which is pretty useful too!
You can find out more details on the website www.sunartcommunityrenewables.org.uk
Community Share offer 2 – Urras Energy Society
Urras Energy Society Limited has been set up to offer shares in a community renewables development. It has a co-operative structure with community benefit objectives and will be open to individuals, businesses and organisations. Shares will be made available for purchase and investors will have an opportunity to assist in the creation of a sustainable future for the community and, at the same time, secure an attractive return on their investment over a 20 year period. Additional tax benefits may be available to eligible UK taxpayers through special allowances for purchasing shares in small unlisted companies.
The objective of the share offer is to raise monies to support the installation of two 900kW wind turbines at Ballantrushal, Isle of Lewis, to operate alongside the existing turbine that was installed in December 2013. These new wind turbines will be connected to the local power grid and provide clean, green electricity for up to 1,400 homes each year.
Urras Energy will be registered with, but not authorised or regulated by, the Financial Conduct Authority and, therefore, investments are not safeguarded by any depositor protection or dispute resolution scheme.
Unlike the ‘ordinary shares’ typical of a limited company, these types of shares have a fixed value and cannot be sold, traded or transferred between members. Furthermore, only UESL can buy them back. Also, there is no prospect of them ever being worth more than their nominal value. Rather than an annual share dividend being paid to shareholders, an annual interest payment is made.