March 2014 saw the launch of NextEnergy Solar Fund Limited as a Guernsey domiciled closed-ended collective investment fund focusing on operational solar photovoltaic assets located in the UK. The investment fund successfully raised £86 million for its listing on the premium segment of the main market of the London Stock Exchange (LSE).
This was followed in April by the John Laing Environmental Assets Group Limited raising proceeds of £160 million for its own placing and Initial Public Offering (IPO) on the LSE. It is also a Guernsey domiciled closed-ended fund which will acquire a seed portfolio of interests in UK based solar, onshore wind, waste processing and wastewater projects on or around admission.
These two launches also come in the wake of a number of successful launches during 2013 of other Guernsey domiciled investment funds: Resonance British Wind Energy Income Fund first closed in April 2013 with £35 million for consolidating the small and medium sized operating wind farm industry in the UK; in July 2013 Bluefield Solar Income Fund had an initial capital raising of £130 million on the premium segment of the LSE as the first solar energy infrastructure fund focused on the acquisition and management of a diversified portfolio of large scale solar energy in the UK; and later that same month, The Renewables Infrastructure Group – investing in a portfolio of fully operational wind and solar energy generation assets – raised £300 million on the LSE, with City sources reporting that this was the largest IPO of a clean energy firm in London to date.
These examples are part of the growing body of evidence which suggests Guernsey is seen as the home of the clean energy fund and especially for those seeking to IPO.
Investment fund credentials
Guernsey's long and strong heritage as an investment fund centre has helped build an industry with significant infrastructure and expertise. Today, there are more than 50 fund managers, administrators and custodians servicing more than 1,000 investment funds valued at approximately half a trillion US dollars. Guernsey domiciled investment funds are distributed into all corners of the globe.
The Island is well positioned for the domiciling and servicing of the widest range of funds but it has grown a reputation for excellence in alternative investments, especially private equity, property and infrastructure and, more recently, clean energy. This experience means that Guernsey is ideally placed to act as a centre for funds investing in existing clean energy projects or seeking to raise finance for new clean energy ventures.
Leading global investment houses, including those within the clean energy space, have their funds domiciled and serviced in Guernsey and a number have also established staffed offices in the Island.
Guernsey has a pool of well-qualified non-executive directors, many of whom have broad industry experience as well as specific clean energy experience. Many of the major investors, including those who specialise in clean energy, are therefore comfortable with Guernsey as a fund domicile.
Guernsey's regulator has significant experience of understanding investment fund structures and last year approved 103 new funds across a range of different asset classes including a number of clean energy vehicles. Much of this success can be attributed to the fact that as the Island is outside the EU, it is able to provide a flexible and proportionate regulatory regime.
Guernsey is tax neutral for investment funds which means that tax is only paid by investors in their home country and according to their own circumstances.
The desired fund structure for any clean energy project will often be dictated by the requirements of the investors but consideration should also be given to whether the structure will remain optimal as the project proceeds and indeed, the most appropriate exit strategy should be established at the outset of the venture.
The ability to float companies on international exchanges may prove beneficial to a clean energy fund since a stock market launch may provide early investors with an exit route from the project as well as provide access to further capital investment.
Guernsey companies can list on the LSE, Euronext, Hong Kong, Toronto, Australia as well as the local Channel Islands Securities Exchange (CISE), amongst many others. A number of Guernsey clean energy vehicles have been utilised to access various stock exchanges and most notably the LSE where data shows that there are more Guernsey entities listed on its markets than there are vehicles from any other jurisdiction globally (ex UK). There are currently 125 Guernsey investment funds and trading companies listed on the LSE with a combined market capitalisation of £34 billion.
Guernsey has a broad finance industry which can provide a wide range of financial services to clean energy projects, including banking services, specialist insurance and bespoke intellectual property protection. However, the Island has found its niche as a centre for clean energy investment funds and especially those seeking to raise capital through a listing on an international stock exchange. Guernsey is the home of the listed clean energy fund.
A complete version of this roundtable article was published in Clean Energy Pipeline's Clean Energy UK Finance Guide 2014, July 2014.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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