Future Capital Partners launches eco fund
By David Carr
FUTURE Capital Partners has launched a renewable energy investment opportunity, focused on the construction and operation of two wheat-based bioethanol plants.
The vehicle, Bioethanol Partners LLP, aims to raise £135m of equity capital from investors and £195m of project debt, for an estimated total project cost of £330m.
Future Capital Partners' CEO, Tim Levy, describes the project as "an opportunity to invest in the green agenda and the demand for alternative fuels."The investment case is underpinned by both legislative developments and growing commercial demand.
It is focused on commercialising the requirement placed on fuel suppliers to include a specified amount of biofuels within their products, which will rise to 5pc by 2010.
Amongst the partners in the project is Vireol plc, a socially responsible company promoting measures to reduce greenhouse gases.
It is engaged in the development of the two bioethanol plants at Grimsby and Teeside which, together, will have a productive capacity of just over 1 million litres per day, or 300,000 tonnes a year.
Construction is slated to be over a two year period, with fully operational capability expected by 2010.
The investment term is expected to be at least 5 years, with the useful life of the plants likely to be 20 years or more.
An internal rate of return (IRR) of 40pc over the 5 year term is being sought, based on wheat prices of £105 per tonne in 2010, rising to £149 per tonne by 2013 and oil prices averaging $92 per barrel.
Bioethanol itself is classed as a biofuel, produced from crops. Whereas biodiesel is produced from vegetable oils, bioethanol is a petrol substitute produced from cereal and other crops that can be produced in industrial quantities.
Its production has less impact on the food/fuel balance than biodiesel production and it is easily blended into petrol. The commercial demand for bioethanol stems from rising environmental concerns and the need to reduce greenhouse gas emissions.
BP has already recognised the importance of bioethanol and is planning to build and operate a facility, while other energy companies have been actively engaged in dialogue with Bioethanol Partners LLP with regard to purchasing the plants' output.
Aimed at high net-worth individuals, companies and trusts, the vehicle has a minimum investment of £40,000 with 2-3pc commission available to IFAs. It is not suitable for inclusion in SIPPs.