The board of Clean Future VCT No.1 PLC, a VCT managed by Future Capital Partners (FS) Ltd ("Future"), has announced to withdraw its offer for subscription of shares for the current tax year.
Future has devised a rigorous and coherent approach to managing the key risk areas for a Renewables VCT: namely a robust structure adhering strictly to the VCT/tax rules, that addresses technology risk (and the associated overpayment/supply chain issues) and Feed-in-Tariff reviews (especially solar). The innovative investment structure provided a de-risked minimum return on the investment and offered a realistic upside case so a pre tax IRR of in excess of 20% was achievable.
However, two recent Government announcements have introduced a element of uncertainty to investing in the Renewable Energy Sector though a VCT, and have led to the withdrawal of a number of VCT offerings in the market.
1) Chris Huhne’s statement on the 7th of February, announced the first review of FIT's (Feed in Tariffs). The announcement highlighted large scale solar PV but also cast doubt generally on the validity and the certainty of FIT's. The announcement cited 50kW as the size of plant which the Government considered large scale.
This announcement by Chris Huhne, whilst not affecting the proposed investment mandate of the Clean Future VCT No.1 PLC, has had a clear impact on both individuals and advisers by creating uncertainty around any investment that has any potential links with FITs. To that end we have been advised by a significant number of advisors that they have advised their clients not to pursue renewable investments until the uncertainty of tariffs in general has been resolved.
2) Chancellor George Osborne has made comments that there is a "question mark" over the merits of VCTs and the support the scheme gives to growth businesses
In light of the uncertainty the two announcements have created, the Board of Clean Future VCT No1 PLC has concluded that it is in the best interests of the current investors that the VCT be withdrawn with immediate effect.
FCP's renewable EIS fund will remain open as it is not affected by the two announcements.