Foresight Group claims that the smart meter bond is a ‘first of its kind’, offering an innovative and simple funding solution for the UK’s smart meter rollout which has become a highly controversial subject for the UK power market since the government set a deadline for the completion of the deployment.
The UK government wants every home and business to be offered a smart meter by 2020 but the programme is lagging behind schedule.
The country’s energy suppliers are also less than impressed about the onus of deployment being placed on their shoulders. Several of the ‘Big Six’ suppliers are already blaming price hikes on the rollout.
Now, Foresight intends to power the deployment with a new investment plan.
Investing in a smarter tomorrow
The first tranche (Tranche A) of the fund aims to raise £10m, takes a minimum investment of £10,000 with no maximum and allocates to investors on a first come first served basis. It will remain open to investors until 15 September. Further tranches are to be launched in the near future.
The funds raised from the bond will generate returns by lending to companies that own, operate and rent smart meters to UK energy suppliers.
The fund offers investments in bonds backed by long-term rental agreements with UK energy suppliers. Investments can be made over one, two or three-year fixed terms for between 4.07% and 4.83% rates of interest per year.
Foresight said it could facilitate adviser charges from the investment if required by the investor but the manager levies no initial annual management or exit charges against the investment.
Risk adjusted returns
With a five year track record of funding smart meter installation in the UK, Foresight has to date invested £74m in more than 160,000 smart meters across the country.
The company also launched Foresight Metering, a second generation meter asset provider (MAP) early last year.
Chairman Bernard Fairman said in a statement: "Foresight has a specialist focus on energy infrastructure and energy efficiency combined with a proud tradition of innovation in creating investment solutions that respond to investors' needs.
“We manage funds for more than 22,000 private investors and for some of the world’s leading financial institutions and our innovative Foresight Smart Bonds Fund is a good example of providing investors with market leading risk adjusted returns whilst improving the energy infrastructure across the UK.”
Foresight claims that an estimated £13.5bn is expected to be saved by the universal adoption of the meters.