So, just as we’re all starting to get our heads around this crowdfunding malarkey and where it fits in our portfolios, someone comes along and flippin’ changes things again.
This week, a new platform from investment industry stalwarts Downing looks set to shake-up the sector with its first ever crowdfund. So grown-up, even the advisers are giving it head space.
Its first offer on the platform is a solar bond , with an interest rate of up to 6.25 per cent over a one-year term, which has been put through Downing’s 30 years’ established due diligence process and been assessed by its experienced VCT and EIS managers. It’s asset-backed by a solar farm, Kenninghall in Norfolk, that was established in 2015, has already generated an income of £500,000 (as at 31 January 2016) and has been delivering power to the grid for the last nine months. Kenninghall’s owners, Armstrong Energy, are looking to raise £3.2mn to refinance the 8MW solar array.
Downing has enlisted Julia Groves, Chair of the UK Crowdfunding Association and ex-CEO of Trillion Fund, to spearhead the launch. She says: “This is crowdfunding growing up.”
Up to now, crowdfunded investments, pledges or donations, have tended to sit at the ‘alternative’ or ‘experimental’ end of a more serious investor’s portfolio.
Downing hopes the crowdfund launch, backed by its heritage, investment and business assessment expertise, together with the additional company information involved in such deals, will start to professionalise and bring down risk in a market which has, traditionally, been viewed as high risk.
Additionally, because of its investment management expertise, Downing crowdfunded investments are now also a more realistic proposition for independent financial advisers.
Ben Yearsley, investment director at WealthClub says: “Like many, I have been pretty sceptical about crowdfunding to date. I haven’t been convinced there has been enough due diligence or investment research available to enable the average investor to really assess the risks and rewards of the highlighted investments. Downing’s new crowdfunding platform brings their heralded VCT, EIS and investment expertise to this exciting, but risky market, which can only be a good thing for investors.”
Downing’s VCT and EIS products typically require a minimum of investment of between £5,000 and £15,000, but the minimum investment for the Kenninghall Solar Bond is just £100, because they hope to open up the market to a wider audience.
Groves adds: “Crowdfunding platforms will have to go large or go home.”
Forthcoming bond offers from Downing Crowdfunding will include a small chain of pubs in the home counties, care homes and an anaerobic digestion plant.
If you are thinking about investing in the Kennginhall Solar Bond you should talk to your adviser, or have a thorough read of the Offer Document on www.downingcrowd.co.uk.
*This article provides general information only on the Kenninghall Solar Bond and Downing Crowdfunding available for individual investors. It is not financial advice. If you invest in any of the products mentioned in this article, you do so at your own risk. Capital is at risk and past performance is not a guide to future performance.
