WELCOME TO GRESHAM HOUSE NEW ENERGY

A STRATEGY OF GRESHAM HOUSE

About Us

The aim of Gresham House New Energy is to generate sustainable financial returns for our investors while supporting the shift from finite resources to a clean energy world.

The investment team includes responsive, analysis-driven investment managers who understand the potential of clean energy, and have an impressive track record to prove it. Our target clients are yield-focused investors seeking capital preservation.

The team creates attractive investment offerings which are focused on the three key leading transformative technologies – solar power, electric transportation and energy storage. ‘Attractive’ means strong downside protection, a sustainable yield and an appropriate investment horizon. Where a tax-efficient feature is achievable the investment team seeks to access this also.

Why invest in Gresham House New Energy

Over the last decade since 2007, Gresham House New Energy (formerly Hazel Capital) has successfully invested in the very rapidly changing energy landscape despite regulatory uncertainty and complex risks. It has harnessed its team’s technical and investment expertise to produce a strong track record while delivering sustainable, attractive yields for its investors and preserving capital. Gresham House New Energy has invested across the clean energy spectrum in wind, rooftop and ground mounted solar, energy and battery storage and electric transport technologies. By having good capital-backing, best-practice management processes and an IT infrastructure which minimises costs and the potential for inefficiencies, the team has been free to apply its core competences. This, combined with a resilient determination to learn, has allowed Gresham House New Energy to maintain its edge over the competition and the result is one of giving our investors a feeling of pride that comes from successfully investing in new and critical areas of the clean energy industry.

The Gresham House New Energy portfolio of renewable energy assets is appropriate for investors who seek strong ‘downside’ protection, a sustainable yield through annual income distribution (where applicable) and tax efficiencies (VCT investments) while investing in a growth sector with significant opportunity in new energy infrastructure.

The Opportunity

We believe that new energy and renewable energy generation is the most significant growth sector in the UK today. For the second year in a row, renewable energy accounted for more than half the new power generation capacity added worldwide (source: FT.com*) and continues to rise. The UK global renewable energy market has seen marked growth since 2003 and is expected to see ongoing growth as the UK Government pushes to meet new mandates.

Global energy demands continue to rise and total worldwide energy use is predicted to increase nearly 40% over the next 20 years, which would require huge supplies of fossil fuels. However, fossil fuels are non-renewable sources, which are depleting and are being phased out by many government mandates as they pollute the environment and contribute to global warming.

The UK is bound by the Climate Change Act which demands an 80% reduction in greenhouse gas pollution by 2050, and the UK is projected to spend £8.4bn on renewable projects in the UK in 2020-2021. In fact, the UK is a global leader in the clean tech revolution and has a target to meet 15% of its energy needs from renewable sources by 2020, up from 8% in 2015. To achieve this end, the UK is phasing out all coal power plants by 2025 and is replacing the new power needed by clean, renewable energy. September 2017 saw the opening of the UK’s first subsidy-free solar farm, demonstrating that solar can remain a commercially viable technology despite earlier government cuts to subsidies.

Gresham House New Energy predict that three key technologies will have a huge global impact on how trillions of dollars are spent on energy and transportation.

1. Energy Storage

More reliable and lower cost batteries are becoming the key driver for rising renewable energy and EV market penetration. On the grid, batteries smooth out intermittent generation, a problem that has become worse with the deployment of renewable energy on a large scale and the decommissioning of coal-fired power plants. We believe the battery market will be the new $1trn market of the 21st century. Gresham House New Energy is developing a series of “Energy Storage Systems” comprising batteries and engines to offer “Grid Enhancement” or grid balancing services to National Grid as energy generation in the UK is undergoing fundamental change.

2. Electric Vehicles

Electric cars are proving that they are the best design option through better quality and range – combined with lower running costs and emissions. Gresham House New Energy expects electric cars to represent c.50% of the new car market by 2025.

3. Solar

Solar is already the cheapest form of renewable energy in many parts of the world and becoming cheaper every year. Gresham House New Energy expects solar to provide a c.40% share of electricity by 2050.

Gresham House New Energy is among the leading operators of ground-mounted solar farms in the UK. The ground-mounted solar PV projects, whether currently managed, sold or permitted, totalled c.290MW across 28 solar projects. C.1,600 rooftop solar installations and c.300 small scale wind turbine sites are part of the VCTs which are now managed by Gresham House New Energy.

We believe renewable energy generation, the electrification of transport and energy battery storage are the sweet spots for investment opportunities today.

* https://www.ft.com/content/44ed7e90-3960-11e7-ac89-b01cc67cfeec

Investment Process

Gresham House New Energy Investment Process

Introduction

Gresham House New Energy implements a rigorous investment process to mitigate capital risk and maximise risk-adjusted returns. In building a pipeline of investable ideas, the investment management team carries out research and draws on their experience gained in the ownership of infrastructure projects as well as its knowledge of the renewable energy industry. Furthermore, the team has extensive industry contacts and counterparties including developers, technical experts, academic researchers, and governmental bodies as well as close relationships with leading technology manufacturers in different market segments which also aid in the process. Gresham House’s New Energy research spans different equity asset classes (public, private and real asset) providing a breadth to its experience and research.

Whether an acquisition of operational sites or the development of new sites, it is important to understand the full development process.

The Investment Process

The investment process includes the following steps:

  1. Technology Research
  2. Market Research
  3. Deal Sourcing
  4. Project Screening
  5. Deal Negotiation & Due Diligence Process
  6. Post Completion – Asset Management

Technology Research and Market Research

Risk‐adjusted returns can vary significantly between technologies due to their performance (which is further impacted by the specified site), cost and reliability. Where possible Gresham House New Energy aims to optimise the use of technologies to maximise returns by investing in projects where returns are secured under contract for the investment period. Normally this is achieved by the signing of term off‐take or supply contracts (e.g. Feed‐In‐Tariffs (FiTs), Renewable Obligation Certificates (ROCs)). However, in certain scenarios it may not be possible to mitigate market dynamics in this manner and, therefore, returns are open to market risk. Gresham House New Energy undertakes comprehensive market research in the following areas: electricity prices, capital equipment costs, asset supply demand balance, inflation and interest rates and regulatory matters.

Deal Sourcing

The team maintains a pipeline of opportunities available for investment. This helps reduce the delay between the fund‐raising and underlying project investments, which optimises the time‐weighted, return and Internal Rate of Return (IRR) to the investor. Potential projects are presented through a number of sources. Notably, Gresham House New Energy tends to avoid intermediaries which avoids significant introduction costs.

Project Screening

The risk‐adjusted equity IRR is the primary factor considered when assessing the viability of projects. Projects must meet internal hurdle rates.

Deal Negotiation & Due Diligence Process

On completion of the screening, information gathering and modelling process, the investment team enters a due diligence phase where the project undergoes technical, operational, counterparty, financial and legal processes.

Post Completion – Asset Management

Once an asset has been acquired, Gresham House New Energy significantly and continuously aims to improve its performance and energy yield and investment return by reducing overheads as well as through the improvement in the financing structure.

Our Track Record

Gresham House New Energy has a strong track record in the conception, delivery and asset management of renewable energy projects in the UK. Since 2010, the team deployed in excess of £200m during this period (as at 30 September 2017), mainly into solar and wind projects with a significant skew until 2015, towards ground-mounted solar PV as a preferred technology for its visibility and reliability of returns.

The team has a proven track record for the timely deployment of capital as well as for meeting and often, significantly exceeding, targeted returns; achieved by a combination of refinancing, restructuring or extending projects, as well as by making operational enhancements.

VCT Track Record

Gresham House New Energy launched Hazel Renewable Energy VCT 1 Plc and Hazel Renewable Energy VCT 2 Plc in 2010. With a seven years track record, the Renewable Energy VCTs are currently ranked ‘best in class’ when compared to all other VCT offerings launched since then. The VCT performance league table for their 2010/2011 vintage is displayed below.

VCT Name Total Return NAV Divs NAV Date
Hazel Renewable Energy VCT1 155.6 116.1 39.5 30/09/2017
Hazel Renewable Energy VCT2 154.5 114.9 39.5 30/09/2017
Foresight Solar 124.9 95.9 29 30/06/2017
Triple Point 2011 115.05 4.3 110.75 29/08/2017
Downing FOUR DP2011 – Low Carbon 107.5 33.6 73.9 30/09/2017
Octopus VCT 2 105 100 5 30/06/2015
Downing FOUR DP2011 – General 104.4 19.4 85 30/09/2017
ProVen Planned Exit VCT 101.6 44.6 57 31/10/2015
Puma VCT VII 95.28 70.28 25 29/02/2016
Ingenious Entertainment VCT 1 ’F’ Shares 86.2 86.2 30/06/2017
Ingenious Entertainment VCT 2 ’F’ Shares 86.2 86.2 30/06/2017
Ingenious Entertainment VCT 2 ’E’ Shares 83.7 83.7 30/06/2017
Ingenious Entertainment VCT 1 ’E’ Shares 83.7 83.7 30/06/2017
Edge Performance “G” Shares 77.87 49.87 28 31/08/2016

Source: Downing, as at 30 September 2017

How to Invest

Investment into Gresham House New Energy can be accessed by contacting

Christine Wallier on c.wallier@greshamhouse.com or 07500962206

Michael Hart on m.hart@greshamhouse.com or 020 3837 5908

Joe Thomas on j.thomas@greshamhouse.com or 020 3903 0554

Investor profile:

Gresham House New Energy products require capital in terms of both debt and equity. For each opportunity we always target the most appropriate investors. At times this means tax-efficient equity products most suited to an individual investor and at other times it suggests bank financing.

Historically, over the last ten years, Gresham House New Energy has worked and offered products ranging from bond issuances to large institutional investors, to EIS and VCT offerings to individuals.

The constant across the board has been the intent to protect investors’ capital and to provide an attractive cash yield as well as, if possible, additional upside.

Team