The investment process includes the following steps:
- Technology Research
- Market Research
- Deal Sourcing
- Project Screening
- Deal Negotiation & Due Diligence Process
- 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.
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.
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 screening, information gathering and modelling process, the investment team enters into 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.