Hazel Capital Renewable Energy VCT 1 and 2

A Product of New Energy

Hazel Capital Renewable Energy VCT 1 plc and Hazel Capital Renewable Energy VCT 2 plc (the VCTs) seek to invest in a portfolio of unquoted companies that specialise in long-term renewable energy projects and energy developers, to provide shareholders with a reliable source of tax-free income and looking to maximise the potential for capital preservation.

 

Investment Approach

The VCTs seek to invest in companies that they believe are materially de-risked and will provide shareholders with a reliable source of tax-free income and maximise the potential for capital preservation.

Performance

Hazel Renewable Energy VCT 1 plc and Hazel Renewable Energy VCT 2 plc were launched by Gresham House New Energy (formerly Hazel Capital) in 2010. £41.6m was raised between 2010 and 2011 representing the most successful ever launch by a new entrant to the VCT market. The VCTs have since launched three Top-Up Offers (2012, 2014 and 2017). Both were fully subscribed to a target fund raise together of just over £8.0m.

The Hazel Renewable Energy VCTs are currently ranked ‘best in class’ when compared to all other renewable energy focused VCT offerings launched in 2010/2011 in terms of Total Return. They have successfully invested in 16 projects including 6 Feed-In Tariff and 2 ROCs (Renewables Obligation Certificates) accredited ground-mounted solar projects.

An investor in the VCTs’ original share offer has enjoyed a Total Return (NAV at 31 March 2018 plus dividends to date for Ordinary and A shares combined) of 154.0p for every 100p invested in VCT 1 and 153.0p for every 100p invested in VCT 2.

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. This has normally been 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 fundraising and investment, which optimises the time‐weighted, return and Internal Rate of Return (IRR) to the investor. Potential investment deals 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 investments. Potential investments 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 investment undergoes technical, operational, counterparty, financial and legal processes.

Post Completion – Asset Management

Once an asset has been acquired or investment made, the Gresham House New Energy investment team strives continuously to improve its performance and the investment return.

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 has deployed in excess of £200m (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 an eight year track record, the Renewable Energy VCTs are currently ranked ‘best in class’ when compared to all other renewable energy focused VCT offerings launched in 2010/2011. The VCT performance league table for their vintage is displayed below.

VCT NameTotal return per share (p)NAV per share (p)Total dividends (p)NAV date
Hazel Renewable Energy VCT 1 (Ordinary Shares)151.8116.035.830/09/2017
Hazel Renewable Energy VCT 2 (Ordinary Shares)150.7114.935.830/09/2017
Foresight Solar & Infrastructure VCT (formerly Foresight Solar VCT)128.696.632.031/03/2018
Triple Point VCT 2011 (Closed)115.1-115.128/02/2018
Downing FOUR DP2011 – Low Carbon VCT107.30.0107.315/02/2018
Octopus VCT 2 (merged with Octopus Apollo VCT )*97.3-97.331/08/2016
Puma VCT VII (Closed)95.370.325.029/02/2016
ProVen Planned Exit VCT (Closed)92.0-92.030/03/2016
Ingenious Entertainment VCT 1 ’E’ Shares (Closed)83.71.082.731/12/2016
Ingenious Entertainment VCT 2 ’E’ Shares (Closed)83.71.082.731/12/2016
Ingenious Entertainment VCT 1 ’F’ Shares (Closed)86.21.085.231/12/2016
Ingenious Entertainment VCT 2 ’F’ Shares (Closed)86.21.085.231/12/2016
Edge Performance “I” Shares77.8749.872831/08/2016
Downing FOUR DP2011 – General81.446.435.028/02/2018

* Returns shown here are the returns for those shareholders who elected to exit their investment in Octopus VCT 2 plc
Source: Gresham House research

How to buy/sell shares

Shares in Hazel Renewable Energy VCT 1 plc (HRO1) and Hazel Renewable Energy VCT 2 plc (HRO2) are listed on the London Stock Exchange.

Investors can buy new shares when offers for new subscriptions are launched from time to time. Shares currently in issue can be purchased on the secondary market via a stockbroker or authorised share dealing service. The annual allowance for a qualifying investor (individuals aged 18 or over who are tax residents in the UK) for VCT investment is £200,000. This covers the acquisition of VCT shares by any means within a tax year.

IMPORTANT NOTICE: Prospective investors should carefully consider the risks associated with this form of investment and seek advice from a qualified financial adviser. Investment in smaller unquoted companies involves a higher degree of risk than investment in larger companies. VCT shares are infrequently traded, so shares are often valued at a discount to their Net Asset Value and may be difficult to realise. Shareholders may be offered a price which is less than the full value of the underlying assets.

  1. To buy new VCT shares:

Please access details of the current offer for new share subscriptions here.

  1. To buy existing VCT shares on the secondary market:

You can buy existing VCT shares through a stockbroker or authorised share dealing service.

To register your interest to buy or sell shares you, or your broker, should contact Chris Lloyd at Panmure Gordon (UK) Limited, the Company’s market:

Chris Lloyd
T: 0207 886 2716
E: Chris.lloyd@panmure.com

 

The tax benefits available to qualifying investors (individuals aged 18 or over who are tax residents in the UK) looking to subscribe for or purchase existing VCT shares are outlined in the table below:

Summary of VCT Tax ReliefsNew sharesExisting shares
Income tax relief on subscription amountUp to 30% *No
Are dividends free of tax?YesYes
Are gains made on the sale free of capital gains tax?YesYes

*The disposal of new VCT shares within five years of their issue will result in some or all of the 30% income tax relief available upon investment becoming repayable. On this basis, investing in new VCT shares should be considered a long-term investment.