Foresight launches third Solar EIS fund

Ellie Pullen
17 May 2013

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Foresight Group has launched its Solar EIS 3 fund, with a target of ТЃ20m, to follow in the footsteps of its recently closed ТЃ30m Solar EIS 2 vehicle.

The fund's planned closing date is 31 October this year. Its terms and conditions include a 1.75% annual management charge, 20% carry and a minimum subscription of £10,000.

The firm currently boasts a portfolio of solar assets in the UK, Italy, Spain and the US worth an overall £310m. Its most recent fund, Solar EIS 2, closed this month on £30m, having been launched in February this year with an original target of £20m.

Foresight recently issued a £60m bond on the London Stock Exchange in order to refinance four of its portfolio companies in Kent, Wiltshire and Somerset that were bought via the firm's Solar EIS and Solar VCT funds. The bond was purchased by a UK pension fund and an insurance company. The refinancing generated a return of 15-20% for investors in these two funds.

SGH Martineau provides legal and tax advice to the fund.

Investors
According to Foresight's website, investors will be in a position to benefit from the possibility of enhanced returns due to the government's Renewable Obligation (RO) scheme. The RO scheme was introduced in 2002 and requires licensed electricity suppliers in the UK to source a set portion of their electricity, which increases annually, from a renewable energy supplier. Ofgem issues renewable energy generators with Renewable Obligation Certificates (ROC), who then sell their ROCs to electricity suppliers at a premium.

Investments
Foresight typically invests £1-5m per company as part of management buyouts, buy-ins, BIMBOs and expansion deals.

The new fund will, like its predecessor, focus solely on investing in UK solar power plants and aims to invest in four plants capable of generating around 20MW of electricity.

Foresight aims to fully invest the fund by next April and hopes to exit or refinance the fund's portfolio within four years, although investors have the option to stay invested for longer. The target return to be generated by the fund's portfolio is 20%.

People
Bernard Fairman is chairman of the Foresight group. Richard Thompson is Foresight's senior investment manager for the firm's UK solar infrastructure.