Biomass investment

Discussion in 'Investments' started by !RAY, Feb 3, 2017.

  1. !RAY

    !RAY Frequent Poster

    Hi All

    Thinking about some investments has anybody experienced investing in Biomass. Capital is guaranteed and its government backed.

  2. noproblem

    noproblem Frequent Poster

    Who's guaranteeing it?
    SBarrett likes this.
  3. GerardPROactive

    GerardPROactive Registered User

    Hi Ray, these are not what I would consider capital guaranteed products. There may be certain guarantees etc. in place such as supplier guarantees but in terms of risk these investments would generally fall in the medium range. The returns can be very strong and the products I'm aware of have excellent precedent. But these are not what I would consider a low risk investment and not something to put your life savings into. However, I think the better ones can definitely be worth a punt with some of your available funds.

  4. MrEarl

    MrEarl Frequent Poster

    Very good question and following on from that (assuming you are happy with the guarantor), under what circumstances can they get out of paying up on foot of the guarantee ?

    Also, does anyone else have a claim on the benfits or proceeds of payout on foot of the guarantee ?

    There was a very expensive lesson learnt by a lot of people who bought the likes of foreign sale and leaseback properties "with guaranteed rents" years ago, so hopefully thats a lesson everyone can learn from and remember, when we seen mention of anything being "guaranteed" !
  5. !RAY

    !RAY Frequent Poster

    Sorry All for not replying.
    Thanks for your comments, the investment is asset backed sorry for my wrong post.
    @Gerard the return is due to a service agreement I would think is the best way of explaining. It is government backed short term fixed return investment. There is a construction guarantee in place and power purchase agreement in place.
  6. sunnydonkey

    sunnydonkey Frequent Poster

    We've had these type of things before. None of the above guarantees your investment. Buyer beware.
  7. Jim2007

    Jim2007 Frequent Poster

    Two things this is a very small project which means if it really was such a good deal the promoter should have no problem coming up with private investors to finance it, so why is it being opened up to all and sundry???

    The second is that you clearly don't understand how this thing is put together. You say the return is government backed, but the documents say a certain level of plant revenue is backed... you say it is asset backed, but the valuation is restricted to as set of parameters given by the company so who knows if it is a market value or not??

    Best avoided I think.
  8. Gerard65

    Gerard65 New Member

    Hi. This is my first post as I came across this project last year. The project itself seems fine if you are looking for a higher risk option. It is essentially a bridging loan to allow the promoters build the plant which is underpinned by existing government supports once it has been completed. The investor is therefore bridging the funding need over the 3 year term. A few concerns in that (i) that the guarantee seems to be over egged on the promotional material (ii) that the return may not really be high enough to compensate for the fact that the investment is higher risk bridging finance.

    When I did some research on this project however, the biggest concern was that the investment is unregulated and therefore does not have to present all the information or in detail that is typically required by law/regulation for regulated investments. And this hides the biggest issue I came across - any adviser who sold the product last year was making up to 10% sales commission and did not have to disclose this to the investor as it was an unregulated product. I know a number of advisers in the west who refused to show this to their clients as they felt that this was plainly wrong. Others I heard had no such concerns and to use that awful phrase "filled their boots". If advisers were getting 10% it is not inconceivable to think that there could have been another 10% in the deal for others involved (trustees, pensions, lawyers etc.). And the truth of the matter when it comes to all investments is that the investor always pays the fees one way or the other. The big problem with this deal then is that ordinary investors were getting involved in a relatively higher risk project on the back of advice by advisers who were being paid way over the typical commissions and they didn;t have to disclose it.

    Hope that helps. Like I say there doesn't seem to be anything wrong with the project itself - but the thinness of information, the fact it is unregulated and worse of all the huge undisclosed fess cause concern.
  9. cremeegg

    cremeegg Frequent Poster

    Very informative post. Welcome to AAM.
  10. Brendan Burgess

    Brendan Burgess Founder

    I second that. Great analysis.
  11. Monksfield

    Monksfield Frequent Poster

    That is excellent Gerard