Prestige Funds, a specialist direct lending manager, is partnering with UK-based Goji to launch a Renewables Lending Bond which is eligible for inclusion in an Innovative Finance ISA (IFISA). IFISAs are a new, tax-free way for investors to access investment opportunities that are not available on stock exchanges.
What is a Renewables Lending Bond?
A renewables lending bond is an IFISA-qualifying fixed term bond designed to provide investors with income from a basket of hundreds of loans made to companies involved in the development of renewable energy projects, in this case in the UK.
Prestige is a fund manager that specialises in lending to businesses in the UK, replacing sources of bank financing which have been drying up since the financial crisis in 2008. Among the areas in which Prestige specialises is renewable energy projects. These are considered to be vital if the UK is going to meet it green energy commitments under international climate change agreements.
The Goji Renewables Lending Bond will include a yield target of between 5.5% and 6.5% over three and five year terms. Interest payments on the bond will be supported by UK government subsidies, such as Feed-in-Tariffs.
How is a renewables lending bond managed?
The bond is composed of loans to renewable energy projects which are overseen by the credit team at Prestige, itself composed of financial professionals with commercial banking background and experience of lending to smaller firms in the UK energy market.
“Renewables infrastructure and socially responsible investing are continuing to rise in prominence within the wealth management market,” says Jake Wombwell-Povey, CEO of Goji.
Goji is an investment manager and technology provider that works with specialist direct lending investment managers. It launched its first peer-to-peer lending bond in the UK in March 2017. As an investment market, direct lending is continuing to garner interest from UK investors, as it provides consistent yields, frequently from loans against secured assets.
In the case of Prestige, the company employs experts in the area of bio gas and anaerobic digestion plants, which are key components of the UK’s future clean energy infrastructure. The fund manager works closely with the people managing the plants to make sure they are managed efficiently and ultimately profitably.
The UK commercial lending market continues to grow in size as banks are no longer as interested in lending to smaller businesses, focusing instead on more cost-effective lines like credit cards and mortgages. This has opened up the opportunity for smaller, more specialist providers like Prestige Funds. Prestige provides investors with the ability to lend to thousands of UK companies and infrastructure projects through its finance companies.
The Goji Renewables Lending Bond is being marketed to investors through financial advisers in the UK and not directly to investors.