Future Capital Partners (FCP), the £6 billion alternative investment boutique, has struictured a private equity deal that will allow UK investors to engage in the rapidly growing Renewable Transport Fuels (RTF) sector for the first time.
The Future Fuels partnership expects to provide investors with returns of over 30% per annum over a five to seven year period. It will be raising £40m equity, of which it has already secured over £5m (including a £3m investment from Future Capital Partners itself), and there will be a minimum investment of £50,000. A trade sale or IPO is targeted within five years of commissioning of the plant.
Future Fuels is an LLP established by FCP to build a Renewable Transport Fuel plant in Grimsby, North East England. The industrial scale plant will produce two principal products - a Renewable Transport Fuel (RTF), Ethanol, and a high protein animal feed, Distillers Dried Grains and Solids (DDGS). The production of European RTFs is expected to grow 10-fold over the next decade.
FCP is undertaking the project with Vireol, which will operate the completed plant. The Partnership will own, provide finance for and construct the site. Once completed, the Partnership will lease the plant to Vireol.
Heads of Agreement have been signed with a major global investment bank for the purchase of the first 10 years of production, while a global animal feeds business has made a £250m-£500m commitment over the same period to purchase the animal feed produced.
Tim Levy, CEO at Future Capital Partners, said while there is strong interest in renewable energy, there are few opportunities to invest in the sector. "Investment in first generation Renewable Transport Fuels is essential to underpin investment in second and third generation technologies - and is a crucial step towards the long term goal of replacing oil in transport fuels (in the UK this accounts for about 70% of our oil imports)."
The partnership will target sophisticated retail investors and high net worth individuals via the intermediary market. FCP's opportunities are sourced through UK wealth managers, high-end IFA's, accountants and private banks.
Future Capital Partners specialises in alternative investments such as renewable energy, international property, biotechnology and media and entertainment. The firm's products and investment opportunities are available to investors through financial institutions, wealth managers, IFAs and accountants.
EU and UK directives have indicated that by 2020 13% (estimated at 23 billion litres) of all the Europe's petrol fuel must come from renewable sources. Currently, just 2 billion litres (or 3.5%) of the Europe's petrol fuel comes from renewable sources, meaning that the petrol based Renewable Transport sector is set to grow more than 10-fold in the next decade.
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