Downing Corporate Finance is making its first foray into the clean energy sector with an investment in a biogas producer.
The VCT manager has invested £3.8m in Future Biogas to help the firm develop a new biogas plant in Norfolk. The investment comprises £3m in loan notes and £800,000 in equity provided by five of its VCTs.
Future Biogas plans to grow its own maize on rented farmland which will subsequently be fed into the plant to produce electricity.
Investment manager Michael Hughes says the introduction of feed-in tariffs, combined with the development of proven technology, is attracting Downing to the sector.
"Feed-in tariffs provide a guaranteed price for the electricity for 20 years, which means as long as you can provide the power, you will receive an income."
"This project uses proven technology, which reduces some of the risk associated with clean energy, and Future Biogas is a highly experienced team."
The plant is due to begin construction next month and should be up and running by December. The firm anticipates the plant will provide electricity for more than 3,000 homes in the region.
Hughes says they are sourcing further investments in the sector. Downing already has an agreement in principle for a solar plant in East Anglia, which is awaiting planning approval, and is also assessing the potential of a small-cap wind farm.
Downing was the leading fundraiser in the VCT space in the previous tax year, raising more than £70m. It has over £180m under management in 13 separate VCTs.
