A South African alternative investment manager today announced the successful close of its R300-million inaugural tax-enhanced renewable energy alternatives investment strategy.
The fund manager, Westbrooke Alternative Asset Management, achieved its target by raising from numerous private investors in just eight weeks and will now invest the capital alongside South African businesses that install, operate and own small and medium-scale embedded generation solar photovoltaic (PV) projects nationally.
“Westbrooke REAL allows investors to access the much-needed and fast-growing renewable energy sector, through a diversified portfolio of solar PV projects underpinned by long-term cash flows, through power purchase agreements concluded with high-quality end-users,” explains Dino Zuccollo, head of product development and distribution at Westbrooke Alternative Asset Management.
To incentivise investment, the Minister of Finance expanded the Section 12B tax incentive to enable investors to claim up to a 125% up-front tax deduction for all renewable energy projects brought into use for the first time between 1 March 2023 and 28 February 2025.
Westbrooke REAL allows investors to benefit from owning the underlying solar PV projects and claim the 12B tax benefits. The innovative Westbrooke Real investment structure allows investors to enhance 125% to between 200% and 250% of their cash invested.
“After recouping their initial capital, investors will remain invested in a high-quality solar project that will deliver stable and predictable yields for up to 20 years. It’s attractive for investors seeking long-term returns with a capital preservation focus,” adds Zuccollo.
The objective of the Westbrooke REAL fund is to invest the capital in various solar PV energy projects, alongside reputable and experienced partners to unlock and accelerate the roll out of these projects, says Jonti Osher, head of the South African investment team.
“Closing the 2024 fundraise in record time is a significant achievement. The demand for allocations in the fund is indicative of the attractive investment returns, and the desire of private investors to support solutions that can address the energy crisis in the country,” he adds.
The Westbrooke REAL fund will invest in renewable energy projects with the following criteria:
* South African small-scale and medium-scale embedded generation projects which are either grid-tied or in a hybrid system (batteries / generators). This will range from project sizes of 100KW up to 25MW with the ability to invest in larger projects.
* Existing and greenfield solar projects.
* Underpinned by power purchase agreements and / or operating leases with a focus on commercial, industrial, agricultural and body corporate off-takers.
Key to the strategy is to provide fast, innovative and flexible equity funding to its solar partners to roll out their pipeline. “Partners will benefit from our collaborative approach and tailored investment solutions, with the ability to move with speed to provide accelerated growth and fast track project execution,” explains Osher
Westbrooke REAL will invest in projects that provide off-takers with certainty of electricity supply and cheaper electricity over the long-term.
“Westbrooke REAL is an attractive proposition to investors as they receive inflation-beating investment returns over the long-term while providing secure and sustainable energy to South African business,” concludes Zuccollo.