Solar energy fund aims for 7.25% return a year

Investors can tap into a new solar energy fund and reap a steady, bond-like return of 7.25% a year, according to boutique fund management group Independent Portfolio Managers.

The group has set up a new fund that will back the building of a solar park in Italy and it claims that by taking advantage of Italian legislation that guarantees a price for energy sold to the national grid, the fund will produce a steady yield.

Tony Curtis, IPM chief executive, said that the Solar Park Fund could be considered alongside fixed interest investments.

‘If I was to look at Italian government bonds, over the last 20 to 30 years you would be getting a yield of 5.8 to 6%,’ he said. ‘If you are looking at solar parks, you are taking a bit more risk, but you are getting a bit more return.’

IPM is hoping to fund the construction of three solar parks, and is targeting the completion of two by the end of the year.

The parks will be run by a separate company, Global Investment Strategy UK (GIS), which will have the right to buy the solar parks from the fund after five years.

GIS have been incentivised to buy-out the parks as soon as possible, as they will not receive any income from the project otherwise, IPM said.

Land has been secured and planning permission has been granted for the project, and Curtis estimated that the fund would need to raise £10 million in order to comfortably finance it.

The fund is domiciled in Guernsey and fits under the IPM Renewable Energy fund umbrella.

‘We put an umbrella structure together, and the cells were separate and you couldn’t mix and match assets - we thought that was a reasonable way of going forward,’ said Curtis.

IPM, which currently manages around £160 million of assets, is planning for the fund to have a five year duration.