Type Anaerobic Digestion
Asset Backed Yes
Estimated loan to value 71%
Capital is at risk and returns are not guaranteed. This is a 21 month Bond and is not readily realisable.
This is an opportunity to lend to Warren Energy Limited, the owner of an operational biomethane injection anaerobic digestion (AD) plant located near Methwold, Norfolk.
The Bond will offer investors a chance to earn an annual interest rate of 6.75% over the term of the bond which will mature no later than 28 September 2019.
The AD plant generates biogas through anaerobic digestion, which is then exported to the gas network.
It has been operational since March 2016 and is fully accredited under the Renewable Heat Incentive (RHI) and Feed-in Tariff (FiT) schemes. Warren Energy Limited receives income for the biogas and electricity generated as well as payment for exporting the biogas and electricity to the grid.
In September 2017, Downing assessed the value the AD plant to be £12.9 million. The £3.95 million Bond will rank alongside an additional £5.25 million of debt provided by other Downing-managed funds, indicating an estimated loan-to-value of 71% (based on the total debt provided to the Borrower of £9.2 million).
Warren Energy Limited, the Borrower, is the owner of the AD plant at Methwold, Norfolk. The plant is operated by Future Biogas Limited.
Future Biogas Limited is an experienced operator with a further eight AD plants in the UK, including five in which Downing-managed funds are currently invested.
Downing has significant experience in the energy sector having invested more than £400 million in such businesses since 2010. As at 30 June 2017, Downing manages over £150 million worth of anaerobic digestion projects.