Crowdfunding, which is currently one of the fastest growing and popular investments in the UK, could be set to enter the mainstream now that it qualifies for what has been dubbed the ‘third ISA’ alongside cash and stocks and shares ISAs
Investors can now make direct investments into company bonds via peer-to-peer platforms and keep the returns tax free, thanks to the roll out of the Innovative Finance ISA (IFISA) earlier this month.
As a result, two bonds, which are the first to qualify as IFISAs, have been launched by Abundance Investment, which is authorised and regulated by the Financial Conduct Authority. One of these is the new 5% seven-year bond offer to raise £7.5 million for investment into sustainable energy projects, around the UK from Thrive Renewables plc.
The bond, which can be used against a number of energy initiatives, including wind farms and solar generation, is also eligible to be held in a self-invested pension plan (SIPP). Alternatively, investors can hold the bond directly and receive interest after withholding of basic rate income tax.
There is a minimum investment of just £5 online and £250 through a paper application. The first close is on 9 December, while the final close is scheduled for 27 February 2017.
Thrive Renewables, which was founded in 1995, has built up a 5,700-strong community of shareholders and bondholders over the last 20 years.
Its new offer has already attracted more than 500 investors and raised £2 million towards its target. More than 50% of those who have invested so far have opted for the IFISA so that they can benefit from tax free returns.
More than a third of Thrive’s projects are in Scotland and include a major contribution to the construction of Gevens Wind Farm, near Kirkcaldy, and a 50% share in Green Breeze Energy Ltd, a company with the rights to build a 6MW wind farm in West Lothian.
Thrive’s ‘Buchan Bond’ – secured against two existing and generating wind farms in Strichen – was the company’s fastest selling bond ever and the second fastest bond offer to reach target on the positive investment savings platform Ethex.
The company also has a pipeline of 20MW of new wind projects and 15MW of solar PV, which include both community ground mounted and commercial roof sites.
Thrive Renewables now has a portfolio of 15 operational renewable energy sites with two developments currently in progress. Operational sites now generate enough green electricity for 41,000 homes in the UK and the average shareholder will be saving around 12.8 tonnes of CO2 emissions.
The group’s last capital raise took under five weeks to reach its target amount and in 2015 Thrive Renewables reported a turnover of £15.2 million and an operating profit of £5.1 million.
According to the Peer-to-Peer Finance Association, peer-to-peer lending £6.5 billion up to the third quarter of this year, with more than £700 million transacted between July and September alone.
It says ISA subscriptions also continue to go from strength to strength. Recent statistics issued by HM Revenue & Customs reveals that £80 billion have been subscribed to adult ISAs in 2015-16 – an increase of £1 billion on the previous year.
Please note: An investment in Thrive Renewables plc bonds is not covered by the Financial Services Compensation Scheme. Thrive Renewables plc’s ability to pay the interest and repay the bonds is not guaranteed and is dependent on the continued success of its business model.
Thrive Renewables plc bonds are unquoted securities with a fixed repayment date and although the bonds are transferable, investors should be aware that they may not be able to access their capital during the life of the bond.