Future Fuels LLP, the flagship Renewable Transport Fuel investment product of one of the UK’s leading (£6 billion) alternative investment and hedge fund boutiques, Future Capital Partners (FCP), announced the acquisition of a site and planning permission consent for its industrial scale plant in Grimsby, North East England.
Construction of the site will provide 750 jobs for two years and 70 permanent jobs once the plant is up and running. The plant will produce two principal products – a Renewable Transport Fuel (RTF), Ethanol, and a high protein animal feed, Distillers Dried Grains and Solids (DDGS).
Since Future Fuels LLP was launched at the end of February, it has raised a further £10 million from UK high net worth individuals take up the first ever chance to invest in the British Renewable Transport Fuel (RTF) Market.
Future Fuels has also announces today the signing of a 15 year off-take agreement for its CO2 by-product with a major gas supplier to the food and drinks market. The agreement follows the previous announcement of Heads of Agreement signings with a major global investment bank for the purchase of the first ten years of RTF production and with a global animal feeds business to purchase the high protein animal feed by-product across the same period. Unusually, all products for the first 10 years of the plant’s operating life are under take-or-pay contracts before the plant has been built, netting a combined forecast income of over £1.5 billion.
The Future Fuels partnership expects to provide its investors returns of over 30% per annum over a five to seven year period. It will be raising £40m equity, of which it has already secured over £15m (including a £3m investment from Future Capital Partners itself), and there will be a minimum investment of £50,000. A trade sale or IPO is targeted within 5 years of commissioning of the plant.
Tim Levy, CEO at Future Capital Partners said:
“The Future Fuels is gathering momentum. This is a well thought out investment proposition put together by proven partners who have built and operated commercially functioning plants using proven technologies. EU environmental targets mean, simply, that everyday motorists will require the gas in their tanks to be blended with a greater proportion of bio-ethanol by 2016-2017. This is one of only three production plants in the UK. It is a growth industry for Britain and one we can be good at.
“As well as being very proud of the positive environmental and social effects the project will have, it is the investment opportunity itself that is truly exciting. It is a chance to capitalise on a non-correlated, niche investment of huge potential and at the same time benefiting from the risk controls we have placed around the partnership. Moreover, by securing off take agreements for the plant’s produce, we have done a great deal to ensure the project’s long term success. For the first time, Future Fuels will give UK investors the chance to take advantage of the next decade’s most lucrative investment.”
The partnership will target sophisticated retail investors and high net worth individuals via the intermediary market. FCP’s opportunities are sourced through UK wealth managers, high-end IFA’s, accountants and private banks.
EU and UK directives* have indicated that by 2020 13% (estimated at 23 billion litres) of all the Europe’s petrol fuel must come from renewable sources. Currently, just 2 billion litres (or 3.5%) of the Europe’s petrol fuel comes from renewable sources, meaning that the petrol based Renewable Transport sector is set to grow more than ten-fold in the next decade.
Notably, the fuels produced will help to reduce the UK’s reliance on imported oil in transportation and will cut carbon emissions, when compared to the use of oil in transport fuels, by over 50%. In the case of this project, this is the equivalent of removing over 60,000 cars from the road every year. This has been peer reviewed and validated by Imperial College, one of the leading academic research centres globally for climate change and sustainable renewable transport fuels. This independent verification ensures that the project is significantly environmentally beneficial.
FCP is undertaking the project with Vireol, which will operate the completed plant. The Partnership will own, provide finance for and construct the site. Once completed, the Partnership will lease the plant to Vireol.