‘Mid-Quarter Investor Update: Q2 2019’ main author: Nicholas Dimmock BA MBA(CASS), Director of Investor Relations, 350 PPM Ltd. Section ‘Sector Commentary’ by the 350 PPM Research Team.
Headlines
350 PPM: To provide mid-quarter updates as the environmental revolution hots up (forgive the pun), as does the world.
Solar 350: Signs term sheet with billionaire US solar developer from Silicon Valley for Mexican sites (430 MW). Framework agreement for up to 2.5 GW to follow.
Storelectric: Featured on CNBC TV, now live on Eureeca, a multi-jurisdictional crowdfunding platform out of Dubai.
Waste to Energy Solutions: Increases forecasts for 2019, continues SEIS / EIS fundraise.
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Contents
Company Updates:
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About 350 PPM
350 PPM Ltd is an environmental incubator and business accelerator specialising in green investment opportunities often categorised as “ESG” Investments.
350 PPM Ltd directly identifies Companies, Projects and Technologies that it believes will benefit substantially from the implementation of The Paris Agreement; the new global treaty to combat climate change which has now been ratified and comes into force on 1st January 2020.
350 PPM then structures these opportunities under the UK’s Enterprise Investment Scheme (EIS) where possible and works with, advises, assists and raises finance for such businesses along the commercialisation runway, to ensure they reach their full potential.
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Sector Commentary
Since our last update, the Committee on Climate Change (CCC) has come out with some very significant recommendations:
- A new emissions target for the UK: net-zero greenhouse gases by 2050.
- In Scotland, a net-zero date of 2045.
- In Wales, a 95% reduction in greenhouse gases by 2050.
The CCC state that this net zero target is “achievable with known technologies, alongside improvements in people’s lives, and within the expected economic cost that Parliament accepted when it legislated the existing 2050 target for an 80% reduction from 1990.”
However, the CCC also warns that “this is only possible if clear, stable and well-designed policies to reduce emissions further are introduced across the economy without delay. Current policy is insufficient for even the existing targets.”
So, the CCC has thrown down the gauntlet to our politicians, advising that net zero could and should be adopted, but not without policies to make it a reality.
So far, the response from politicians has been almost entirely supportive, with Scotland declaring within hours their intention to legislate a net zero target. In England, the government has officially declared their intention to adopt a net zero target and yesterday (12th June) laid a ‘statutory instrument’ in the Commons to fast-track related legislation through both houses of Parliament.
A UK net zero target would be one of the most ambitious policies in the world and the first such policy by a major nation. Assuming a reasonable degree of policy follow-through, 350 PPM sees this as a game-changer for the UK’s low-carbon sector (and as other countries hopefully follow suit, the international low-carbon sector).
As well as necessitating a ramp up in the deployment of established technologies, a net zero target should be particularly beneficial for those early-stage technologies that are barely used today, but without which it would be much more difficult to meet such a target. The most obvious examples are carbon capture – removing carbon dioxide from concentrated industrial sources or even directly from the air – and the use of hydrogen as an energy carrier alongside electricity. The 350 PPM research team is currently working on a brief introduction to hydrogen, coming soon.
Now onto the company reports….
350 PPM LTD
Starting Price: £12.50 per share
Current Price: £190 per share
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350 PPM has of today raised a further ~£850k for Storelectric at a price of £1.15 per share. This is of course in addition to the incubation round we completed in 2017 at the price of £0.25 per share (circa £280,000). Storelectric is now crowdfunding on Eureeca.com, at a non-discounted price of £1.45.
Waste to Energy Solutions Ltd (WES) incubation raise is proceeding and we anticipate passing through the SEIS limit this month (please note, many of our investors are international and thus are not able to access the SEIS Reliefs, thus, these individuals are not counted in the SEIS tally). The forecasts for WES are detailed in this update and it would seem that WES is ahead of its revenue projections.
As of today, 350 PPM holds positions in the companies it champions as follows: Solar 350 Ltd; 3771 shares priced at £24.00 (£90,504), Storelectric Ltd; 256,654 shares priced at £1.45 as per non-discounted price on Eureeca (£372,147), and Waste to Energy Solutions Ltd; 1.3M shares priced at £0.33 (£429,000) though unfortunately without the anti-dilution and anti-performance clauses our investors benefit from. These shareholdings have been purchased in lieu of fees charged in order that our objectives are aligned to those of our investors.
Accordingly, it is quite natural that on occasion we run a little short of cash especially when we are taking a proportion of our fees as shares in the companies we champion. 350 PPM is therefore again open to investment and we are looking to raise circa £150,000. Because of 350 PPM’s holdings in companies we have already championed, we hope that 350 PPM is especially attractive to new investors, providing them with early diversification in the sector.
Going forward, as well as expanding our investor base organically, we are looking to partner up with established stockbrokers and financiers keen to gain exposure to this sector. This will add substantially to our put away power and elevate us to the next level. If any of you have any contacts with companies that we could partner with please do not hesitate to contact me directly.
Please also feel free to forward this post to friends, family members, rich and powerful enemies, tycoons, billionaires and Heads of Infrastructure and Sovereign Wealth Funds that may also be interested in exploiting the potential of the Environmental Revolution. Or post it on your linkedin, twitter or facebook.
$90 Trillion is still the best estimate of the investment required to decarbonise the world economy and we fully intend that the companies we are financing today will be providing the projects and services to these organisations, and enabling and facilitating the deployment of this capital.
This link will take them to our Research Request page and would be a suitable location for them to input their details and find out more about 350 PPM Ltd: https://350ppm.co.uk/researchrequests/
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Solar 350 Ltd
Starting Price: £2.50 per share
Current Price: £30 per share
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Subsequent to our Spring Update, Solar 350 has now signed a Term Sheet with the US solar developer and Silicon Valley billionaire referred to in the previous report. The ambition remains the same: 390 MW of pre-construction assets, 1 GW of operational assets (upgraded to investment grade PPAs) and begin a further GW of additional development, however, the exit prices and additional terms have now been defined and the Term Sheet has been signed by both parties.
My best estimate of the net worth of this individual and his companies is circa 20 billion. One of his businesses is due to list on the LSE shortly and it is looking like it will go straight into the FTSE 250.
We have begun sourcing these assets, and are close to securing a further 800 MW of semi-developed sites that we will work on with our Mexican partners in preparation for sale to the buyer as defined above.
We recently met again with our buyer (breakfast in The Dorchester no less), and we have a conference call with his lawyers on Friday to progress the Framework Agreement.
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Storelectric Ltd
Starting Price: £0.25 per share
Current Price: £1.15 per share (prior to Eureeca fundraise – Eureeca has a variable discount that decreases at specific investment totals)
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Building on a successful funding round with 350 PPM, which has raised ~£850k, Storelectric is now fundraising on Eureeca.com. Eureeca is an international crowdfunding platform with regulatory licences in the UK, Holland, Dubai and Malaysia. Access the deal directly here.
The following news is adapted from Storelectric’s latest newsletter, emailed 24/05/2019:
Storelectric has been featured on an episode of CNBC’s ‘Sustainable Energy’. The broadcast had global coverage, with an estimated audience of 8 million. It is a great scoop for Storelectric to be profiled as one of three fast-moving green energy companies to watch out for. The full programme is available below; the video starts at the relevant point.
We have submitted our BEIS grant bid for CCGT CAES, based at the Fleetwood site. This bid is led by Storelectric, with bid partners Siemens, Arup and NPL. The grant applied for is just under £10m (the final decision as to the amount is with BEIS). We have since been selected for interview with BEIS in London, attended by Storelectric, Siemens and Arup personnel. The interview went very well and we will hear whether we have been successful in about one month.
We are currently compiling our new CEF bid for TES CAES. This relates to the PCI status that Storelectric currently has at the Cheshire site. This bid is led by Storelectric with consortium partner Arup, and subcontractors ERM, Fortum, National Grid / SPEN, KBB Deep / Geostock and Newgate Communications. The bid is due to be submitted in June 2019. The grant applied for is approximately £10m, this covers all the engineering and all the planning approval for the 40MW and 500MW plants.
We have now submitted a detailed Feasibility Study to NAM, for them to consider further investment into a project in the Netherlands or elsewhere. The Feasibility Study will be presented to the NAM Board at some time in the near future.
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Waste to Energy Solutions Ltd
Starting Price: £0.12 per share
Current Price: £0.33 per share
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Fundraising for Waste to Energy Solutions (WES) remains open. For some background, an introduction to the Waste to Energy sector is available. Investment is currently available with the benefits of SEIS (including up to 50% income tax relief), though we anticipate passing through the SEIS limit this month.
WES have, over the last few months, made progress on several major projects and strategic alliances. Combined, these projects are forecast to generate revenue of ~£1.6 million in 2019 (these forecasts are subject to change):
Project 1
For our Fuel Pellet Production project, several key agreements have now been finalised. WES expects this project to still close within 2019, and we expect financial benefits to bring about £750k of income.
Project 2 Hull
This is due to have financial close in June but payments of funding have agreed to be staggered to meet funding, as follows, £100k likely in Sep 2019, £100k within 6 months and final £100k in a further 3 months. Depending on how WES account for the deal, this is still considered to be a 2019 deal.
Project 3 Corby
WES are trying to finalise the funding and financial close, which is expected around Sep this year, likely receipt of funds of £250k is still on track for 2019, however we are also trying to negotiate an equity share which will of course significantly amend WES value, but cannot guarantee what this will be at this stage. We are currently finalising who our funding partner will be for this project. We have several major equity and debt investors all currently carrying out their due diligence on the project.
Project 4 Middlesborough
The AD plant is under a lot of discussions with funders at the moment, the announcement last Friday of the RHI being retained until 2021 has helped significantly. WES expect financial close for this on or around October this year with expected revenues of about £300K.
Project 5 Holum AD
This is another AD close to Middlesborough where we expect to close in September, our income is likely to be around £150k and this is running concurrent with the Middlesborough Project.
WES are working on several other deals that may occur this year but more likely will be Q1 2020, we are currently in the progress of signing up exclusivity on two further large Waste to Energy Plants similar to Corby and will announce updates on these two projects later in the summer.
DATA STORAGE STRATEGIC ALLIANCE
WES’s strategic alliance with Asanti Data Centre company continues very positively, we have set up two key strategic locations in Corby and Middlesbrough where we have engaged local associates to work with Asanti to provide anchor tenants for the data centre. This has a positive knock on effect to WES when Asanti can secure the anchor tenants they can then formally sign Power Purchase Agreements with WES to take both Power and Heat from our own developments. This helps to increase the project IRR and also supports further the project investors.
Absolute Investment Partners (AIP) have signed an agreement with WES to further support and advise WES throughout the waste to energy project financing. AIP have helped to raise funds for over 700 MW of Renewable Energy Projects and are extremely well connected in the Corporate Finance World. AIP has helped WES shortcut a lot of time and effort to ensure the right overall funding package of their projects, helping to negotiate the right Debt and Equity balance needed to ensure the projects can reach financial close.
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Contact Information
Tel: +44 (0) 203 151 1 350
Fax: 0203 151 9 350
Level 1, Devonshire House, 1 Mayfair Place, London, W1J 8JA, United Kingdom.
To contact us by email, use the contact us page.
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Risk Warnings
350 PPM Ltd is an Appointed Representative of M J Hudson Advisors Limited (FRN: 692447) which is authorised and regulated by the Financial Conduct Authority in the UK.
Information contained within this post has been supplied by client companies, or taken from sources considered by 350 PPM Ltd to be reliable, but no warranty is given that such information is accurate or complete and it should not be relied upon as such. 350 PPM Ltd will not be responsible for any loss or damage of any kind which arises, directly or indirectly, and is caused by the use of any part of the information provided.
The value of your investments and the income from them can fall as well as rise. An investor may not get back the amount of money invested. Past performance and forecasts are not reliable indicators of future results. Currency denominated investments are subject to fluctuations in exchange rates that could have a positive or adverse effect on the value of, and income from, the investment.
No representation or warranty is given as to the availability of EIS relief / reliefs. Since the requirements to fall within the EIS must be monitored all the time it is possible that if the requirements are met today, they might not be tomorrow. Investors should consult their professional advisers on the possible tax and other consequences of holding such investments.
The investment opportunities associated with this post are only available to persons who would be categorised as professional clients (including elective professional clients), sophisticated investors and high net worth investors as set out in COBS 3.5 of the FCA Handbook:
https://www.handbook.fca.org.uk/handbook/COBS/3/5.html
for professional clients and COBs 4.12.6 R of the FCA Handbook:
https://www.handbook.fca.org.uk/handbook/COBS/4/12.html#DES582
for high net worth and sophisticated investors.
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