GEL is a section 12J clean technology fund that provides solid returns on the back of an impressive portfolio of projects. The fund forms part of Grovest Group and is managed by Decentral Energy Managers Proprietary Limited (DEM).
GEL was founded in 2016 to address the steadily increasing demand for low-cost renewable energy, the unreliability in grid energy supply, and the willingness of large corporations to commit to long-term supply agreements. The energy industry in South Africa is going through a major disruption and GEL has been positioned to maximise the opportunities this is creating.
Fossil-based fuels (oil, coal, and natural gas) currently provide most of the energy used throughout the world. These resources are being constantly depleted and can’t be replaced within any practical time span. In contrast, renewable energy resources are naturally replenished and will never be exhausted. They have a lower environmental impact than that of conventional fuels and consequently, are referred to as ‘green.’ Renewable energy is now cost-competitive with other forms of generation, harnessing naturally occurring and abundant wind, sun and water resources.
Every R1 million invested into GEL sees more than 112 man-months created and 3356 tons of Carbon Dioxide (CO2) emissions avoided – which equates to planting 16780 trees in the humid tropics.
Grovest Group is South Africa’s first venture capital company (VCC) incorporated under Section 12J of the Income Tax Act. It affords investors direct exposure to the rapidly developing venture capital (VC) sector in the country, whilst enabling them to write off 100% of their investment capital against their taxable income in the year in which it is made. You can find out more about Grovest Group by visiting their website here.
DEM is the fund management company for GEL. It is the only experienced EPC-agnostic clean energy fund manager in the industry with black shareholder majority and comprises seven board members with over 80 years of experience in delivering robust results across energy-related and other fields. You can find out more about DEM by visiting their website here.
One of the main challenges to the economic growth of small and medium-sized businesses is access to equity finance. To address this, the South African government implemented a tax incentive for investors in such enterprises through a venture capital regime – a marketing vehicle that brings together small investors and concentrates investment expertise in favour of the small business sector. This incentive is effective between July 2009 and June 2021 and enables investors (any taxpayer) to claim income tax deductions on the expenditure they incur in exchange for VCC shares. Thereafter, the incentive will be reviewed before continuing. You can learn more about this here.
The full amount that you invest into GEL is 100% deductible from your taxable income in the year in which you make your investment. This means that you, an individual tax payer at maximum marginal rate, can obtain upfront tax relief of up to 45%. It also means that if you keep your investment in GEL for a minimum period of 5 years, the tax benefit conferred will become permanent, i.e.: there will be no recoupment of the tax benefit in the hands of the investor when the investment in GEL subsequently realised. You can learn more about this here.
Any taxpayer (whether an individual, trust or business) qualifies to invest in this approved venture capital company (VCC).
GEL’s assets are set to grow to R100 million by financial year 2020, which opens up a limited window of opportunity for new investors in the form of:
- A low-risk, high-yield, asset-backed investment
- Upfront tax-relief of up to 45%
- Projected 5-year returns as high as 25% before tax or 20% after fees and taxes
- An average dividend yield of 12-15% on risk capital
- An investment multiple of 2 to 2,5 times the money on risk capital
- A clear exit strategy through the sale of underlying assets to IPP or the listing of GEL
GEL invests in qualifying companies which execute bankable agreements with credit-worthy, energy-consuming customers. A qualifying company acquires clean energy assets which produce low-cost, clean energy output, purchased and consumed by the respective customer/s who benefit from:
- Utility cost savings
- Security of energy supply
- Impact through job creation and carbon emission reductions
GEL’s assets are set to grow to R100 million by financial year 2020, thanks to the steadily increasing demand for low-cost renewable energy, the unreliability in grid energy supply, and the willingness of large corporations to commit to long-term supply agreements. This opens up a limited window of opportunity for new investors in the form of low-risk, high-yield, asset-backed investment returns.
Grovest Group and DEM share the same investment philosophy and process for GEL. We focus on finding the most compelling opportunities on offer that present the lowest risks to our investors. DEM is the only experienced EPC-agnostic investment funder in the industry – this means that we have the right balance of experience in both the fields of finance and energy to expertly understand and mitigate the risks to the right industry players, freeing us up to focus purely on the commercial, asset-based propositions for maximum returns.
What is the minimum amount you can invest in GEL and does this need to be done in one lump sum payment?
The minimum investment is R200 000 and this needs to be paid in one lump sum before the closing date of February 2019.
Yes, your investment will incur the following fees:
- 3% capital raise fee
- 2.5% management fee
- 20% performance fee
Yes, SARS will recoup the tax benefit if the investment is disposed of in under five years.
All GEL investors are provided with quarterly electronic reports which contain the relevant information to keep you updated on the performance of your funds. You can also sign up to the GEL newsletter for project updates.
You can invest in GEL between now and February 2019, before the 2018 tax year ends. The time to act on this exclusive investment opportunity is now!
If your business is producing revenue, has a plausible business model, rapid growth potential, a defensible market position, a dynamic management team with meaningful equity stake in the business and requires growth capital in the clean energy sector, click here to visit Grovest Group website and follow the number of steps in the investment screening process.