faq with noel shannon

Your Questions,
Answered: NOEL SHANNON

I am worried about deploying the fund monies but also selling the projects?

Firstly, there are many great projects on the Acordo list. I am confident that we will have plenty to select from and can cherry pick our favourites. With regards to selling, we have a selection of institutions who like to invest at RTB, who will consider buying our projects from us at a fair price, as and when they are RTB, thus I do not have any concerns about deploying the fund monies into suitable projects or in selling those projects on for a significant profit, once they are ready.

Will you invest outside of Portugal?

We have the ability to do so under our mandate and to be honest, I have the experience and the contacts to do so, however we do not believe that this will be necessary as there are plenty of great projects on the Acordo list for this fund to invest in. We have excellent projects on our radar in other European countries and in the UK - and the fund is allowed to invest up to 40% outside of Portugal, thus we can easily do this, although I believe that there will be enough good quality projects in Portugal to satisfy the fund’s €100m capacity.

Noel, how do you know a site is suitable for New Frontiers? How do you decide between them?

For a start, we are targeting projects on the Acordo list, which means that one major box has already been ticked, that being that grid connection is guaranteed at some point in the future. This is often a major stumbling block for projects so to have this box ticked with all the projects we will initially choose between, is a huge advantage.

After this we would look at technical and environmental reports and gauge both the chances of the site being fully approved and also the costs involved in this, particularly the cost of ultimately connecting the project to the grid.

Very importantly, there are plenty of projects to choose from, so we are not under pressure to cut corners or to commit if we are not 100% happy that the site is perfect for us and can be invested into for a fair and reasonable price. The pedigree and historic successes of other investors into these projects will also guide our choices as it is great to work together with other experienced parties towards a positive outcome for all. After I have selected the projects which I believe are suitable for New Frontiers, these are then reviewed and approved by the fund’s investment committee, thus there are strong systems and controls and checks and balances with all our acquisitions.

What sort of costs will New Frontiers have to pay to get the projects to RTB?

Depending on the percentage of equity we have in any project, we will proportionately cover our share of the costs. These costs typically include covering due diligence of the site, environmental reports, legal costs of liaising with the relevant government bodies for approval and rent for the site. When the grid offer does come along we will need to pay a significant sum to accept the offer - otherwise the government move on to the next project in the queue. Often it is these costs which prevent good projects obtaining Ready-to-Build status. New Frontiers can assist good projects struggling to get through these milestones financially, while delivering attractive profits to our investors at the same time.

How do you invest in a certain project?

When a project is established, an SPV is created. This is a special purpose vehicle, which is effectively a standalone entity/company which represents the new solar project. Shares are then sold in this entity and we purchase a percentage of those project shares. We then assist by paying our share of the costs in order to get to RTB stage and then we sell our shares for a profit to an investor whose appetite to invest is at the RTB stage and not before. There are many large investment funds out there with a risk appetite only for RTB projects or even later stage and it is to these funds which we plan to sell our shares to when the time is right. Regardless of what percentage we choose to purchase, we insist on controlling rights at the outset - regardless of the initial equity percentage that is secured, thus we always control our own destiny and that of our investors.