When the Triodos crowdfunding platform was launched at the start of the year it was (and
still is) a unique proposition. Triodos is the first and only UK bank to launch
a crowdfunding platform, and one which provides direct investment opportunities
spanning a range of social and environmental sectors with a requirement that every
issuing organisation must be committed to delivering positive change.
The Bank’s crowdfunding advisory team
also provides advice and innovative solutions to support these organisations
(often charities, social enterprises and community organisations) raise finance
on the crowdfunding platform.
In community energy for example Triodos has
been able to reduce the pressure on community groups who need to raise capital
by offering a unique and comprehensive financing solution. This has helped to take
away the onus on community groups being solely responsible for their financing.
By doing so, some of the projects have been able to start making positive
changes to their communities sooner than they first envisaged to the benefit of
The crowdfunding platform has so far
supported a number of community led projects, including the ongoing phased
support of the solar bond offer for Burnham
& Weston Energy CIC.
At its outset the organisation
originally borrowed over £11 million in bridging finance to buy its site in
North Somerset, which facilitated it becoming one of the largest community
solar projects in the UK. The 9.3MW solar farm has been generating electricity
since June 2016 and produces the equivalent of the annual electricity
consumption of around 2,000 homes.
The business banking arm of Triodos
was able to refinance £7.4 million of the bridging finance, more than halving
the group’s original debt. However, this still left Burnham & Weston Energy CIC
with the remaining £4 million of the short-term, high-cost facility to repay.
The directors of Burnham and Weston
Energy then worked with the Triodos crowdfunding team to plan a £4m community
bond issue on the crowdfunding platform. However, £4 million is a large raise
for crowdfunding – in fact, the largest community solar bond ever to be raised in
the UK. Part refinancing of the £4 million was not an option as it would leave the
financing structure unresolved, create uncertainty for investors and reduce the
value of the community fund - the ultimate objective of the project.
To help resolve this challenge,
Triodos decided to underwrite part of the raise itself through a unique new
product. TCRUF (Triodos Community Renewable Underwriting Fund) was created by
the bank and committed to underwrite £1.35 million of the £4 million raise.
Triodos also secured investment from Big Society Capital (BSC)
of £1.3 million in the bonds before the launch. This meant the community only
had to raise £1.35 million for the scheme to be fully refinanced at a lower
cost so the community fund payments could start.
The deal was closed on 12 September
as the £4 million target was reached and community payments to local charities
and a community foundation have already started and are already making an
impact. Around £3 million of the net revenue generated over the life of the
project is expected to be allocated to the community fund to support community
projects and tackle fuel poverty in the local communities of Burnham and
Highbridge and Weston-Super-Mare and the nearby rural parishes.
With the successful £4m bond issue
providing long-term financing for the Burnham & Weston Energy, Triodos can
now continue to offer new investors the chance to invest in the project by
refinancing both the BSC and TCRUF investments.
“It’s fair to say no other crowdfunding
platform would have agreed to this approach,” says Richard O’Brien, Corporate
Finance Manager at Triodos. “As we are part of an established and sustainable
bank we can directly help organisations achieve greater financial stability and
support community groups, such as Burnham & Weston. We want to create
simple, long-term financing solutions to enable community groups to do what
they are set up to do and to flourish.”
He continued: “Our aim is to always to
help to provide financial advice and support in addition to helping raise the
capital. Frequently the projects we support are led by people giving up their
spare time to ensure the project is a success, its often not their full-time
job and therefore it only feels right that any financial pressure sits on the
shoulders of organisations which have been set up to cope with it. We take our
role very seriously and hope our contribution goes way beyond simply bringing
in the funds.”
Jake Burnyeat, Director at Burnham
and Weston Energy CIC said: “Having the support of Triodos from the beginning
has been extremely valuable. We appreciate the role they have taken has been
unique and collaborative. Having their advice, support and guidance has been
amazing. By sharing the risk of the capital raising we could start our community
fund much more quickly and have more certainty over the future. We could start
to give money to groups and make a difference within our community which was
great to see.”
The opportunity to invest in Burnham
&Weston Energy CIC is still open, for more information please
click here. Please note, your
capital is at risk through these investments. The investments may be long term
and are not readily realisable. Learn more about the risks.