Dear Futureneers Solar 12J Investor,
(This blog post was also distributed via email and SMS)
As you may be aware, we invest in two types of solar projects:
- Mini-grid projects
: These projects mean we construct a solar plant on the roof of one or more buildings within a business park (normally sectional title rules applies) and then generate and sell the solar energy generated from such roofs to multiple companies within the business park via our "mini-grid" distribution model. The multi-grid model therefore reduces credit risk by collecting income from multiple users instead being dependent on a single user of the solar energy.
- Single Client projects
: This traditional model implies we construct a solar plant on a single site (normally on a roof) and then generate solar energy which is then used and purchased by a single client which is either the owner or the tenant of such building. It is therefore very important that the single client has a solid and sustainable business and balance sheet since solar energy will be sold to it over the next 20 years.
- Our first "Single Client" project is a "blue-chip" multi-national organisation
As mentioned in our summary email last year, we are very proud to announce that we have secured Klinger Mzanzi (Pty) Ltd as our first "Single Client" contract at the end of 2021. Klinger is the world’s leading manufacturer and provider of industrial gaskets and valves. Established in 1886 as a family enterprise, the company was a pioneer in gasket technology and the group now has a worldwide presence in over 60 countries, including in South Africa. Please visit their website for more information: www.klinger.co.za. What has not been mentioned before, is the continuous effort of the development team to secure this contract stretching over 16 months and probably more than 10 iterations to the original engineering design and proposal - Well done to the team!
- Type of Contract: Power Purchase Agreement (this simply means we own the solar plant and sell all the solar energy on a "pay-per-use: basis to Klinger);
- Estimated project finance required: R9.5m;
- Type of solar plant: Hybrid (including generators enabling Klinger to use solar energy during load-shedding);
- Term: 25 years (
provided Klinger has an option to purchase the plant which transaction will result in Investors achieving their target ROI);
- Estimated Risk profile: Low;
- Construction commencement date: December '21 (in construction at the time of this email)
- Estimated Operational Date: May'2022. (date from which we will start earning income).
What does it mean for you as investor?
- We are rolling out cash into quality projects and increasing average pre-tax and fee returns from 4.25% on cash (in call accounts) to a targeted 12% on solar projects. We continue to be on target to pay our first dividends in June 2022.
- Klinger also has a few smaller other sites in South Africa which we will target as a secondary proposal.
Should anyone have any questions, please drop me an email at any time.
CFO: Futureneers Group