Investment firm SMSF Funds Management will be making available a new opportunity for individuals running their own super funds to invest in the renewable energy segment of the infrastructure asset class.
The manager is giving SMSFs and their trustees the chance to invest in a new solar farm project in the Victorian town of Robinvale through the issue of A class redeemable preferential shares.
SMSF members looking to purchase shares in the project will get the benefit of capital growth as well as a 7 per cent yield per annum paid by way of preferential dividends, SMSF Funds Management director Stuart Nelson told selfmanagedsuper.
“There is a huge amount of capital upside associated with this project. If the original capital raising is successful, we will move into a listing phase and we expect the value will go up significantly as a result,” Nelson said.
“That’s because you’re essentially a long-term project with infrastructure assets that generate strong returns, double-digit returns, and they’re ongoing for 10 years.
“So that’s why it’s good for people looking to hold the stock for five years and potentially to make a return when it does list.”
Further, he noted there are benefits to the income component of the investment because it is being done through a preferential share issue.
“We should be able to pay a yield, which is for all intents and purposes interest, that we will be able to stream franking credits through as well,” he said.
SMSF Funds Management’s fee structure on the renewable energy project is unique and another positive feature for investors, he said. To this end, the manager will charge a 1 per cent management fee and will collect dividends from the project through B class preference shares that will only be paid after the A class share dividends.
The offer has incorporated an element of cash-flow residue that will allow dividends to be paid early in the project timeline.
The A class preferential shares will be offered at an issue price of $1.00 with a minimum investment threshold of $25,000 and can be traded by the shareholders.
The offer will commence and close in February 2020.