Greenstone Finance and Aurium Capital Markets acquire the Green Deal Finance Company (“GDFC”)
LONDON, 15 January 2017: Greenstone Finance and Aurium Capital Markets (“Aurium”) have today announced the acquisition of the business and assets of the Green Deal Finance Company (“GDFC”), as well as its existing loan book with a principal value in excess of £40m; the acquisition is being supported by Honeycomb Investment Trust (“HIT”) which is managed by Pollen Street Capital.
Greenstone Finance, which invests in organisations focused on financing in renewable energy and energy efficiency, and Aurium, a structured finance boutique with a focus on renewable energy, have acquired GDFC Services and its subsidiaries with immediate effect; the new ownership will continue to service the existing Green Deal loans and will commence financing of new Green Deal loans in Q1, 2017.
First launched by the Government in 2013, the Green Deal was established to address the fact that the UK has some of the most thermally inefficient housing in Europe. Green Deal loans provide customers with accessible financing to improve their homes by installing energy efficiency products. In particular, Green Deal financing has the potential to help:
- those who face the heavy costs of needing to install a new boiler or other essential measures but who can’t afford to pay the upfront costs of doing so;
- those who want to increase the value of their homes through installing renewable energy or energy efficiency measures;
- landlords requested by tenants to install energy efficiency improvements or, as of April 2018, landlords who own properties that fall below the new minimum energy efficiency (EPC) rating of E;
Green Deal loans not only offer competitive interest rates, but are more easily managed as loans are repaid as part of a customer’s energy bill, which will normally be reduced by the energy savings generated from the measure the loan has financed – a “Pay-As-You-Save” scheme. Furthermore, the loan remains with the property and is paid by the energy bill payer from time to time – ensuring the payments are made by the person who benefits from the energy saving.
Minister for Energy and Industry, Jesse Norman, said,
"People living in more energy efficient homes can have lower bills and warmer homes, while producing fewer carbon emissions, which is why the Government has committed to improving the insulation of more than one million homes over this Parliament. This deal will help us to reach that goal."
Kilian Pender, Founder and CEO of Greenstone Finance, said,
"We believe that the concept of repaying your loan as you save on your energy bills is an excellent one and with the significant private investment that we have secured, we’re looking forward to rolling the Green Deal finance scheme out across the country. We will provide homeowners a cost-effective way to improve their homes and quality of life."
Nimesh Kamath, Partner at Aurium, said,
"This joint venture with Greenstone Finance adds to Aurium’s continued commitment to the UK renewable energy sector and, in particular, the objective of improving the energy efficiency of UK buildings for consumers and business owners alike, whilst supporting the wider goals of distributed energy generation and energy security in the UK."
NOTES TO EDITORS
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About Greenstone Finance
Greenstone Finance was set up by Kilian Pender in August 2015. Greenstone Finance is a holding company which invests in and starts companies focused on the financing space in renewable energy and energy efficiency. Greenstone Finance aims to become the leading finance provider to UK homeowners, landlords and SMEs wishing to save money and improve their properties through energy efficiency products. Greenstone Finance is a private company backed by a consortium of investors.
About Aurium Capital Markets
Aurium is an award winning, leading mid-market investment house, providing its investors with access to innovative opportunities across several asset classes, most notably renewable energy and real estate. Aurium specialises in managing risk without compromising yields and is able to finance transactions where size, complexity, knowledge or speed of decision-making are crucial to achieving above market returns without compromising asset security.
About the Green Deal
The Green Deal was a UK Government scheme launched in 2013 set up to reduce the greenhouse gases emitted by the UK’s residential housing stock, which currently accounts for around 25% of the UK’s energy demand and 12% of the UK’s greenhouse gas emissions, as part of national efforts to meet the UK’s legally binding target to reduce carbon emissions by at least 80% by 2050.
Green Deal finance is a highly attractive offer because it allows consumers to meet the upfront costs of installing energy efficiency measures by providing a fixed interest rate over the lifetime of the finance plan. The key feature of the finance scheme is that the repayment of the loan is made with the customer’s energy bill and so can be managed more easily as the bills should be lower as a result of the energy savings made from the installation of the measure. In addition, Green Deal loan repayments are attached to the property, not the individual, and this means consumers can make the energy efficiency improvements without having to worry that they will be left with a loan to repay if they leave the property.
In terms of immediate priorities, Greenstone Finance will focus on improving access to and awareness of Green Deal finance by investing significantly into its website, customer services and training of Green Deal Providers. Following the departure of the GDFC team, Greenstone Finance has assembled a new management team to run the business and operations for the Green Deal Finance Company.
About Green Deal Finance Company Ltd
The Green Deal Finance Company Ltd is a not-for- profit company which was established to support the Government’s Green Deal programme by setting up, financing and administering Green Deal Loans, entered into by Green Deal Providers with consumers. This allowed Green Deal Providers to sell more energy efficient products, whilst not having to finance the loans that they originated. In July 2015 the Government said that it would provide no further funding for the Green Deal Finance Company Ltd to purchase any more Green Deal Loans and as such, the Green Deal Finance Company suspended financing Green Deal loans for Green Deal Providers. The Green Deal Finance Company Ltd currently has a loan book with a principal value in excess of £40m.
The acquisition by Greenstone Finance and Aurium pertains to the business, operations and assets belonging to the Green Deal Finance Company Ltd.
Sale of the GDFC for £40m
The Board of the GDFC is delighted to announce the sale of its wholly-owned subsidiary, GDFC Services Limited (‘GDFC Services’), to Green Bidco No 1 Limited, an independent acquisition company jointly owned by Greenstone Finance Limited (“Greenstone”) and Aurium Capital Markets (“Aurium”) for a total consideration of £40m. The sale is the culmination of a process that saw expressions of interest from 14 separate parties in buying or investing in the GDFC. As part of completion of the sale, the GDFC has repaid in full the outstanding amount of £20.2m drawn under the senior loan facility from the Department for Business, Energy and Industrial Strategy.
The purchaser has acquired GDFC Services and its subsidiaries, which own and operate the GDFC’s pay-as-you-save loan administration system, and the GDFC’s loan book of Plans, which currently amounts to £43.8m. Existing Green Deal Plans will continue to be administered as normal by GDFC Services. There will be no impact on existing Green Deal plan customers and no need for them to do anything.
David Brent, Chairman of the Green Deal Finance Company said:-
“I and the rest of the Board of the GDFC are delighted that, following the announcement by the Government in July 2015 of its decision not to provide further funding for the GDFC, we have completed the sale of the company to a buyer who intends to re-activate the GDFC’s pay-as-you-save lending activities. The sale shows the significant value of the pay-as-you-save system the GDFC developed. With the right backing it has the potential to fulfil the environmental and energy efficiency objectives set out by the Government and the GDFC’s other stakeholders when the GDFC was first established.
I would like to take the opportunity to thank Paul Williamson, Managing Director of the GDFC, and his team for diligently running the business while the loan book has been in run-off and for supporting the sale process so effectively. I also thank Mark Bayley and all the previous management and staff at the GDFC who worked so hard to establish the GDFC in the face of a number of challenges. Thanks are due as well to our colleagues at the Department for Business, Energy and Industrial Strategy who have provided invaluable support to the sale process.”
Notes to editors
- The Green Deal Finance Company is a not-for-profit company. It was established to set-up, finance and administer Green Deal finance plans on behalf of Green Deal Providers within the Green Deal framework set up by the previous Coalition Government.
- On 23rd July 2015, the Government announced its decision not to provide further funding for the GDFC to enable it to continue building demand. The GDFC ceased quoting for new Plans with immediate effect, reduced the size of its staff, and put the loan book of Plans into “run-off” administered by a small team led by Paul Williamson, Managing Director. In run-off, Green Deal finance plan repayments are collected over the term of the plans and applied to repaying the GDFC’s borrowings raised to fund the plans.
- The GDFC’s loan book currently amounts to £43.8m. As a result of the pay-as-you-save mechanism, the emerging evidence is that, as anticipated, the underlying level of customer default in Plan repayments is as low or possibly lower than original expectations in setting up the GDFC, notwithstanding the high level of financial inclusion within the GDFC’s lending policies up to July 2015.
- Following the Government’s announcement in July 2015, the GDFC received 14 separate approaches from parties looking to buy or invest in the GDFC. The GDFC conducted a formal sale process during 2016 which has culminated in the sale of GDFC Services and its subsidiaries to Greenstone and Aurium.
- Greenstone Finance was set up by Kilian Pender in August 2015 and is a private company backed by a consortium of investors. Greenstone Finance invests in financing for renewable energy and energy efficiency products with the aim to become the leading finance provider to UK homeowners, landlords and SMEs wishing to save money and improve their properties through energy efficiency products. For further information please see www.greenstonefinance.com.
- Aurium is a London based investment manager which specialises in asset backed finance with a particular focus on renewable energy and related infrastructure. For further information please see www.auriumcapital.com.
- Greenstone and Aurium have stated their intention to commence the financing of new Green
- Deal loans in by the end of the current quarter.
The GDFC sale process was led on behalf of the Board by Mark Bayley, former Chief Executive of the GDFC, and Victoria Wilson, General Counsel.
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