Westbrooke Alternative Asset Management, a prominent South African alternative investment manager, has announced the successful completion of its R300 million inaugural tax-enhanced renewable energy alternatives investment strategy. The fund manager achieved its ambitious target within an impressive timeframe of just eight weeks by garnering support from numerous private investors. With the funds secured, Westbrooke Alternative Asset Management will now invest in collaboration with South African businesses engaged in the installation, operation, and ownership of small and medium-scale embedded generation solar photovoltaic (PV) projects nationwide. This marks a significant step towards promoting sustainable energy solutions in the country.
“Westbrooke REAL allows investors to access the much-needed and fast-growing renewable energy sector, through a diversified portfolio of solar PV projects underpinned by long-term cash flows, through power purchase agreements concluded with high-quality end-users,” explained Dino Zuccollo, head of product development and distribution at Westbrooke Alternative Asset Management.
To encourage investments in renewable energy, the Minister of Finance has extended the Section 12B tax incentive, enabling investors to claim an up-front tax deduction of up to 125% for all newly operational renewable energy projects from 1st March 2023 to 28th February 2025.
Westbrooke REAL presents an opportunity for investors to capitalize on this incentive while owning the underlying solar PV projects. Through the innovative investment structure of Westbrooke REAL, investors can boost their cash invested from 125% to 200% to 250%.
“After recouping their initial capital, investors will remain invested in a high-quality solar project that will deliver stable and predictable yields for up to 20 years. It’s attractive for investors seeking long-term returns with a capital preservation focus,” noted Zuccollo.
Jonti Osher, the head of the South African investment team, stated that the primary goal of the Westbrooke REAL fund is to deploy the capital into diverse solar PV energy projects in collaboration with established and experienced partners. “Closing the 2024 fundraise in record time is a significant achievement. The demand for allocations in the fund is indicative of the attractive investment returns, and the desire of private investors to support solutions that can address the energy crisis in the country,” he added.
The Westbrooke REAL fund will target renewable energy projects that meet the following criteria:
- South African Small-Scale and Medium-Scale Embedded Generation Projects: The fund will invest in projects that are either grid-tied or operate in a hybrid system, incorporating batteries or generators. The project sizes will range from 100KW up to 25MW, with the potential to consider larger projects.
- Existing and Greenfield Solar Projects
- Power Purchase Agreements and Operating Leases with a primary focus on commercial, industrial, agricultural, and body corporate off-takers.
The core strategy is a commitment to offer rapid, innovative, and adaptable equity funding to solar partners and facilitate the efficient rollout of their project pipeline. “Partners will benefit from our collaborative approach and tailored investment solutions, with the ability to move with speed to provide accelerated growth and fast track project execution,” explained Osher
Westbrooke REAL’s investment approach centres on supporting projects that offer off-takers a reliable electricity supply and cost-effective energy solutions in the long run. “Westbrooke REAL is an attractive proposition to investors as they receive inflation-beating investment returns over the long-term while providing secure and sustainable energy to South African business,” concluded Zuccollo.