Tax-leveraged investment specialist, Anuva Investments has successfully deployed funds raised via the Anuva Green Energy partnership to conclude the purchase of twenty-three solar projects, equivalent to 11 megawatts of power from independent power producer Decentral Energy.
The funds have been raised via a tax–leveraged structure and have allowed shareholders to benefit from the investment into Decentral’s solar projects by making use of SARS’s Section 12B tax incentive. Section 12B of the Income Tax Act provides taxpayers with a tax deduction of up to 100% for investment into solar power plants.
This will be the first round of projects sold by Decentral, a solar and clean energy asset management company that owns, manages and leases solar power assets across South Africa. The sale includes projects that have been built, owned and operated by the company or are in its approved pipeline. These grid-tied solar solutions are primarily structured on long-term Power Purchase Agreements (PPAs) with the end-user. The portfolio consists of retail shopping centres, residential estates, and light industrial and commercial users who are contracted to purchase electricity supplied by the solar plant on a monthly basis for terms of up to 20 years. “These systems reduce our customers’ reliance on the electricity grid substantially, allowing users not only to save on electricity costs but also to decrease their carbon footprint by 25 to 40%,” says Christian Bode, Executive Director at Decentral.
The energy security crisis South Africa faces has placed major pressure on the supply chain and skills availability of the independent energy sector. Bode says that suppliers’ order books are booked up until July/August 2023 and the capital injection provided by Anuva Green Energy through the portfolio sale will allow the company to re-invest and proceed with its growth strategy through the undertaking of new projects. Commenting on the significance of the deal, Bode said; “Primarily, our focus will be on energy security and energy storage solutions for the commercial and industrial sector.”
“There is a considerable amount of investment required to overcome and replace Eskom generation feeds,” says Zane De Decker, Chief Investment Officer of Anuva Green Energy, a subsidiary of Anuva Investments, which raised significant funds via Section12 J structures. “Fortunately we picked up on the solar tax incentive via Section 12B when SARS introduced it in 2016, and we have a few successful projects under our belt,” he said. The tax-leveraged investment offering has been well received by Anuva’s clients and with the addition of Decentral’s 23 projects, the portfolio holds a total of 55 projects, valued at R325 million. “Having made considerable in-roads into the solar sector, we applied stringent due diligence factors in our selection process.” De Decker said that with Decentral’s track record, quality of their portfolio, geographical diversity and sound off-takers, the investment committee was confident in proceeding.
About Anuva Green Energy
Anuva Green Energy (AGE) investment provides a unique opportunity to investors to leverage the power of tax-based investing, via Section 12B of the Income Tax Act.
Treasury (and SARS) is encouraging South African tax payers to invest in sustainable energy with a significant incentive; AGE provides investors with exposure to a quality portfolio of Solar Photo-voltaic (PV) plants with strong investment fundamentals further enhanced by an attractive personal tax write-down along with access to favourable debt funding.
Investors can also secure their place for future AGE investments by investing in the Anuva Impact Fund (AIF) – a high yield, alternative investment vehicle that funds the development of Solar PV projects. The AIF acts as a catalyst to bring these projects to market and provides a structure that allows investors to secure their place now for future partnerships.
About Anuva Investments
Anuva Investments is an FSB-regulated and FAIS Act-compliant Venture Capital Company, formed in 2014 by a combined team of tax and investment specialists. Anuva invests in small- and medium-sized companies where the opportunity exists to significantly enhance profitability through a management involvement process. Higher-risk investments are balanced by investments into well-established businesses with proven profitability and stable cash flows.
About Section 12B
Section 12B of the Income Tax Act provides taxpayers a tax deduction of up to 100% for an investment into solar power plants. The Act provides for an accelerated capital allowance in respect of certain assets owned and used by a taxpayer in the generation of electricity from wind power, solar energy, hydropower to produce electricity of not more than 30 Mega Watts.