Optomise Alternative Investments is offering private investors the opportunity to tap into the attractive returns provided by a “green” asset – renewable solar energy generation – an asset class that produces returns that are not correlated to traditional financial markets.
Until now, direct access to such renewable energy projects was only offered to large institutional investors.
The Optomise Renewable Energy High Income Fund has partnered with GreenMatters Engineering to install and operate rooftop solar systems for business premises.
GreenMatters Engineering has to date developed over 10 megawatts (MW) of energy generation across a R100 million solar portfolio installed on commercial, industrial and retail properties. Landlords of these properties are achieving electricity savings of 20% to 50%.
For a minimum investment of R250 000, the fund returns a guaranteed fixed income of 9.00% per annum with dividends paid every six months, excluding any tax incentive.
With the Section 12J tax incentive, the fund expects to achieve a total return of 17.34% per annum net of all fees and taxes for an individual or trust (based on the highest marginal rate of tax). For a corporate investor, the net total return is 15.40% per annum. The investment term of this Section 12J fund is fixed for five years.
CEO of Optomise, Gadi Cohen notes: “Rising electricity costs and unreliable energy supply in South Africa are creating a massive demand for renewable energy. To date it has been very difficult for private investors to invest in this sector because most IPPs are funded by institutional investors.”
“The uniqueness of this opportunity, together with the exceptional returns we are generating, enhanced by the S12J tax incentive, is attracting considerable interest from private investors.”
The S12J tax incentive provides a special upfront tax deduction on investments made in certain alternative asset classes. The purpose of this incentive, which was introduced in 2008 and amended in 2015, was to assist small and medium enterprises to raise capital and create jobs.
Cohen said the high level of interest could also reflect the imminent closure of the S12J tax incentive window on 30 June 2021. There will be no extension, as communicated by Finance Minister Tito Mboweni in his 2021 Budget speech.
Director of Optomise, Namir Waisberg adds, “We are grateful to National Treasury for creating this tax incentive. We are very proud that, together with our investors, Optomise has invested over R500 million across 28 diversified investments to date and created over 700 jobs for the South African economy.”
“Now that there is a greater awareness of the alternative investments asset class, many of our investors have advised that they will continue to invest in alternative assets in future, even without the Section 12J tax incentive due to the attractive returns”.
Investors wanting to maximise their yields by utilising the tax incentive should make their Section 12J investment before 30 June 2021.