How we raised funds
Wedmore Community Power Co-operative raised a total of £1,225,000 in the summer and autumn of 2013 through a variety of ways.
To start the process, the Co-operative’s Board launched the first of two share offers, the Pioneer offer, to attract local investment to the value of £150,000. This was achieved and funds were earmarked for early development costs.
The Board then launched a second, main offer that also achieved its target of raising £800,000. Most of the investors – who are automatically members of the Co-operative – are from the Isle of Wedmore but a substantial number are from other parts of Somerset and the rest of the UK.
Local people were able to invest a minimum of £250 while those from outside the area had an investment threshold of £2,500. A number of members loaned further funds to the Co-operative through two- and seven-year bonds.
We produced a Share Offer Document that set out full details of the project and included an application form for those wanting to invest.
Tax relief
The Co-operative was successful in applying to HM Revenue & Customs Enterprise Investment Scheme (EIS) tax relief for the project. EIS is an important government incentive offering 30% tax relief on shares invested in qualifying societies – see our EIS page.
This meant that investment in our Co-operative was particularly attractive for UK taxpayers.
Profit and loss and cashflow projections
Interest rate projections
|
Period |
Average interest rates per annum for the period |
|---|---|
|
2014-2017 as set out above |
5.2% |
|
2018-2023 |
8.2% |
|
2024-2033 |
11.8% |
|
2034-2040 |
13.7% |
|
2014-2040 full life of the project |
9.5% |
Interest rates increase over time in the projection as capital is returned when the asset is written off. The following table compares the illustrative Internal Rate of Return (IRR) with average interest payments and illustrates the potential advantages associated with EIS.
|
Full life of the project |
Average |
IRR |
IRR with EIS |
|---|---|---|---|
|
2014-2040 |
9.5% |
7.2% |
11.2% |
