Green Deal Finance Company issues new bond to raise £5m

The Green Deal Finance Company (GDFC) plans to raise £5m by issuing a new bond using the peer-to-peer lending company Abundance Investment. It plans to use the capital to upgrade the company’s infrastructure to handle the loans that it will be issuing shortly.

The new bond, which is fixed for three years, will be offering a healthy 12% a year return and allows those looking to get involved to invest from just £5. So by investing £1000, you can expect to get back £1387 after the 3 years. A 38.7% return.

Those looking to invest in the new GDFC will by buying debentures, which is a promise from the borrower to pay back a set amount on a set date with the maturity date being 30th June 2020.  70% of the interest earned would be paid out twice a year until maturity. The remaining 30% will be paid back on the date of maturity along with the investor’s original capital.

“The Green Deal was established by the government to give homeowners an opportunity to invest in their homes and make them more comfortable to live in, whilst also making them more energy efficient,” said GDFC chief executive and founder of Greenstone Finance, Killian Pender.

“Our latest fund raise through Abundance gives a broader set of retail investors the opportunity to invest in the GDFC, allowing us to accelerate the roll-out of the business and therefore making a greater positive impact on the environment sooner.”

12% a year return sounds very appealing but as with most things, the higher return represents the higher risk. After all, this is an unsecured obligation and the company needs to go from loss making to profit making and it is too early to tell how successful the revised Green Deal will be.

Nick Hurd, the climate change minister has commented on how committed the Government are to improving the insulation of Britons homes and had the following comments on the new Green Deal: “It’s encouraging to see private sector firms working to deliver energy efficiency to consumers through the Green Deal framework.” 

The GDFC plans to relaunch the Green Deal with just a select number of Green Deal Providers and Installers to ensure a high-quality service before allowing others to get involved. It also plans to widen the scheme to include other technologies such as solar PV and battery storage.