The Emerging Markets Solar Fund aims to earn healthy returns whilst contributing to global clean energy production. The fund provides investors with an opportunity to raise living standards in emerging markets, provide access to modern energy services, reduce global reliance on fossil fuels and offset their carbon emissions. Invictus Capital has partnered with Sun Exchange to initiate the fund given their strong presence in the African market and their track record to-date. Sun Exchange is the world’s first global peer-to-peer solar-cell micro-leasing online marketplace.
Social and environmentally conscious product
Invictus Capital has sought to provide a truly social and environmentally conscious product. The primary objective of the Emerging Markets Solar (EMS) fund is to generate stable and consistent returns for investors over the long term, while contributing to global clean energy production.
The fund will incur zero ongoing management or performance fees. Consolidating investments gives the fund purchasing power which allows its costs to be covered through a small percentage rebate on the initial bulk purchase of solar cells in each new project, without altering the return potential for the investor.
A portion of the fund (approx. 5%) will be allocated to a dollar-based liquidity pool providing investors 24/7 liquidity through a smart contract. Investors should note that fund liquidity is not guaranteed and will be replenished through new subscriptions and monthly lease payments.
The fund will deploy funding across multiple projects with different geographical, commercial and return profiles to provide a degree of downside risk protection.
Efficient Capital Allocation
The fund will invest subscriptions in the Invictus Margin Lending Fund until the proceeds are ready to be utilized. This will result in earnings accruing to the fund while awaiting project deployment.
The fund automatically reinvests earnings which results in increased fund returns as a result of compounding.
Potential tax benefits
Broadly speaking, capital gains rates are lower than income tax rates which means there is a potential tax saving from investing via a fund structure.
The fund is suitable for medium to long-term investors seeking exposure to commercial solar projects. Investors should expect moderate to high levels of volatility driven by emerging market exchange rate fluctuations and a potential drawdown of their investment. Due to this volatility, the monthly lease payments received on the underlying solar assets are converted and deposited back into our USD liquidity pool to minimize foreign exchange exposure.
The investment time horizon is medium to long term depending on investor requirements. However, investors are able to redeem their tokens back to the fund in exchange for TUSD at any point in time.
The fund will deploy the vast majority of fund assets in solar infrastructure projects across emerging markets via the Sun Exchange. The small percentage of assets not deployed into solar projects will be invested in the Invictus Margin Lending Fund or serve as a liquidity pool for investors looking to redeem their tokens. All returns earned on infrastructure financing are reinvested in the fund.
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