Financial services provider FedGroup has acquired a controlling stake in provider of installed solar photovoltaic commercial projects in South Africa Emergent Energy.
The acquisition is aimed at vertically integrating FedGroup's Direct Ownership investment platform into the solar energy generation sector, to rapidly scale the project and meet growing demand.
FedGroup in November 2016 launched the first iteration of the Direct Ownership fintech platform as a new way for local investors to generate wealth through the burgeoning sharing economy.
“Our vision was to disrupt the traditional investment paradigm by offering the public access to a broader range of income-generating assets,” explains FedGroup CEO Grant Field.
Solar panels through FedGroup’s Direct Ownership model have to date earned investors a nominal rate of return of 9%, with the financial projections expected to deliver a nominal rate of return of 11% and an effective rate of return of 15%. As a result, since launching less than a year ago, FedGroup has gone live with five commercial solar farms, four of which have already sold out.
“There is no doubt that green energy is in demand. The opportunity to save the environment and contribute to a greener, more sustainable future, while enjoying robust returns, is resonating with local investors,” says Field.
FedGroup's investment in Emergent Energy aims to take advantage of this value proposition and meet increasing investor demand for the offering. “Our stake in the company will enable us to scale the platform by leveraging Emergent Energy's existing base of over 65 commercial and industrial solar installations,” he adds.
Emergent Energy boasts a significant project pipeline, which will offer FedGroup numerous opportunities to grow its Direct Ownership platform. “The combined value of the installed base and project pipeline exceeds R1-billion, which is significant for the future of renewable energy in South Africa,” says Field.
Through FedGroup's investment and the additional source of funding provided through Direct Ownership, Emergent Energy aims to increase its share of the private sector renewable energy market from 2% to 10%.