Private client manager Invicta is to launch a £300m fund targeting the biomass industry to cash in on government targets for renewable energy

( Bruno Prior, MD of Forever Fuels, comments on the Invicta announcement – these are Bruno’s personal views, not those of Claverton Group)

“Just one little problem (well actually, several, but this one’s a good one).

Invicta have been shy about whose technology they are using. We sent one of our team to a public meeting in Edinburgh, to ask the question. He was told that Organics would supply the kit, in 1.2MW modules. Happily for us, Rob Eden, Organics’ MD, is a long-time associate of ours (going back around 25 years), so we contacted Rob to express interest in a gasifier or pyroliser if he had 1.2MW modules commercially available. Unfortunately not. He has had a small demo unit (attached to a 50 kW engine) running for a year (haven’t asked him what load factor, efficiency, and maintenance costs he had achieved on the gen-set). He is in the process of putting in a 150 kW unit in the UK. He has no run-hours powering Jenbachers (the sorts of engines that Invicta claimed they would use). He is only at the discussion stage with potential customers. If it progresses to the commercial stage, the units would come with only a one-year warranty.

Basically, Invicta (run by a lawyer and an accountant with media backgrounds) have made a big noise in order (a) to increase their chances of getting capital grants, (b) to prejudice other plans to use the Scottish biomass, and (c) to kick-start their fund to raise £300 million from unsuspecting investors (£35m by Feb), who will not be aware that they don’t actually have any proven or commercial kit behind their proposal (and some other devils in the detail). We wrote to them last Friday, suggesting that they clarify the situation. We have not yet heard back.

They are claiming a target IRR of 20% post tax and 8% return to investors (also post tax). That’s a “bullish” projection for unproven technology that has yet to make a profit for anyone, anywhere in the world. Maybe they’ll be lucky, but would you bet your savings on it? Anyone else have the feeling that financial types jumping on the green bandwagon, and selling improbable promises to investors in ignorance of the many technical and economic challenges, is the next sub-prime-style accident waiting to happen?

Cheers,

Bruno Prior

MD Forever Fuels

See FT article:

http://www.ftadviser.com/InvestmentAdviser/Investments/AssetClass/AlternativeInvestments/News/article/20091116/d4efc754-cd26-11de-9040-00144f2af8e8/Invicta-targets-biomass-fuel.jsp

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