Innovative Finance ISAs

Companies behind the brands

Ethex

Ethex promotes ethical investing as well as offering its own IFISAs. From the table you can see it offers ISAs under two brands, Ethex and Energise Africa. Ethex is a not-for-profit company (limited by guarantee). Its ISAs are offered through a third party company called ShareIn which is regulated by the Financial Conduct Authority.

Ethex is based in Oxford and is staffed by a team of 10, working on developing the website, handling customer orders, finding new businesses and investors and fulfilling regulatory requirements. It has much the best formal ethical policies of all the platforms in this Guide.

Ethex Funded Project – Solar for Schools

The Solar for Schools Community Benefit Society (CBS) was set-up in 2016 to enable schools in England and Wales to derive some financial and environmental benefit from solar panels. It was designed so that schools could share in the expected long-term financial returns without having to invest their own money.

Over 500 schools registered an interest in having solar panels installed. The project closed in January 2018 having raised £250,000 from 67 investors.

Energise Africa

Energise Africa is designed to provide working capital to projects that install and sell solar home systems in sub-Saharan Africa. The aim is to provide more than 111,000 rural families access to renewable energy over the next three years. Home systems tend to provide simple electric lighting and phone charging facilities.

Some of the projects are managed by UK companies such as BBOX which is based in London. Others have been run by companies based in Africa such as Sollack (see below for more details). Most of the investments target returns of between 4-6% and offer bonds with a term of 2 to 4 years with interest paid every 6 months. 

Ethex runs the Energise Africa project alongside Lendahand, a Dutch company that initiates renewal energy projects around the world.

Energise Africa is also supported by a number of other partners such as the UK’s Department for International Development, the Virgin Unite fund (the non-profit foundation of the Virgin Group), Good Energies Foundation and Partnering for Green Growth. These organisations help to match-fund some of the projects helping to limit the risk to individual investors. 

Energise Africa Funded Project – Sollatek Kenya

29 million individuals in Kenya are currently ‘off-grid’ and without access to clean, renewable electricity. Sollatek is 100% Kenyan owned and managed, and has been operational in East Africa for over 30 years. Over the last 7 years Sollatek has sold over 650,000 solar lanterns and solar home systems providing approximately 3.8 million people with access to solar energy. 

The most recent bond offering on Lendahand platform helped to fund the provision of clean energy to 217 families in Kenya. Kenyan families pay for these systems in affordable installments over 18 months.

Triodos Bank

In 2018 Triodos became the first UK bank to launch its own crowdfunding platform. Most of the projects available to invest in are eligible for the bank’s IFISAs.

Since its launch the Triodos crowdfunding platform has raised £20 million for eight pioneering organisations delivering positive change. The investments available on the site tend to be longer term investments (up to 18 years) so investors need to be aware that their money could be tied up for a considerable amount of time.

Most of the projects pay interest annually and some even offer inflation linked returns.

Triodos does its own due diligence on each project which includes analysing the companies’ business plans, numerous meetings with the project leaders and some investigation of the track record of the senior people involved in each project.

It is also possible to invest in many of the projects using paper forms instead of online. You can call 0330 355 0355 for more information.

Triodos Funded Project – Mendip Renewables 

A £1.8 million bond was successfully raised for Mendip Renewables in 2018, which owns and operates a 5MW community solar scheme and uses its retained profits to support charities in Somerset. The bond offered a 5% interest rate inflation linked over 17 years.

The company donated £25,000 to Key4Life to help support its South West ‘At Risk’ programme which supported disenfranchised young men who were at risk from offending. The charity’s programme includes mentoring, employability skills and specially-designed workshops to manage emotions and overcome negative behaviours. Six months into the programme 62% of participants are in employment or meaningful activity. 

Abundance

Abundance has been a pioneer of raising green finance ever since it launched in 2012. Its first investment was to fund the construction of a community-sized wind turbine in the Forest of Dean. The project was by far the biggest investment of its kind at the time, but more importantly it broke the mould of what investment was all about. It was the first crowdfunded energy investment, allowing anyone to invest from just £5 at a time when green energy investments could usually only be accessed by those with far deeper pockets. 

It only funds what it calls ‘socially useful’ projects. These have largely been green energy in the form of wind turbines and solar farms, but have also included a project to recycle used cooking oil into bio-diesel and, most recently of all, affordable housing.

Abundance recently achieved a B Corp status – a certification scheme looking at social and environmental performance, public transparency, and legal accountability to balance profit and purpose. The company carries out due diligence on prospective projects which can last between 6 weeks to six months. This involves a series of stages from face to face meetings, to financial model testing, to helping them produce the offer document. They then have ongoing, usually monthly contact with each project. 

Abundance has also helped when projects get into difficultly. For example, when a decision by the energy regular OFGEM cut subsidy payments to the Monnow Valley CHP, Abundance helped the organisation to find their way through the problem. 

Abundance Funded Project – Merseyside Assured Homes plc 

Merseyside Assured Homes plc raised £4,250,000 in the summer of 2018 to fund the construction of 30 social housing properties at three locations in and around Liverpool. 

The homes will be offered to people and households on local waiting lists who are eligible to receive Local Housing Allowance, and nine flats specifically cater to people in need of supported living.

The money is being spent on three specific developments. The first consisting of 8 semi-detached and detached 3 bedroom houses and one 4 bedroom house. The second of 9 flats in a single 3-storey building and will provide supported living accommodation for its tenants. The third site will have 12 semi-detached and detached 3 bedroom houses. 

The Downing Crowd

The Downing Crowd platform is owned by Downing LLP, an investment manager which also operates funds investing in not exclusively ethical areas.

Downing Crowd was launched in 2016 and has raised almost £50m since launch. Similar to the Abundance site, the investor chooses the company bonds they want to invest in from those available on the platform at the time. The interest offered typically ranges from 4% to 7% p.a., with terms usually from one year to three years.

It offers renewable energy investments and also other, not-marketed-as-ethical, opportunities like hotel renovation, care homes and pubs. Downing Crowd Bonds are often secured against a business’ tangible assets (such as wind farms, hydro plants and care homes) to help reduce the risk for investors.

Downing’s other products offered investments in companies, such as Drax and Shoe Zone, which have been criticised in categories used for our ratings such as Climate Change and Workers’ Rights. It was marked down in these categories because it did not score best in our Financial Transparency ranking.

Downing Funded Project – Alternate Energies

The first bond offer to be included in the Downing IFISA featured a £1.39m funding opportunity for Alternate Energies, which owns an established portfolio of solar panel systems on residential buildings owned by Colchester Borough Council. 

Goji Investments

Goji Investments specialises in direct lending and offers ‘renewables’ IFISAs that invest in UK renewable energy . It also offers not-marketed-as-ethical, ‘diversified UK lending’ – to property, education, and SMEs. Its Renewables Lending Bond finances renewables projects, which are originated and managed by the Prestige Group. We have therefore combined the rankings for Goji and Prestige on our table for this product.
Unlike the other IFISAs in this guide, it does not appear that the investor can choose which companies to invest in – the portfolio is chosen for you.

As of Goji’s Annual Return February 2018, AXA held 3% of its shares whilst a company called Anthemis held around 21%. Anthemis’ parent company was registered in Luxembourg, a tax haven, and Anthemis had investments in Atom Bank.

Prestige Group’s funds did not disclose which companies they invest in. As a likely holder of shares in companies receiving criticism across all our ratings categories, and scoring worst for transparency, it lost half a mark in all of our categories.

Prestige also owned companies based in tax havens such as the Cayman Islands and the British Virgin Islands.

Goji Funded Project – Renewables lending bond

The Renewables lending bond is spread over 33 individual renewable energy loans, totalling £1.6 million. The minimum investment is £5,000. The bond funds UK wind, solar and anaerobic digestion (agricultural, food and water treatment waste is diverted from landfill and broken down to produce biogas). The Portfolio aims to provide a yield of between 6% pa for 3 year investments and 8.3% pa for 5 year investments. The first 20% of any loss will be underwritten by Prestige. There is no details on the individual loans that are funded.

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