Evaluating “Abundance” – As an Ethical Impact Investment Facility

I first became aware of Abundance Investment a couple of years ago. They had an interesting proposition back then and look like they have developed it further to become a leading provider to Ethical Impact Investors and I have certainly become a fan of what they do and how they do it.

Signing up was quick

In signing-up I needed to confirm I am from the UK or EEA (European Economic Area) and not a US national, as well as an everyday investor – which roughly means I don’t have more than 10% of my investments into these alternative investments which aren’t readily trade-able.

The sign-up was slick. In fact their whole website is active and engaging, without being distracting. Clearly a lot of thought has gone in to it.

Three options for type of account:

Once signed up it was time to chose an account type, there were three options.

  1. Standard Portfolio – Can start with only a fiver (£5)
  2. Innovative Finance ISA – Which can sit alongside a Cash and an Investment ISA (Only 1 of each though)
  3. Abundance Pension – Which is a Single Asset SIPP

I wasn’t interest in the last two options at this stage, so I went ahead and opened the Standard Portfolio which is eligible for both the Personal Savings Allowance (£500-£1,000) and Dividend Allowance (£2,000?).

A few more details required such as address was required.

My Standard Portfolio account was now created and I was again treated to a vibey, clear and functional web page.

The Marketplace – A great add-on

Only one project was available at the time. So I had a quick look at the marketplace.

The marketplace has a bidding structure. With about 20 different projects, both fixed and variable IRR ranging 4.5% to 15%+3%. It also includes the years remaining, the price to capital ratio in the marketplace, e.g. £100 going for £105 would be 105%. Interestingly most were trading at a premium to purchase of about 5-10%. It also included their performance in terms of payment against the payment schedule.

For each project there were 1-28 sales opportunities on offer, ranging from about £30 to £1,150. With the purchase price, the reserve price, the current highest bid and the time remaining to bid. There seems to be mixed success, but it was good to know that there is an option to sell any investment later which is great, but it’s certainly wouldn’t be considered a liquid investment. Although at the right price I’m sure it would go, there is a big difference when you need cash between taking a 20% loss and not being able to shift it at all.

This is a great real value add-on by Abundance Investments and something I have not seen as well executed before.

Time to invest

For this review I headed back to the one Open Project avaialble.

CoGen – UK’s leading developer of waste gasification facilities.

  • A relatively attractive 10% a year fixed return
  • 4 yr 6 mth investment
  • £2,372,263 invested at the time
  • 79% of min threshold funded at that stage (£3.0 million and up to £7.0 million)

The facility being funded “will treat over 240,000 tonnes a year of residual municipal solid waste and will produce at least 24 megawatts of electricity (‘MWe’)… Compared to landfilling the waste….will save some 104,000 tonnes of CO2 being released into the atmosphere a year, compared to Combined Cycle Gas Turbinegeneration it will save 82,500 tonnes of CO2 a year.” 

A better result of course would be to not have the waste in the first place.

Assuming their maths is correct and they actually need £7.0m and a £1,000 investment will save 15 tonnes a year (if I did the maths right). This is lower than a Trine investment and does not have the same social benefits as Trine (although Trine’s interest rates are generally lower and they withhold tax.) and of course Better Globe gives a better (although longer duration which may not meet your investment horizon) return with a multi-bottom line benefit. So it becomes an assessment for each individual, my view is to spread the risk across various projects and providers.

Investing was straight forward

  • Read the offer document.
  • Decide on amount – Minimum investment is a low £5. I went for £25. They even explained that I could invest up to £50,000 by debit card, although certainly not possible on my debit card :).
  • 7 risk questions on the questionnaire to be answered, I assume I got them all right.
  • Then payment – no credit card option, only debit card or (a delayed) direct deposit and my purchase was done.

Concluding thoughts

Abundance Investments have in my view a great website and offering. The Marketplace adds a lot of value and they are one of the best offerings I have seen so far, certainly in the UK.

The team can be proud of what they have achieved so far, once again demonstrating the increasing attractiveness of Ethical Impact Investments.

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