Jamie Sutton (pictured), a director of the Isle of Man-based Premier Group, says the New Earth Solutions Recycling Facilities Investment Sub-Fund, whose sterling version has returned some 40 per cent in the three years since launch in July 2008, is seeing a steady inflow of new investment and that assets could grow faster if the economic recovery gains traction.
GFM: What is the history and background of your company, principals and funds?
JS: The Premier Group (Isle of Man) was established to offer a range of investment funds specifically targeted at qualifying and specialist investor clients of professional intermediaries throughout the world. Based in the Isle of Man, funds under management have grown to approximately GBP500m since the launch of the first fund in 2001.
In 2009 Premier was accepted as both a regulated manager and promoter under the supervision of the Isle of Man Financial Supervision Commission, becoming the first company to hold both types of licence in the island.
GFM: What is the structure of your fund?
JS: The New Earth Solutions Recycling Facilities Investment Sub-Funds are three sub-funds denominated in sterling, US dollars and euros. They are sub-funds of The Premier Investment Opportunities Fund Protected Cell Company, a qualifying type Experienced Investor Fund complying with the requirements of the Isle of Man Collective Investment Schemes (Experienced Investor Fund) Regulations 2010.
The fund is structured as an open-ended investment company, incorporated in the Isle of Man and is available only to qualifying investors. As a protected cell company, under Isle of Man law the assets attributable to each New Earth Solutions Recycling Facilities cell (of which the New Earth Solutions Recycling Facilities Investment Sub-Fund forms part) are only available to the creditors of that cell.
GFM: Who are your main service providers?
JS: The manager and promoter is the Premier Group, while the recycling facilities valuer is GVA Grimley in London. The administrator is IFG Fund Administration (IOM), the custodian BNP Paribas Trust Company (IOM), and the auditor Ernst & Young.
GFM: What is your distribution strategy and targeted client base?
JS: The fund is distributed through professional independent intermediaries throughout the UK and internationally. Investors in the fund are high net worth individuals investing directly or though international life companies and/or pension funds in the form of UK small self-administered schemes and self-invested personal pensions.
GFM: What impact has the recent global financial crisis and economic downturn had on your business?
JS: The fund was launched in July 2008, which given the events that soon followed could be described as a brave move. However, the fundamentals remained unaffected by the financial crisis, as local authorities still had to deal with the same waste volumes that had to be diverted away from landfill. Having achieved an annualised growth rate of just over 12 per cent since launch, the fund has proved its resilience in the most trying of times.
GFM: Please describe your investment process.
JS: The primary investment strategy of each sub-fund is to invest directly or indirectly in recycling facilities operated by the New Earth Group, a strategy overseen and directed by the investment committee. A full cost-benefit case is prepared for consideration by the investment committee for each investment.
The cost-benefit case typically is based on engineering due diligence reports, full valuation reports prepared by GVA Grimley, waste contracts, waste supply and demand analysis for the plant under consideration, planning permissions, licences and permits, construction budget and business plan for the proposed plant.
In addition, each sub-fund aims to hold at least 7 per cent of its net assets in cash deposits or other liquid investments, which may be reduced through the payment of redemptions or to meet charges against the sub-fund in question.
GFM: What is your approach to managing risk?
JS: Investment risk is managed from the outset when the full cost-benefit case is prepared for consideration by the investment committee. Once the plant is established, regular sites visits and quarterly monitoring reports ensure that operational risk monitoring is maintained throughout, with any potential issues rectified. In addition, the valuer conducts six-monthly inspections to highlight any issues.
Corporate risk is monitored at board level, where the fund has director representation on the main board of the New Earth Solutions group as well as in any SPV set up to hold recycling facility assets.
GFM: How has your fund performed?
JS: Thesterling sub-fund has achieved a return of 40.8 per cent since launch in July 2008, for an annualised performance of 14.01 per cent. The US dollar sub-fund has returned 13.4 per cent and the euro sub-fund 12.8 per cent since their launch in June last year, delivering annualised rates of 12.39 and 11.9 per cent respectively.
GFM: Are you looking at any particularly attractive opportunities right now?
JS: The drivers for the fund are new waste contracts that may be awarded following extensive negotiation between the New Earth Solutions group and local authorities. While these negotiations are of a confidential nature, we can say that the group is looking at potential pipeline contracts amounting to some 7 million tonnes annually with authorities ranging from Scotland to south-west England.
GFM: How do you view the environment for fundraising over the coming 12 months?
JS: New investments into the fund have been growing steadily since launch and are currently averaging around GBP2.5m per month. With a decent track record, we are confident that new investments will continue to grow at least at this rate and higher if the economic recovery can gather pace.