When the wind blows – the money flows

It is worth explaining why we consider that HgCapital must take full responsibility for not setting adequate investment criteria that would ensure that Wind Direct do not select potential sites too close to dwellings.

HgCapital entered into a joint-venture arrangement with Wind Direct in 2006. Under this arrangement HgCapital, through its renewable energy fund, HG Renewable Power PartnersLLP agreed to invest £19million into Wind Direct’s wind turbine projects over 3 years.

As at the end of 2006, one investment had been made under this agreement into Workington Energy Limited, a two 2MW turbine project in Cumbria . The following information is in the statutory accounts of the relevant companies and highlights how HgCapital’s fund virtually takes complete ownership of the project. We assume (rightly or wrongly) that the structure in respect of the Sheephurst Lane site would be similar, if not identical, if it were to go ahead.

In this example, Wind Direct retain only 10% of the wind turbine company since the investment is totally leveraged and all the finance is coming from HgCapital. The 10% effectively given to Wind Direct is presumably in recognition of their role in sourcing the site and getting the turbines up and running.

It is quite clear, therefore, that HgCapital is not just providing project finance. Their fund is investing in wind turbine companies in which they will be entitled to 90% of future profits generated.

There is therefore absolutely no question who is accountable if the investment criteria set for these investments are not socially responsible. We have made this point to HgCapital now on numerous occasions. We have pointed out to them that the site has numerous dwellings within 600m. We have provided them with evidence of how people’s lives have been totally blighted elsewhere by having turbines built too close to their homes. Their Chairman’s latest response to these submissions is that he “will ensure that Hg Capital continues to act in the best interest of its clients”.

In this day and age such a dereliction of social responsibility is extremely depressing and one has to wonder if even their clients would be comfortable with this approach if they were fully aware of it.

The chart below is drawn from the statutory accounts filed at Companies House for the year ended 31 December , 2006. There are some apparent inconsistencies between the accounts and we have invited both HgCapital and the auditors Elliott Bunker to comment. If any such comments are received we will incorporate them.