GLIF has invested $1.25m for a 21.6% equity stake in the US-based solar investment portal Open Energy Group (OEG). The platform – which only launched last year – is on a mission to drive forwards the growth of US solar power infrastructure. OEG makes $300k to $5m loans against high quality commercial solar power assets. It’s a market segment that is otherwise seriously underserved, in spite of consistently high yields and relatively low relatively risk. OEG caters exclusively to accredited and institutional investors.
We can now count GLIF amongst those institutional investors. Further to the equity investment, the SME specialist has also extended a $5m revolving loan facility for the purpose of underwriting the loans originated by OEG. The facility should serve to ramp up lending activity via the platform. OEG lent a grand total of $1.42m in 2014 – but spread across just 2 projects.
Successfully filling loans is the primary challenge for any platform that operates with such lofty average loan amounts. The GLIF underwriting commitment represents a natural solution. The move is not dissimilar to the £20m-£50m deal that was recently struck in the UK between secured lending outfit ThinCats and ESO Capital Group. OEG now carries a sense of assurance that its next batch of loan opportunities will be fully funded faster, and its overall loan velocity will increase. Those loans will then be partially refinanced by the platform’s existing base of investors.
"We are delighted to be welcoming GLI Finance as a significant investor and partner in our business. Growth of the US solar industry is accelerating rapidly so partnering with GLI is a fantastic opportunity to exploit this expansion, by scaling the Open Energy solar finance platform. This represents an important strategic step for Open Energy Group and an early validation of the opportunity to transform solar finance using marketplace lending.
We believe that the experience and expertise of the GLI management team will be hugely valuable in working towards Open Energy Group’s goal of becoming a go-to solar finance provider in the US. Our offering provides further SME diversification to GLI Finance's existing portfolio, and we look forward to implementing synergies on our platform, derived from across the portfolio."
GLIF can hardly keep out of the AltFi headlines right now. The company hinted on Wednesday – following the sale of a 20% stake Fair Oaks Income Fund – that further equity investments may be on the cards. It remains to be seen whether further providers will be added to the GLIF warchest alongside Open Energy Group.
Geoff Miller, Chief Executive of GLIF, commented:
"Open Energy Group’s innovative financing solutions and growing investor base make it an excellent ﬁt within our portfolio of financing platforms for growing businesses. This platform further expands our geographical presence in the US and gives us a very exciting foothold in the growing US solar industry. Given the strong demand for such tailored financing solutions and investor appetite I am sure that Open Energy Group will be a valuable partner for GLI."