January 11, 2010 / 3:04 AM / 9 years ago

Future Capital seeks funds for $376 million biofuels plant

LONDON (Reuters) - A partnership set up by investment boutique Future Capital Partners aims to raise 236 million pounds ($376 million) in project finance for a biofuel plant it will construct in Grimsby, northern England.

Future Capital’s chief executive Tim Levy told Reuters the bulk of the project finance will be raised through a combination of debt and equity though wealthy private investors will be tapped for 40 million pounds.

Future Capital said in a statement it expects to provide investors, who must commit at least 50,000 pounds, annual returns in excess of 30 percent over a five to seven year period.

The venture has also secured purchasing contracts worth at least 1.5 billion pounds, with an unnamed global banking group agreeing to purchase all the ethanol produced over 10 years for 1 billion based on current fuel prices.

A global animal feeds business has also made a commitment to purchase the feed produced as a by product of biofuel production process worth around 500 million pounds.

Levy said the partnership has purchased the site and secured planning permission for the venture.

Biofuels company Vireol and engineering group Simon Carves are the other partners in the venture.

When construction is complete, the plant will be leased to Vireol while Future Capital plans to exit within six years through a trade sale or flotation, Levy said.

European and UK legislative commitments to increase the use of renewable energy have led to an increase in investment schemes used as project finance for new plants.

Editing by Rupert Winchester

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