You can apply for CARES funding to help get access to professional advice. The next section highlights different forms of advice your community may want to take on your shared ownership journey.
Professional advice
There are many rules and regulations governing the financial market and how investment deals are managed. This includes what types of organisations are able to make commercial investments. As a result, it is important to seek professional guidance early when making commercial investment decisions.
Most projects are likely to require advice from specialists such as solicitors, financial advisors, and other technical specialists. The community must lead the project but assistance from others should be considered. This will reduce the project risks as specialists will bring experience and knowledge to the team. Our Establishing a community group module provides further information on the skills required when developing a project. From this, it is possible to determine which skills are available within the group and which should be procured.
The following list describes the support that may be acquired from financial and legal specialists when considering an investment in a renewable project. CARES funding can be used to procure these services.
Before approaching a professional advisor it’s important that you are clear about your aims and goals for the project you are exploring. This will be useful in the early exploratory discussions with the advisors. Ask yourself the following questions:
- What outcomes are you hoping to achieve? For example, is it financial security for the community, is it energy security, or is it revenue generation?
- What is the nature of the undertaking in the project? For example, is it a joint venture, or is it a shared ownership investment opportunity?
- What are your key drivers? For example, is it to reduce carbon emissions, for community development, or for long term community sustainability?
- What is your appetite for risk?
- What level of involvement do you want in the project? For example, is it as an investor, operator or developer?
- What level of investment are you considering? Do you have equity to invest? Would you be raising debt finance?
Financial specialists
Financial Modelling
This is required to determine the financial feasibility of the project. This service will also help to determine the potential financial returns for the community.
Transaction support
The specialist provides advice or acts as facilitator on behalf of the community to attain their financial requirements. The services to consider here include:
- preparation of financial and business plans
- identification of potential sources of finance or developers
- lead debt and equity raising
- review funding structures, returns and ability to make the payments on debt
- lead negotiations with commercial developers
- permitted value gain study.
Strategic Advisory
This service helps bridge the gap between the method to attain finance, attaining the finance and then paying the debt. The likely services provided under this would include:
- provision of an independent Financial Conduct Authority approved financial advisor
- advice on strategic options and ongoing review of business plans and financial forecasts.
Social Impacts Services
This is where economists ascertain the non-financial benefits of the project. The service can then determine how they could benefit the project. The services here can include:
- economic benefit analysis
- cost saving analysis
- alternative sourcing
- social impact bonds.
Legal specialists
Due diligence and review of the commercial offering
This is where all the legal documents for the project are considered. The aim is to ensure that from a legal perspective the community receives the greatest benefit.
Structure community group for investment
This is an important requirement as there is likely to be significant legal requirements linked to the financing option. The likely areas covered here would be:
- negotiating and agreeing the legal documents related to the finance package; and
- considering and dealing with the formalities of completion.
Some of the community group structures that may be appropriate are outlined in our Establishing a Community Group module.
Finalise negotiations with commercial developer
This is where the legal team will check the documentation to ensure that they are acceptable. The likely services here will include:
- negotiation and agreeing legal documents are acceptable for the funding package, and
- consider all the various stakeholders and parties involved in the project and ensure all contractual requirements are covered.
As each project is different, their project path to completion will be different. This means that a community should always keep decisions open for as long as feasible. This is particularly true of investment decisions as they are likely to impact the investment structure which in turn is likely to impact finance availability.
The timeline for a project can be complex, therefore it is important that communities approach specialists at the right time. Early preliminary investment advice can assist the community in two ways.
- Gain an insight into the general investment opportunity before full & detailed analysis is carried out, and time and money is spent, and
- Ascertain whether there is a general appetite for the investment.
If receiving support from CARES, a community group will be required to produce a community development plan. Further information on this is available in the Establishing a community group module.
