Investment opportunity

  • High-yielding investment in energy sector, factoring-type financing for a woodchips trading company.
  • Secured debt, 16% planned annual return.
  • Investment principal buyback is available at 5% penalty rate.

Project description

The company RIETUMU ENERGIA SIA is a venture that successfully works on the market of production and sale of woodchips. Woodchips are being used as raw material for a big number of cogeneration-type power plants across the Baltic region. This type of produced heat and electric energy is considered to be one of the most environment-friendly, as it does not create excessive pollution and ensures full utilization of timber, processed by woodworking factories.

Founded in 2013, RIETUMU ENERGIA SIA is cooperating with an established pool of buyers that ensures necessary and stable demand for woodchips. This pool is formed by several small and medium cogeneration power plants and Tukums city municipal company that provides heating to the city.

 

On the supply side RIETUMU ENERGIA SIA cooperates with big Latvian woodworking factories SIA Stiga RM un AS Latvijas Finieris, processes own timber as well as purchases imported raw materials.

The need for additional funds is justified by current situation on the Latvian woodchips market that is characterized by high seasonality and continuously growing demand for this type of raw materials. Summer season is characterized by lower prices at which woodchips are available for purchase from the bigger suppliers, however, up to 6 months payment delay from the final customer has to be faced in that case.

Covering this gap with the help of Envestio financing will allow getting extra profits during the winter season, when the price of woodchips reaches its maximum, and repay the investment principal to Envestio participants.

Market

During the last years Latvian market for woodchips was characterized by increasing demand for the qualitative product. The size of Latvian woodworking industry, which is the main internal supplier of raw woodchips for further processing, remains relatively stable; at the same time, the number of customers has been increasing almost exponentially. Cogeneration power plants and producers of wooden pellets are looking to purchase growing amounts of the raw materials. Given the constant supply and increasing number of foreign customers from countries like Estonia, Lithuania, and Poland this logically results in price increase and even product shortage on the market.

Besides the increasing demand the market also faces extreme seasonality. Woodchips can be purchased at cheaper price during the summer, at the same time, during the winter not all customers can handle the price growth (and still there is an excessive demand). In these conditions, a company that can purchase the woodchips during the low season, store it, and sell during the period of higher prices may achieve extra profits.

 

 

Sample repayment schedule

Envestio participant’s investment - EUR 1 000.00
Payments:

  • 07.09.2019 - EUR 13.59
  • 07.10.2019 - EUR 13.15
  • 07.11.2019 - EUR 13.59
  • 07.12.2019 - EUR 13.15
  • 07.01.2020 - EUR 13.59
  • 07.02.2020 - EUR 13.59
  • 07.03.2020 - EUR 12.71
  • 07.04.2020 - EUR 13.59
  • 07.05.2020 - EUR 1013.15

Total expected return: EUR 1 120.11

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Informationen zum Projekt

Kredit IDEN018113
Projektstartdatum07.08.2019
Kreditnehmer“Rietumu Energija” SIA, Reg. Nr. 40103646226, Latvia
Finanzierungsziel€ 250 000
Zweck des DarlehensFactoring-type financing for the purchase of raw woodchips.
Darlehenszeit9 Monate
Zinsrate16% jährlich
Rückzahlung des DarlehensIn full at the end of the Loan Period
Kapitalrückkauf möglichYes, 5% penalty rate
Zahlung von ZinszahlungenMonthly, on a specific date
Typ der FinanzierungSecured debt
Garantie vom Eigentümer des ProjektsCommercial pledge in favor of Envestio Collateral Agent, Personal guarantee

 

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