Daniel Zywietz, the chief executive of Enerwhere, was able to raise Dh1 million from crowdfunding in less than a week for his solar power company. Ravindranath K / The National
Daniel Zywietz, the chief executive of Enerwhere, was able to raise Dh1 million from crowdfunding in less than a week for his solar power company. Ravindranath K / The National

Dubai solar company Enerwhere raises quick Dh1m via crowdfunding platform



Dubai-based solar company Enerwhere raised Dh1 million in less than a week via a crowdfunding platform tapping unconventional investors amid tight SME lending from local banks.

The three-year-old company decided to test the crowdfunding site, Beehive, to secure financing for operational expansion including solar hybrid power generators as well as solar rooftop systems.

Daniel Zywietz, chief executive of Enerwhere, said that the company turned to crowdfunding as a result of a lack of avail­able bank financing for SMEs in the UAE.

“Banks aren’t providing [attractive rates] for the type of company that we are, which is young, fast-growing and without a local backer,” he said. “The only offers that we saw from banks were double-digit interest rate offers which is unattractive.”

Enerwhere asked for a Dh1m loan with an 18-month tenor using Beehive’s 14-day reverse auction system, where investors bid against one another to fund a company’s financial request driving down the cost of borrowing.

Within five days, the amount had been funded with a 15 per cent interest rate. However, as investors kept bidding in a show of interest for the renewable energy sector, that rate dropped by over 27 per cent by the final close with 130 investors on board with the average pledge totalling around Dh7,700.

Beehive was launched in 2014, and has helped to facilitate Dh68m in funding, according to Francesca Moore, its chief marketing officer.

While the financial facilitator makes it easier for SMEs to register, the company still uses the same credit criteria as conventional banks. Despite having 150 businesses currently listed on the site, Beehive turns down 80 per cent of the applicants.

Besides there is a growing interest in renewables on this peer-to-peer lending platform.

Anne Petersen, a Beehive investor, has been involved in the platform for two years. “I welcome the opportunity to invest some of my funds into sustainable SMEs like Enerwhere, as it means I can invest in companies that meet some of my personal values and investment criteria and it allows me the opportunity to invest in environmentally sound businesses which I found hard to do before.

“It’s good to see companies from forward thinking industries such as renewables on Beehive as I wouldn’t normally be able to invest in these outside of their platform,” she said.

lgraves@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.

The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.