CoPower green bond gets jump from new exempt rules

It may not be the first of its kind following the recent unveiling of new rules allowing a broader group of investors to sign up within the exempt market.
 
But it’s the first by CoPower, a Montreal-based online lender (which also comes with an office in Toronto) that’s focused on clean energy and which has just launched its first green bond offering.
 
“We were poised to leap,” said Trish Nixon, someone at CoPower, when explaining how the offering has been launched inside a few weeks of the new prospectus exemption rules being unveiled. “We were awaiting the brand new rules in the future into effect to ensure that our product would be more accessible.”

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The issuer, that is counting on an exemption to the offering memorandum, needs to raise as much as $300,000 from retail investors. An investment includes a five-year term, and offers a five per cent coupon. Over the period investors will receive, on a quarterly basis, a fixed sum representing a mixture of interest and principal.
 
Those proceeds will be used to refinance loans previously produced by CoPower. Specifically those loans were made to help finance rooftop solar projects in two Ontario cities (Windsor and Chesley) as well as an energy efficiency project in the Harbourfront Centre. The funds for those loans – and in all CoPower has placed $2.7 million – were raised from accredited investors, meaning these were raised under an offering memorandum.

Nixon is CoPower’s newest partner. She joined this past year after David Berliner, and Raphael Bouskila established it in 2013.



“We make it simpler for people to take a position directly in clean energy infrastructure with the products we come up with,” said Nixon, who spent time at the MaRS Discovery District before joining Co-Power.

“We are filling a financing gap for smaller distributed-energy which are in the community scale.”

Nixon added CoPower “does the heavy-lifting in terms of sourcing, structuring, and vetting great loans after which packaging them into financial products that meet the needs of investors.”
 
And those goods are distributed via the internet.

Thanks towards the new rules for that exempt market, products can now be purchased by non-accredited investors but under certain limits and provided certain conditions are met. CoPower is registered on your behalf of an exempt market dealer.

For a retail investor the process starts with making an application, a part of the aim of determining if the investment is suitable. Nixon said “we take them through ‘know your client process,'” that is similar to what goes on in a brokerage firm where preferences and requires are assessed. (To look for the person’s identity, a relevant video chat is used.)

Once the determination is made an investment would work, meaning the customer is approved, the “full information on the products that are offered,” will be shown to the client. (The overall process might take about 2 days.)
 
Once the client helps make the decision to invest – and the minimum on this deal is $5,000 – all of the client’s transaction activity occurs on-line. One part of that activity is the investment’s “carbon reduction performance.”

So so how exactly does CoPower, that is in the market for a credit facility, make its money? One source is from the origination fees (which are in the two per cent- four percent range) it earns from placing loans, these guys from management fees and the other may be the interest rate spread in the loans.

bcritchley@nationalpost.com