Understanding the risks
As with any investment product there are risks. The Offer Document will cover the risks specific to the individual Energy Project, but before reading the Offer Document it is important you understand the following points.
Will I get my original investment back?
There is a risk, if something goes wrong or if the Energy Project fails during the life of the Debenture, that you may not get back all or any of your original investment.
Money sitting in your Abundance account is covered by the Financial Services Compensation Scheme (FSCS) – but once you have bought and been allocated Debentures in a Energy Project, the money is transferred to them and you are reliant on their ability to pay it back. Debentures are not covered by FSCS. (Any returns which have already been paid to you are not affected if the Energy Project gets into trouble.)
The sorts of things that could result in an Energy Project getting into trouble are:
- A significant collapse in the price of energy
- Extended periods of lower than expected energy production
- Extended operational failure not covered by normal maintenance warranties and contracts
You should also read the risk section of the Offer Document.
Debentures are very long term investments
Depending which Energy Project you choose, it's a 20-25 year investment and you should expect to hold it for its full term.
The Debentures are transferable which means you can sell them, but they will be harder to sell than some investment products. If you are forced to sell them in a hurry, there is a risk you may not get all of your money back.
What if I need to sell?
There is no regulated marketplace* and the options to sell the Debenture are limited. Abundance provides a Bulletin Board which works in a way similar to eBay without the auction, to allow buyers and sellers to find each other.
Take a look at the Completed Debentures section of our FAQs to understand how you can sell Debentures.
* A regulated secondary market is, for example, a stock exchange like the London Stock Exchange or the Alternative Investment Market (AIM).
Foreign exchange risk
If you are investing from outside of the UK, there is a risk that the movement in the exchange rate between pound sterling and your own currency and any transaction charges may affect the returns you receive from any investment you make. This foreign exchange risk will apply throughout the life of the investment.
Restrictions on investing
Please note that you have been categorised as a "restricted investor" as you previously confirmed that you would not invest more than 10% of your net liquid assets into non-readily realisable securities (such as this long term Debenture). It is incumbent on you to ensure that any investment in this project stays within your declared restriction.