North East biofuel venture targets £236m in fresh funding

A UK-based biofuel firm backed by investment group Future Capital Partners is aiming to raise £236m to fund the development of a major new ethanol plant in Grimsby.

According to reports from Reuters, Future Fuels – a joint venture between Future Capital Partners, biofuels company Vireol and engineering group Simon Carves – has already purchased a site for the facility and secured planning permission, and is now seeking to raise finance to fund the project.

Future Capital Partner's chief executive Tim Levy told Reuters that the firm hopes to raise the bulk of the £236m in project finance through a combination of debt and equity.

Future Capital Partners said it expected investors to enjoy annual returns in excess of 30 per cent over a five to seven-year period.

The joint venture has also put in place a number of partnerships to support the proposed plant.

The company said that it had already secured purchasing contracts worth at least £1.5bn after an unnamed global banking group agreed to purchase all the ethanol produced by the plant over the first 10 years of operation.

In addition, an undisclosed animal feeds business has similarly committed to purchase the feed generated as a bi-product of the biofuel production process for 10 years. The feed will produce about a quarter of the plant's revenues.

When construction is complete, the plant – which will generate ethanol from wheat – will be leased to Vireol, while Future Capital plans to exit within six years through a trade sale or flotation, Levy said.