LIGHTING-AS-A-SERVICE (NORTHERN IRELAND)
Lumenstream is a family run Irish company that has been providing LED lighting solutions to industrial customers for about ten years. They have a strong track record procuring the best technology on a project by project basis and implementing the installations. In order to increase their competitive edge and provide an offering that better suits the needs of their customers, Lumenstream wanted to change business model to Lighting-as-a-Service (LaaS), requiring they cover the finance for technology, installation, and maintenance.
Lumenstream first went to their local Irish bank but quickly realised that they would not be able to set up a sustainable finance solution for this model as the financing would be carried out on a one-off basis and would be treated on-balance sheet, ultimately limiting the number of projects they could take on at any one time. Furthermore, the bank loan did nothing in the way of creating a convincing sale. On the other hand, with a small team and no in-house finance expertise or track record in providing lighting as a service, accessing and engaging with funds was impossible for Lumenstream’s team. Having established a pipeline of £370k of 5 individual LED projects for the industrial and agricultural sector in the UK, Proven Lighting was at risk of not completing their sales or developing their new LaaS model.
Through eQuad, Proven Lighting was able to turn their £370k pipeline into a portfolio of bankable projects for investors and to successfully access an off-balance sheet solution that would enable them to implement their projects and to market a fully viable LaaS solution. To do this, eQuad provided the following:
1. Financial analysis of projects and support fine tuning the business models in order to present an investable portfolio;
2. Financial Due Diligence performed by Joule Assets;
3. Review of client contract to ensure standardized terms covering risk were included for investors;
4. Project certification and Energy Efficiency Performance Insurance provided by HSB Engineering Insurance at a reduced rate. This increased the confidence of investors and was also included in Proven Lighting’s client contract as a key sales point. For investors, the insurance reduced much of the risk surrounding the project including default in energy and technology savings. For clients, the insurance again demonstrated the project’s ability to deliver the promised results and underscored the “Proven” aspect of the projects themselves as well as the impeccability of the company brand
5. Investor Access. The portfolio was sent to and reviewed by investors within the eQuad network
The ultimate result of working through eQuad was a successful investor handshake and a finance deal structured. Through eQuad, Proven Lighting was quickly matched to an investor (within the first week of sending out the portfolio). The first investor, UK-based firm the Ingenious Group, showed strong interest immediately after the portfolio was presented and with Joule Assets, worked to structure a £5 million Special Purpose (SPV), fully owned by the fund itself. The SPV empowered Proven Lighting to pay for the upfront and maintenance costs of their initial pipeline while enabling a steady stream of capital for future projects on an as-needs basis, freeing up Proven Lighting to fully market their solution as LaaS and to increase their sales output. The deal with eQuad effectively enabled Proven Lighting to expedite the rollout of their LaaS solution to a very short time – from start (preparing the project business models through eQuad) to finish (deal closure with the fund), the process took less than one quarter.