PFI Project Finance and COP21 Roundtable 2016: Part 2

PFI: In terms of onshore wind farms, do we need more onshore wind in Europe? Quite a lot was built in Germany and Spain.

Lance: Spain and Germany probably don’t need much more but other countries probably do. In France for example we need to double the capacity, from the 10GW we have now to 20GW. That is a lot of investment.

PFI: You mentioned storage is becoming commercially viable.

Lance: It’s interesting because in the French overseas territories we have real examples. We had a public tender that was published two years ago for Corsica and the islands in the Caribbean where energy is very dirty and expensive. It’s mainly fuel and coal driven and the prices were at about €300 per megawatt hour two years ago. There is a new tender coming out and these days the average price has been reduced significantly – it’s about €200 or a little bit less than that. So it’s still expensive, but it’s cheaper than the grid parity cost for those islands. It’s the same for remote industries like mines, for example, where there is a lot of investment combining renewable energy with storage and diesel engines, for when there is not enough capacity in isolated industrial production facilities. This is becoming more and more competitive and if you look five years down the road it’s going to be completely different, and very competitive for sure.

Stergoulis: Just picking up on the new technologies, it seems to me that storage is particularly interesting. In the US now you’re seeing enormous amounts of effort go into research, because the prize is so big that people will chase it. Storage has been getting more traction in the last two years than anything I’ve seen for a long time. The other one is floating offshore wind. In countries like Japan and other places where you get deep water, they can’t afford the traditional build, but they like the idea of energy security and the cost of energy through offshore wind. So you see more sophisticated efforts applied to that technology. There’s quite a bit of attention being paid to this in the UK too. The interesting thing is that as you move from the pure development to the next phase, the market doesn’t quite work. There’s an example currently where you can get three ROCs, which is a big potential incentive, but there’s a cliff, meaning that if you don’t build it in time you don’t get any ROCs. That makes it very hard to bank, and it is difficult to bid all your equity on that basis if it’s a large sum. So the market design is flawed, in terms of taking projects to the next stage. That is a problem in the UK, and it isn’t the only example. By contrast, some countries like Egypt and Iran have markets that are better designed. The trouble with Iran is that the US won’t let you lend and the European banks won’t lend because they’ve all got US branches. But the design of those markets is very good in terms of stimulating that development. A lot of people are attracted to those markets because the risk-reward balance is better.

We do a lot of big offshore wind deals but we still see, even in Europe, that there is an issue around risk-reward. We’re seeing institutional investors that want to take on more risk to get a better IRR, and they want to take construction risk. They prefer to have it on a risk weighted basis, which they feel gives them a better return. What people don’t want to take is market risk, in terms of power prices. Sometimes it’s unavoidable but there’s not a great deal of enthusiasm to do it. Power price risk is a big issue and is a concern among many equity and debt players.

PFI: Why do floating offshore wind if you can have a nice big non-floating offshore wind project?

Stergoulis: Because you save on all the substructures – an enormous amount of savings. Okay, they’re much smaller, but technology moves on. They were looking at 3MW but you can get the scale up for the cost of production.

Mayhew: That last point about power prices is extremely valid. You can look across Europe as governments first started to try to incentivise people to come into renewable infrastructure, they provided all kinds of incentives. There may have been tax incentives through EIS and VCT schemes here in the UK. There were feed-in tariffs and then ROC-based tariffs. There are some very interesting conversations in the market now, particularly, from the debt side, as to the amount of market risk that lenders are willing to accept on a ROC-based project. We don’t have to look too far into the past to see all the merchant power deals of the 1990s which fell over. It is perfectly valid for people to have differing views of risk. We prefer our long-term senior debt investments to be boring, frankly, with downside protection – that’s what our pension fund and insurance company clients want. So banking something with a large dose of merchant power risk is not conducive to having an investment grade investment.

One of the aspects where COP21 maybe can help is for governments to have a proper debate with their electorates about what energy pricing means. Whichever country we live in, we pay for this, either as consumers or as taxpayers. You just can’t get away from that. And in the run-up to the election here in the UK there were talks about power price caps. And you see it now in the debates about contract for difference (CFD) strike prices for different types of transactions - be that nuclear, tidal or whatever. Is it possible to have a proper debate about that? Is a CFD a market subsidy? Or is a risk mitigant? Is it just a risk mitigant against power market risk? Because actually, as Evan was saying, you can get debt and equity at better pricing if you take some of those risks off the table. Different countries will have different approaches to this and that will provide lots of opportunities, because frankly there are lots of different providers of debt and lots of different providers of equity who will all want to sit at different points on that risk curve.

Picking up some of the other points that people made in terms of deal flow from COP21, yes, pan-European offshore wind probably offers the most definable stream of business. And when there aren’t a lot of other transactions out there of scale, that means a lot of bankers and institutional investors are trying to secure their deal flow and – frankly – trying to secure their jobs. Some advisory bankers have expressed concern to me that they’re getting term sheets back on transactions that have no mark-ups because people are so keen to do transactions. The pricing may have bottomed out, but actually a lot of people aren’t commenting on term sheets. It’s a great time to be a borrower. It’s incumbent on us to properly review the different risks.

One macro point: Ian talked about the personal choices we all make, how people do things in our homes, and that’s absolutely right. Things change over time. How many people go on holidays where they take a flight, rather than getting on a ferry? How much longer are those flights than they used to be? All of these things add up, and it’s interesting in terms of the play into airport capacity. But in a macro context, if you look at the global 2015 carbon emissions, 28% were down to China, 16% to the US, 6% to India and 4% to Russia. The UK wasn’t even 1%. We are de-minimis. But that doesn’t mean you shouldn’t do things. The UK and the EU is trying to set a lead and that is one of the good things that comes out of all of this.

PFI: Do you see the smart meters model we have in the UK going over to Europe?

Mayhew: Well, this is where I can draw that wonderful line between debt, which I run, and the equity people at Infracapital, who are invested in smart meters. They do that completely separately. I think smart meters mean different things in different countries, as has been mentioned already. Some of them I’ve heard referred to as dumb meters. But it depends where you go. I was at an event about a month ago and someone said they wanted to get to a place where your car charges up after you’ve gone to bed when electricity is cheap. Then you get up in the morning and drive your electric car to the railway station, plug it in and sell the excess energy back to the grid while you’re at work, before it charges back up in time for you to pick it up after work when you pick it up from the station to drive home. That’s a long way away, but smart meters in and out of the home, with differing ways to harness battery power, are where we need to get to.

PFI: Regarding storage, we have a competition in the UK for battery enhanced frequency response projects. Has anyone approached you on that?

Mayhew: We have had some general discussions, but not specific projects on our side, no.

Berry: It is yet to be proven from a technology perspective and the contracts are generally not long enough, or the volume is not long enough, to justify debt. But this is exactly the sort of thing that we like to look at with our unleveraged approach. Debt providers always want all of their money back. In theory, at least, we could take an element of risk, which means that we might not get all our money back. We could do it as long as the right risk-return balance is there across the whole capital spectrum.

PFI: You’d look at it from an equity perspective?

Berry: Well, unleveraged equity. So it’s a little bit unusual, but it’s something that a lot of our investors like, because very simplistically all of our investors – pension funds and insurance companies – have fixed income books, equity books and alternatives books. And we’re simply saying that if they have infrastructure in their alternatives book, why look for a leveraged equity product? Think of it a little bit more holistically, it offers the same risk-return, but if you invest without leverage you have more control. You can take a better risk adjusted approach because banks don’t interfere to cover their arse, it means you’re free to make your own decisions. That education process is not easy but once you convince an investor it’s a sensible and attractive philosophical approach it can be enduring.

PFI: RE risk and reward, are debt providers willing to take on more risk because of fewer deals and lower yields? And is equity prepared to accept lower returns as some of these technologies mature?

Smith: If you look at things like green bonds, at the moment if an entity issues a bond or a green bond, the pricing is the same, because ultimately the market sees it’s the same risk. You may get a wider group of investors buying a bank’s green bond as opposed to its normal bonds, but that’s simply because they have two pots – one for investing in banks and another for green investment. If they can buy some of that bank investment with the green investment funds that’s what they will do. But the pricing at the moment for green versus non-green is the same. You want the planet to move that way, but you still actually want to have an acceptable risk return and shareholders will continue to demand that.

In terms of the amount of debt, we’ve been talking a lot about energy but there are also topics such as public transport around the world. There is going to be a lot of financing required for increased amounts of public transport, because this will be an important part of reducing carbon emissions. Electric cars are one thing but if you look at the way things are moving, the number of young people in Europe and the US that today don’t have a driving licence is going up, compared to their forebears. A lot of it is because of social media, which allows people to talk to their friends on their smartphones and actually physically meet up with them less often. So they can use public transport not only for getting to work but also for their social interactions. This will change where financing will be directed.

We’re lucky in the UK, particularly in London, in terms of having excellent public transport. The same is true in Paris and most of the cities in Europe. But increasingly we’ll see smaller cities thinking about how they can they improve their transport networks, and that’s where financing will go. We’ll see city concessions with a certain amount of subsidy built in, which offers an acceptable risk with acceptable rewards and emissions reductions. So there will be financing flowing into things other than just renewable energy. Transport will be an increasing part of the mix.

PFI: Do you think in 10 years’ time, there will be a price differential between a green bond and a normal bond?

Smith: As the bank becomes greener in terms of its portfolio, then the pricing should be the same. You invest in a bank’s green bond, you invest in its normal bond, and as it moves towards a greener portfolio it will be the same. If there’s a real step change – if governments start to demand investors have a certain amount of their portfolio in a certain sector, there will be an impact in terms of supply and demand. If there’s not enough supply, then demand will push the price down.

Lilley: Coming back on a comment about investors not wishing to take power price risk: we do, and two thirds of a billion pounds’ worth of market cap suggests that a part of the market does want to do that, so I don’t necessarily agree with that. But it depends how you buy it, which comes back to what I said at the beginning about not having project finance. We buy on an unlevered basis and our capital structure is much more like a utility, for obvious reasons – because between two thirds and three quarters of the operating UK wind capacity is utility owned. On balance sheet, that’s how we’ll buy from them and that’s how we’ll co-invest with them. And that is, to some extent, the benefit of having no associated companies when we started our business. We looked at the market and thought about who owns the assets and what would be the most rational way to set up the business. It comes back to what Ian was saying about owning assets holistically: there is capital, but whether it is debt or equity, the purpose of the investment is to make a return. In our capital structure we have a bit of short-term debt to enable us to go and buy new assets, which we’ll then refinance with equity and add some longer term leverage on. At the moment we’ve got a £100m Commonwealth Bank of Australia loan, priced at 165bp margin which is an attractive rate. We have an aspiration to maybe put some bond financing in place, probably in a couple of years: we might go to the rating agencies with a five-year track record and put some rated debt onto the business, then come to the market and sell it to institutions. It should be pretty straightforward. But the point is it’s about low leverage. We have the maximum leverage of 40% in total everywhere, that’s very well serviced. We have an interest coverof, at that point, seven or eight times, so it’s massively covered. Do I think you could take merchant risk and get investment grade rating? Clearly you can. If you £1 of debt against a £1bn’s worth of assets its clearly not a problem, so it’s about where you find the crossover.

We think it’s possible to look at the world in a slightly different way, in a holistic way, assessing the return and setting your capital structure up differently. We have used a whole range of different things, including different forms of senior debt, and that has given us a capital structure that looks more like SSE, for example, than a project finance house. It’s just a different way of looking at the world and it’s been successful. But the mindset is, if you’ve got a product that is not particularly high levered, there’s not a lot of risk there. If power prices are very low for a long time you’re giving a 6% return. But if they’re what you expect you’re giving a 9% return. That’s a great product when people are getting a 1.5% return on gilts. It works well at this point in time. If 15 year gilts were paying 5% it would be different, but I think we’re a long, long way from that.

PFI: Power was at £50 last year and £40 this year so you’re still living in a tough environment.

Lilley: Yes, it’s certainly tougher. We’d prefer it as £50.

We think that the build out towards the £60bn I referred to earlier is 12GW onshore and 12GW offshore, that’s about 20-25GW. If you multiply that by 30% odd that’s 8GW at any one time. That’s 20% of the UK power market, which is 40GW on average. That’s fine.

I’m quite pleased that the UK Government has taken the view that its taken, it means that we don’t get to a point like we have in Germany where there’s too much renewable power at times, cannibalises itself and the producers get paid nothing for it. So the Government has done a good thing in some ways – the silver lining to a cloud. That’s good for our business. Whether it’s good for the country is a different question. Would we be better in the long term having a lot of storage? Probably. We would get better power price exposure. Do we hope that a lot of people use electric cars in 10 years’ time? Yes, because at the night when we’ve still got wind production, there would be a higher power price as cars are being charged Solar won’t be in the game at that point, funnily enough.

PFI: So given the facts in Germany and in the UK, do you think some investors are becoming nervous?

Lilley: They’ve realised that with a business like ours, we’re investing in a regulated environment. Perhaps some funds have been sold as if they are social infrastructure Mark II – where everything is the same for 30 years and that’s your return. That is, to some extent, where maybe some have come a little unstuck. What’s probably different with Greencoat is that having a team with experience of investing in regulated utilities – including smart metering and water companies – you know you have a regulatory determination every five years and you start to understand how regulators think. And you model your business accordingly, reflecting that. It’s not social infrastructure Mark II, you are a utility of sorts and you need to understand how to invest on that basis.

Kerins: The question of availability of finance is always a difficult question to answer. If I look at some of the deals that closed recently, it’s very easy to say there’s plenty of finance available, especially in the offshore wind sector. But at one point, not so long ago, policy makers thought that they’d have about 40GW of offshore wind constructed in the EU by 2020. And they thought that would attract about €150bn of investment. It’s pretty clear today that that’s not actually going to be achieved. So despite having projects in the market, developers that are interested, consented projects and the potential for a feed-in tariff, not all these deals will close, have closed or can close. So clearly, when you move from the deal to the macro level there is a financing gap.

It varies very much depending on the market. The UK is one thing. But I’m heavily involved in Egypt, for example, I think Evan mentioned the attractiveness of the Egyptian feed-in tariff, and I agree it is very attractive for developers. But there’s no local, hard currency finance available. So either you have a 100% equity or you have an IFI that can give you some bank debt. But that’s basically it in a market like Egypt. India is another market with huge aspirations, 100GW of solar PV by 2022. But local debt costs are 12% and project IRRs are not much above 12%. I’m not sure if private equity is going to be happy with a 12% return on a deal in a market like India. So it’s quite tricky. As Ian mentioned, the real challenge is while there is a lot of money out there, how do you match it up? How do you get the long term, low interest finance that the EIB has and match that up with the projects that need it. How do you get the more risky capital matched up to the more risky emerging technologies and emerging markets? That’s the real challenge.

Berry: You often find in groups like this, where we’re talking a lot about renewables, we think about regulation in terms of supporting the project or the assets. But actually there’s a whole load of regulation on the other side of the table. That brings us back to the question of why do people invest? Why is debt particularly attractive under Solvency II? Well, it’s because that’s what the Solvency II rules say. And it’s not all debt either, it’s certain types of debt, with certain types of features. It’s an expansion of matching the opportunity, or the asset, to the demand, or the investor. And there is a huge amount of demand and there’s probably a whole load of projects. I’m not sure they’re all good projects. But there are a lot of reasons why those are not matched up. Stephen was talking about the equity capital markets and his vehicle. That appeals to equity capital market investors. And that’s a different type of client to my client who tends to be a defined benefit pension scheme client.

The point I’m trying to make is it is not straightforward at all to match a certain type of capital to a certain type of project. There are so many different types of projects, which most people in the room will be familiar with. But there are also so many different types of capital, which is probably not something that people are as familiar with. And so, just looking around the table, we’re probably all playing slightly different areas in terms of accessing that capital. People will access it for different risk return reasons, different regulatory return reasons and maybe some other reasons. Do people invest in renewables and energy efficiency because it’s renewables and energy efficiency? I’m not sure they do. But there are lots of other reasons that they might invest and this might be a subset.

PFI: Are you finding in established sectors, though, that returns are now not good enough for your investors?

Berry: Yes. We look at hundreds of deals every year and clearly we try to choose the best ones. Some of those will be rejected because the vendors or the developers think their asset is worth too much. And other people will buy it. That’s evidence that there are different types of investor, either assessing things correctly with a different return profile, or assessing things incorrectly and paying too much for assets. Of course, it’s an imperfect market. We’re not talking about the capital markets – I don’t believe they are perfect either but they’re certainly more perfect than the sorts of things we’re talking about here.

Lance: To come back to taking merchant risk. We have this idea that it’s fun to take some merchant risk and we’ve done some of this. For example, in Sweden we are taking merchant risk. Why do we do this? We’ve seen a lot of investors, traditional investors, going after feed-in tariff price projects, because effectively it gives you a 15 year cash flow which is very attractive. But then the pricing will go crazy. And if you look at the life cycle costs of electricity, the cost to big power, the cost to produce power reaches something like €100 per MW hour on feed-in tariffs. So it’s expensive for onshore wind. If you go after merchant deals today, for example in Sweden, your breakeven cost is about €40 per MW hour. So would you prefer to buy a deal that is going to produce electricity for 30 years at €40 or at €100? We take the view that there is more risk in the €100 per MW hour cost of electricity assets because taxes may change, because feed-in tariffs may change. And we’ve seen that. We’ve seen that lately in Poland, and we saw it in Spain originally. We’ve also seen it in Italy and the UK. So is there more risk in merchant if it’s well priced? It’s a challenge, for sure. But we have to get familiar with it because the market is going to turn to more merchant driven types of assets as it becomes more competitive. We’re moving away from feed-in tariff. So we go for private power purchase agreements (PPA). We go for negotiated agreements on selling the electricity at prices that are going to be fixed, maybe not for such a long time, but for a shorter time. But at the end of the day, having an asset which is competitive by itself is probably a good risk mitigant.

PFI: And where else in Europe, apart from Sweden, do you see these types of structures?

Lance: We’ve seen these types of structures in France, as solar moves away from feed-in tariff. But it’s mostly the Nordic countries where we have seen this type of asset.

PFI: Has this been helped by falling equipment prices as well?

Lance: If you want an asset that is ready for sale, developer assets, it sells like gold almost – €500,000 per MW or even more, because there is too much liquidity running after those assets. So equipment is more expensive. It’s mostly the developer who takes it all, but he is the one who has taken the risk of developing, which takes a long time. He has an asset ready for sale and then there are plenty of buyers and plenty of lenders. So he takes the largest piece of it. But at the same time, if you look at Sweden, the cost of machines is cheaper, because to build is cheaper. And the developer makes almost no margin at the current level of electricity prices – we have never seen electricity prices as low as they are today. But it cannot remain this low or all power plants will go bust. So it cannot remain at €25 per MW hour for 20 years. If it did there will be no coal power plants or nuclear plants. At one point it will have to go up.

PFI: Yes, although I suppose they said that in Germany five years ago.

Berry: I’ve heard people at other conferences, particularly solar focus conferences, saying power is going to be cheap, it is going to be almost free, in the context of predicting solar is going to be everywhere. I don’t necessarily subscribe to that, but I think it is a wider debate than saying it’s never going to get worse than today.

Lance: It is a debate, yes.

Stergoulis: Picking up on the corporate PPAs – there are fewer in the UK, especially, for onshore wind. You see the likes of BT and some others do deals. It’s a pretty thin market, but a lot of people are hopeful, with onshore wind having qualified for CFDs, that they can do corporate PPAs. So the market is evolving. If you go to places like Mexico there are corporate PPAs. So it depends on where the power price is. It’s a correlation between two.

The other thing that we see is an enormous amount of interest from the institutional investor base. That includes the whole range, particularly people raising new funds, a combination of infra and renewable funds. They’re out there raising big money now. They obviously feel that there’s a sufficient market in the future to sustain that fund raising. The price of equity is not going to keep going down, because they’re obviously going to tell their investors they’re not getting threes and fours, they’re getting something more, whether that’s a combination of debt on the deals or something else. There’s a dynamic where they’re taking part of their allocation and looking to make sure that they can put it in another slice of the capital pie. It’s that bit between planning and shovel ready, where the smart people looking for the volume and the bigger deals are now allocating a bit of money to that, and therefore they won’t have to participate in the auctions. They’re buying pipelines to secure the deployment of the capital going forward. We see that dynamic happening and it’s quite interesting because it will starve other players from product if these guys are successful.

Mayhew: For good deals there is tons of financing available and there’s then a competition on price. Ian made the same point as well, you then invest on a relative value perspective. Are you actually, for your investors, earning the right kind of return for that transaction? So I’d characterise us at the moment, for example, as patient and selective. There are many deals out there we’d like to finance. But we don’t wish to do it at the rates that others are doing, because for us, looking for relative value for investors, that’s less likely to be found in those deals. But where there is a transaction that we like, then we step forward. So, for example, in the UK we did a transaction for Lightsource last year, where we thought it was a well-run company, they had a good portfolio of feed in tariff (FiT) projects. And so we bilaterally lent them £247m. That was for a variety of funds we manage.

There are good deals out there but there are a lot of, for our risk-reward perspectives, less good deals that we decline. In terms of whether, then, debt is willing to take more risks to get deals done, clearly, some people will do that to earn higher returns.

In Europe at the moment, we have the Juncker Plan, with the EFSI, where actually there is the capability for the EIB under the Commission guarantees to take targeted risks on transactions. This may then help to lever in private sources of capital. I think it is a very worthy and good idea, and one we support. It is far preferable, levering in investment, than some other instances where you can see, in effect, crowding out of private investment. So where you can have projects where there are difficult risks, and you have people like the EIB and EFSI who can come in and take those, that’s something we wholeheartedly support, because that can support you both in existing geographies in moving down the risk scale, or moving into new geographies that by themselves would have lower ratings.

Stephen was saying the risk-free rate has come down massively. Equity returns should be at a premium to the risk-free rate. So equity returns coming down doesn’t need to mean people are chasing deals. It’s just a function of the whole curve moving down. One of the difficulties with very long-term investments is when that curve moves back up, how do they then look? But frankly it doesn’t look like it’s moving up for a while and people need to earn a return. And there are many different ways for people to access that market, depending on what they want. None of them are right or wrong, they’re just different and they will play to different constituencies.

On the merchant point that a couple of people mentioned, I completely agree with that. It’s clearly different depending on the quantum of debt that you’re putting in to transactions as to whether merchant is an acceptable risk for anyone or not, and how you mitigate that. The point about the efficiency of the underlying plant is key. You can go back to the corporate PPAs that were in place in the ‘90s and then TXU fell over, and bang, a whole bunch of power projects suddenly tripped over into default. So, it’s not just the PPA, it’s the underlying efficiency of a plant. That’s where there may be things that multilaterals can do to help to grow some of this business.

PFI: Yes, Drax…

Mayhew: And you can see what happened to its share price when the latest governmental/regulatory decision was made. Stephen said there are some of these businesses outside the project finance arena, and they’re corporates and they’re regulated. That is a different kettle of fish. Regulation doesn’t mean no risk, it means regulation. And there are swings and roundabouts with that.

Audience Question: My name is Charles Donovan, I’m a professor at Imperial College. We’re just preparing a piece of work to look at risk adjusted returns in the clean energy sector globally, more on the equity than the debt side. We wanted to get Thomson Reuters data on project finance deals on the equity side. But, certainly at the project level, that information has not been there – certainly, it’s not been publicly available. So a couple of questions: one, why has that been, when there is so much information available on debt? And two, our initial assumption going in is that if you look at these projects they are fairly stable and they are fairly low return, but on a risk adjusted basis that looks quite good. But this is a very sophisticated conversation. The world as a whole continues to have a perception about renewable energy, which is that it’s quite new, it’s quite risky, it’s unproven. I wonder if people have ideas on why that continues to be the case, despite what has happened over the past few years? Certain investors have done quite well from this sector.

Lilley: I can answer your second question. It goes back to investors and what the return is. If you go back to how the UK wind sector has developed, it has quite a lot of funds, private equity style funds, coming in and investing, with leverage, and making double digit returns. They were going to own assets for life and actually I think, in reality, what you have is a 10 year closed fund structure that isn’t really that well suited to a 25-year asset. Therefore, there has always been a need for exits. We see a trend of that type of vehicle towards construction, proving it to operation and then selling to businesses like ours - a long-term owner matching a 25 year asset with perpetual capital. You’ve got private investors doing that. Once you get into our arena, proven is actually quite important.

We need to build a business like ours on a very steady basis. We need to know that it’s going to take five years before there is, for instance, long-term bond debt in there. We need to demonstrate what the dividend cover has been and that it has been where we said it was going to be; that production is going to be what we said it was going to be, or has been what we said it was going to be; the operating costs are what we said they were going to be.

It’s working out all the things that we know, but investors don’t, and it’s working out if that’s actually been true. The only way that’s possible is to produce an annual report after one year, two years, three years and four years, allowing people to see the facts for themselves. And that’s true with debt provision as well in the business. There’s nothing you can do, other than allow time, to demonstrate whether the product does what we said it would.

And so for us, we can grow well. We can raise equity on a steady basis as more people buy the story. Gradually people will buy it and then more people will buy it and then you get to a scale where you find you’ve got a big company. But I don’t think you can just predict at the outset that you expect to be a billion pounds in a year’s time, that’s just unrealistic. You need to prove it. The places that have chased size as quickly as that are all on the other side of the Atlantic. And in the three years since we’ve listed, we’ve seen a phenomenon the other side of the Atlantic that may end up with people in jail, because they’ve got something that they’ve sold to investors in a way that wasn’t actually true. So for us, the proof is time. And I don’t think you can do any more than that.