You know the one. Everyone’s pension should be put into nice safe bonds to build lovely green infrastructure n’stuff? After all, what could go wrong?
The fact that they weren’t successful is, according to Rodbertus, the fault of the company’s investors, who backed the firm to the tune of €1.4 billion ($1.9 billion). Currently, many of them are demanding the returns that they were once promised: at least 6 percent interest per year or a refund of their principle if they wished to back out. Last week, the mounting claims led Prokon to declare bankruptcy — 75,000 stakeholders could be left out in the cold.
Oh, you mean there is no such thing as a risk free return?
Much of the concern is focused on the large number of projects that are financed by the investment model known as closed-end funds. As a rule, they run for a 20-year period and are open to a limited number of investors. They promise annual dividend payments.
But newly released numbers, collected and analyzed over a several-year period, show what disappointed investors have long surmised: Around half of these commercial wind park enterprises are doing so poorly that investors can count themselves lucky if they even get their initial investment back after the 20 year duration.
Perhaps it will all work in the Curajus State though.
Or perhaps it won’t. There is, after all, a reason why we like to have a mix of equity and debt in a financing package.