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For Investors
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What is IRR and how is it different from ROI?

IRR is a financial metric, used to calculate what returns can one expect from the investment opportunity. It takes into account cash flows throughout the investment and the time value of money. What it means is that the INR 1000 that we hold today is worth more than the INR 1000 that we receive after 3 months taking the inflation into account. The major difference between ROI vs IRR is Time value of money. ROI is simply the growth rate of your investment.

What due diligence is conducted to evaluate and minimise the risks of a project?

A detailed evaluation is conducted to assess the the financial viability of the project across two aspects: 1 - basic management hygiene (core leadership team, statutory non-compliance, board governance and legal proceedings) and 2 - financial due diligence (Historical performance, Operating ratio analysis; debt-equity structure, Projections etc.)

How do we ensure high project performance?

We only work with industry’s best EPC(Engineering, Procurement, and Construction) partners providing end-to-end services and install only Tier 1 category assets. For the entire project duration, we have annual maintenance contracts with the EPC partner. We have a tech enabled system to remotely monitor the project performance and alert the EPC partner to repair/rectify if there is any unusual drop in performance. Additionally, insurance coverage by top insurance companies provides cover against any unforeseen damages to the assets.

How does tangible asset ownership reduce my risk?

Green Energy assets are tangible assets and will provide investors an additional layer of assurance as these assets have a physical form and a residual value. Tangible assets provide a form of value diversification and as a hedge against economic uncertainty.

What kind of projects can we invest in?

Green and renewable energy projects like rooftop solar, that lead to a cleaner planet and greener future, are the primary focus of Collective Capital. Our aim is to make sustainability energy investments financially attractive to all types of investors.


What is the expected IRR?

Expected IRR varies from project to project and depends on the factors such as type, duration and size of the project. These parameters vary on a project to project basis, meaning some projects will have higher IRR potential compared to others being evaluated. Collective capital usually targets projects with an IRR of around 15%.

What is the structure of the investment?

Different Investment structures such as Limited liability partnership (LLP), Holding Company, Alternate Investment Fund (AIF) will be used based on the size and type of investment. Type of structure may also vary from project to project. However, for retail investors, the most common investment structure is an LLP. A LLP is created which holds the ownership of the assets until the end of the project term. Investors via Collective Capital are named as non-managing partners in such LLP.

What are the tax implications on the investment?

Tax implications on the return are dependent on the structure of the investment made and vary from Alternate Investment Fund (AIF) to Limited liability partnership (LLP) to Holding Company. In an LLP, all the returns made are post-tax and investors don’t have to pay any further taxes. Investors are required to file ITR form 3 and declare the income from LLP.

Are there any collective capital management fees?

No. Our income is tied to performance of the project. Only after the expected IRR of the investor is met, any remaining revenue from each project is shared with collective capital

If the project client opts out before the completion of the agreement term, how will the investor’s expected IRR be protected?

If the project client opts out before the completion of the agreement term, a buyout clause will come into effect, which is detailed in the agreement, on a year-on-year basis. The pre-determined residual value for each year will safeguard the targeted IRR of the project and ensure it is met.

What are some of the risk mitigation measures taken?

One of the main risks we address is the payment risk. In addition to rigorous due diligence prior to commissioning a project, client payments are backed by security deposits and bank guarantees against untimely payments.