Jaltech launches new section 12B Solar Investment with up to 235% tax deduction
Jaltech has launched its latest Section 12B Solar Investment, offering investors a compelling opportunity to gain exposure to the country’s rapidly expanding residential solar market. This latest investment is in partnership with Wetility, one of South Africa’s largest residential solar operators.
Maximising Tax Efficiency Through Section 12B
One of the attractive features of this investment is the exceptional upfront tax deduction available to South African taxpayers under the Section 12B tax incentive. By strategically using debt to leverage the investment, Jaltech has structured a model that enables investors to claim a 235% tax deduction on their investment. The upfront tax incentive will enable investors to receive up to 106% of their investment value back within the first year.
For example, if an individual in the highest tax bracket invests R1 million, they would qualify for a R2.35 million tax deduction, resulting in a tax refund of approximately R1,058,000. This means that investors can effectively recover their initial capital plus an additional 6% within the first year, before earning an annual income.
Attractive Returns and Ongoing Income
Over the life of the investment, investors can anticipate an average pre-tax yield of 14% to 17%, excluding the tax benefit. Income is generated through long-term energy purchase agreements with homeowners.
Further Highlights
In addition to the large tax deduction, the investment has the following key features:
17.6% First-Loss Protection: Wetility is contributing 17.6% of the total capital/debt requirement as a first-loss tranche. This means Wetility will absorb the first 17.6% of any losses, aligning their interests with investors and providing a strong risk cushion.
Diversification: Investor capital will be deployed across a broad portfolio of up to 3,000 residential installations, significantly reducing the impact of individual project defaults on cash flows.
Full Deployment in 2025: With a capital requirement exceeding R500 million, the funds raised are expected to be fully deployed within the current financial year, providing immediate exposure to income-generating assets.
Webinar: Learn More
To provide further insight into the deal and investment structure, Biznews will be hosting a webinar on 26 June. Join Alec Hogg, Jonty Sacks, and Vincent Maposa (CEO of Wetility) as they unpack the strategic partnership and what it means for investors.
Register for the webinar here.
Alternatively, schedule a one-on-one with a Jaltech representative here.