Green Investment Bank unveils £1bn fund plan

Shaun Kingsbury, chief exec of the Green Investment Bank
Shaun Kingsbury, chief exec of the Green Investment Bank
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Green Investment Bank chief executive Shaun Kingsbury today described a new £1 billion fund as a “step change” that would give it more firepower to support renewables projects.

The new fund, revealed in Scotland on Sunday, will aim to raise £800 million from the private sector – more than predicted – with the balance provided by the bank. For the first time, it will no longer be wholly dependent on public funding to pump prime early stage developments.

Pension and sovereign wealth funds are expected to be among those which will contribute to the infrastructure fund and help Kingsbury hit this year’s target of between £700m and £800m of financial aid.

The bank was set up by the UK government in 2012 as a profit-making institution. It reported a loss of £5.7m for its first full financial year, expected in view of the early stage of development for the majority of the 28 projects it has backed. Kingsbury said it should be in profit within two to three years once projects become operational.

The new fund will enable the bank to aggregate private investments which it can plunder as required, rather than seeking backing on a project by project basis.

Kingsbury, pictured below, said: “It is really big news for us. Businesses which are successful have access to different types of capital and we are getting there. Announcing the fund is a huge strategic thing for us.”

He said that setting up the fund had been within the remit of the bank and that once he had the pieces in place it only required the support of the board, chaired by Lord Smith of Kelvin.

It has co-invested with about 70 institutions, some of whom are likely to contribute to the fund which will be managed by a subsidiary of the bank. Currently regulated by the Financial Conduct Authority and set to seek permission from the FCA to become a regulated fund manager, the bank is targeting a first close on the fund by the end of the calendar year.

Smith said: “We have emerged as the most active investor in the UK’s green economy. 2013-14 was a good year for the bank in a difficult market – we backed 18 new projects, more than double our first year, committing an additional £668m of capital.”

Business Secretary Vince Cable said: “We established the UK Green Investment Bank to jump start investments in cleaner, greener technology. These results show the impact they are having with £4.8bn pumped into green energy projects in just 18 months.”

He said the bank’s plans for a dedicated offshore wind fund are “a real boost for our industrial strategy in a sector where we have a strong competitive advantage. There are great opportunities for British companies and the industry has the potential to create 30,000 jobs for the UK.”