The plans by the GIB concern a £1 billion fund to acquire equity stakes in operational offshore wind projects in the UK. The bank is seeking a suitable group of strategic, long-term co-investors to participate in the fund which will be managed by a GIB subsidiary in accordance with requirements set by the Financial Conduct Authority (FCA). It will also be seeking permission from the FCA to become a regulated fund manager.
With 3.6GW of installed capacity, 1.4GW in construction and various other projects in the pipeline, the UK offshore wind sector is set to grow substantially in the next few years. It is vital that developers – typically large utilities - are able to refinance part of their investments in operating assets in order to reinvest in new developments. Equity investments in operational wind farms can offer a compelling opportunity for investors seeking long-term, inflation-linked returns. These attributes can be well matched to the needs of long-term infrastructure investors such as sovereign wealth funds and pension funds.
In May 2014 GIB received State Aid approval from the European Commission to promote and manage funds and other co-investment structures for mobilising upfront private sector investment into its designated sectors. The widening of GIB’s activities will enable the bank to promote and manage funds and all other types of structured co-investments within any of its designated green sectors, allowing it to raise and deploy private sector capital in addition to its current £3.8 billion of equity funding from the UK Government. GIB is targeting a first close on the Fund by the end of the calendar year.
In other news, the GIB has also announced its results for financial year 2013-14 during which it committed £668 million to 18 new green projects, taking its total capital commitments to £1.3 billion of profitable investments. This more than doubled the number of green projects the bank supported in its first year.
The GIB is now the most active investor in the UK green economy and its current portfolio, once complete, will potentially earn taxpayers an average return of 8 percent per year with every investment on track to make a profit. It will also reduce the UK’s annual carbon dioxide emissions by 3.5 million tonnes each year, equivalent to taking 1.6m cars off the road. Additionally it will generate 12.8 TWh of renewable energy, enough to power 3 million homes, and avoid 1.3 million tonnes of waste going to landfill, equivalent to the annual domestic waste produced by 1.3m homes.
For additional information:
