Britain's Green Investment Bank (GIB) has unveiled plans to raise a £1bn ($1.7bn) fund to encourage new private investors to acquire equity stakes in operational offshore wind farms in the UK.
The GIB says it is seeking “a suitable group of strategic long-term co-investors” to participate in the capital raising exercise.
The fund will be managed by a GIB subsidiary, which will be seeking permission from the UK’s Financial Conduct Authority to become a regulated fund manager.
“This is an important development for the UK’s offshore wind sector,” says the GIB. “With 3.6GW of installed capacity, 1.4GW in construction and a number of further projects in the pipeline, the UK sector is set to grow significantly in the coming years.
“To support that growth, it is vital that developers – typically large utilities – are able to refinance part of their investments in operating assets to reinvest in new developments. This requires a significant broadening of the number of long-term investors in UK offshore wind projects.”
Shaun Kingsbury, chief executive of the GIB, says the bank’s role goes well beyond that of a traditional investor.
“We are providing a positive demonstration effect by successfully committing capital to profitable, green infrastructure investments.
“We are making a difference across the UK by taking on the tough projects, de-risking new technologies and lowering the cost of capital for our sectors.”
UK business secretary Vince Cable says “the GIB’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 compared to other countries.
“There are great opportunities for British companies and the industry has the potential to create 30,000 jobs for the UK”.
The GIB says that equity investments in operational wind farms can offer a compelling opportunity for investors seeking long-term, inflation-linked returns. It adds that these attributes can be well matched to the needs of long-term infrastructure investors such as sovereign wealth funds and pension funds.
The bank unveiled the new fund alongside its full-year results. “We have emerged from our start up phase as the most active investor in the UK’s green economy,” says chairman Lord Smith of Kelvin.
He adds that “2013-2014 was a good year for GIB in a difficult market – we backed 18 new projects, more than double our first year, committing an additional £668m of capital”.
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