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Green bank half way to raising £1billion wind turbine fund

Shaun KingsburyThe Green Investment Bank, which backs renewable energy projects, has raised almost half of the £1 billion target it set for the world’s first dedicated offshore wind fund.

The Edinburgh and London co-headquartered bank has raised £463 million and continues to seek capital for up to eight projects. Investors include pension funds and a major sovereign wealth manager. It declined to identify any of its backers.

Significantly, the capital raised will allow some investors involved in early projects to reduce their stakes.

When fully subscribed it will be the largest renewables fund in the UK with an expected life of 25 years, allowing a new class of long-term investor to enter the sector.

This is the first fund raised by the GIB group and its first step into asset management. It is also the first private capital to be managed by the GIB group. It will be managed by a new regulated and authorised subsidiary called UK Green Investment Bank Financial Services Limited which is staffed by a dedicated team.

GIB has now transferred its investments in two operating assets into the fund, which will produce immediate cash yield for investors.

Shaun Kingsbury, GIB’s chief executive (pictured), said: “Offshore wind is playing an important role in the UK’s energy infrastructure. By 2020 we expect it to be providing enough clean, green energy to power the electricity needs of 8.2m homes across the UK.

“A sector this size needs a broad range of long-term investors and those investors need products they can confidently, and commercially, invest in – like this fund.

“The fund will create significant benefits for the UK by mobilising capital into the UK offshore wind sector from new, long-term investors seeking good, risk adjusted returns.

“Attracting additional capital and creating a liquid market for operating assets is an important step in reducing the cost of offshore wind and supporting the continued growth of the sector. New investors will allow the original developers to sell down their stakes and use the proceeds to finance new renewable energy projects.”

Karl Smith, managing director of the fund, added: “This successful first close reflects investor confidence in the UK offshore wind sector’s ability to generate strong returns and in GIBFS’s ability to source, execute on and manage offshore wind investments on their behalf.

“The fund gives GIB a new opportunity to create value for its investors through active asset management, leveraging its deep industry insight, relationships and significant capital base.”

The bank’s fund will take equity stakes of 10% to 30% in projects over 25 years, enabling existing investors such as utilities to re-invest capital in more facilities. The bank hopes this will help drive down costs of offshore wind.

At the end of 2014 Britain had 55% of all installed offshore wind farms, the largest amount anywhere, according to estimates from the European Wind Energy Association.

 

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