GIB to launch £1bn offshore wind fund

The UK green energy investor, which received EU approval to raise and manage third-party funds last May, is targeting a first close by end of 2014.

The Green Investment Bank (GIB) has unveiled plans to launch a £1 billion (€1.25 billion; $1.70 billion) investment fund to invest equity in operational offshore wind projects in the UK.

The vehicle, to be managed by a subsidiary of the bank regulated by the Financial Conduct Authority (FCA), will seek commitments from long-term investors such as sovereign wealth funds and pension funds. GIB is targeting a first close by the end of the year, it said in a statement.

The institution received the green light to manage funds and other co-investment structures for catalysing private sector investment into the UK green energy sector when the European Commission granted State Aid approval to the proposal last May.

The offshore wind fund will seek to help renewables developers refinance part of their investment in assets that are past their construction phase so that they can redirect equity towards new projects. This redeployment can only be done successfully through broader involvement of long-term investors in the sector, the bank said.

GIB was set up by the UK government in 2012 to seed green energy projects in the country and put the sector on the radar of institutional investors. With £688 million committed to 18 projects in the 12 months to March 2014, the bank bills itself as the most active investor in the UK’s green economy.

The capital invested by GIB helped attract another £1.9 billion from private investors during the last financial year, taking the total to £2.5 billion of new investments in the sector. The institution says it has now co-invested with more than 70 domestic and international private investors and has mobilised around £3 of private capital for every pound deployed.

GIB’s current portfolio, once built, is expected to yield taxpayers an annual average return of 8 percent through the generation of 12.8 terawatts of renewable power.