Invicta Capital launches £300m biomass fund

The fund, which is one of the first to focus purely on biomass projects, has identified a portfolio of nine projects in Scotland in which to invest. It is targeting first close for the first quarter of 2010.

Private investment manager Invicta Capital has launched a new fund focusing on biomass-combined heat and power investments.

The Invicta Biomass Fund is targeting £300 million (€335 million; $502 million) of commitments from institutional investors to invest in the construction and operation of biomass plant projects in Scotland.

The fund has an identified portfolio of nine medium-sized plants in the country with a combined generating capacity of 90 megawatts. Each plant the fund is targeting would have a generating capacity of between 5 and 15 megawatts. None of the identified projects have commenced the construction phase. The plants will be powered by locally sourced and managed wood, which will be processed using pyrolysis and gasification technology.

The fund will be managed by Invicta Capital chairman and CEO Mohammed Yusef, managing director Niall Bamford and former Babcock & Brown renewable energy specialist Peter Pollock.

Speaking to Infrastructure Investor, Bamford  said of the new fund: “It is unique in the market in its exclusive focus on an identified portfolio of biomass projects. It will help the UK achieve legally-binding emissions targets and secure the country’s energy supply, as well as creating a host of forestry- and manufacturing-related jobs in Scotland.”

First close of the fund has been earmarked for the first quarter of next year, when Invicta Capital is hoping to garner at least £35 million of commitments. This is the minimum amount it needs to allow construction work on its first targeted project, located at Georgemas in North East Scotland, to begin.

Invicta is aiming to complete its full fundraising of £300 million within one to two years. During the operational phase of its investments, the firm is targeting an after-tax return of 8 percent. Invicta is planning on establishing power purchase agreements with utilities for the purchase of its generated electricity, and long-term contracts for the supply of sustainable wood for the plants.

Invicta has formed a joint venture with science and technology park developer New Park to provide access to the plant development sites and to operate the nine plants once construction has concluded. New Park will also contribute to the management of the fund.

The Invicta fund is one of the first to focus exclusively on investments in the biomass sector. Other clean energy funds in the market, such as the Fortis Investments Clean Energy Infra Fund which reached first close on €158 in September, have biomass projects in their mandate, but these also invest in other renewable technologies such as solar and wind power.

EU countries are committed to generating 20 percent of their energy from renewable sources by 2020.

Invicta Capital was established in 2001 and has since raised more than £1.3 billion in commitments for a number of funds, largely focused in the media and film industry.