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World’s first offshore wind fund reaches £1.1bn close

The Green Investment Bank’s landmark vehicle made its final £429m investment amid growing scrutiny around the lender’s privatisation.

The UK’s Green Investment Bank has closed the world’s first offshore wind fund, slightly surpassing its £1 billion ($1.2 billion; €1.1 billion) target to reach £1.12 billion.

The vehicle, launched in 2014, garnered contributions from the local Strathclyde, West Yorkshire, Nottingham, Worcestershire and Croydon pension funds while also securing investments from Sweden's AMF pension and the Abu Dhabi Investment Authority.

The fund held first and second closes of £463 million and £818 million respectively in 2015. It has a target IRR of 9 percent and as of March 2016 had delivered gross returns of 7.7 percent, having invested £710.5 million.

“Delivering the continuing growth of renewable energy is reliant on attracting new types of investors,” said Shaun Kingsbury, GIB’s chief executive. “In setting up an offshore wind fund GIB has created an innovative way to connect deep pools of long-term capital to UK green infrastructure projects.”

Coinciding with the final close was the fund’s £429 million acquisition of a 44 percent stake in the 270MW Lincs offshore wind farm from Centrica and Siemens. GIB itself also paid the duo £302 million for a 31 percent share. The purchase brings the fund’s total portfolio capacity to 1.45GW across six projects while it also completes Centrica’s divestment of its entire wind holdings, which began in 2015.

The UK government-owned GIB is currently in the midst of a privatisation process, with Macquarie the frontrunner for a £2 billion deal. Sources close to the GIB fund said further offshore wind funds were expected to be launched under the new ownership.

However, Macquarie’s bid attracted criticism this week in some quarters of the UK Parliament, with allegations that the Australian firm intends to strip the GIB of some of its offshore wind and biomass assets and a number of MPs calling for the sale to be stopped. Rival bidder Sustainable Development Capital remains hopeful of salvaging a deal.