Green Investment Bank invests £635m in first year

The Green Investment Bank (GIB) invested £635m in its first year of operation but recorded a net loss of £6.2m, according to the bank's first annual review.

Launched by Business Secretary Vince Cable in November 2012, the bank was financed with £3bn of public money with the aim to invest in low carbon technology projects.

At least 80% of the bank’s investment is targeted towards its priority sectors, which are offshore wind (OSW), waste recycling, waste to energy and Non-Domestic Energy Efficiency (NDEE).

The additional 20% of the bank’s investments is used to fund projects in other permitted sectors such as biomass power, carbon capture and storage, marine energy and renewable heat. The bank is also supporting the Government’s energy efficiency scheme, the Green Deal.

In its first five months the bank committed funds to 11 transactions amounting to £2.3bn. Of this the GIB directly committed £635m, resulting in a funding ratio that sees £1 from GIB mobilising almost £3 of private sector money.

Investments included £100m in Drax power plant to convert biomass, £57.5m in Rhyls Flats wind farm and £125m in the Green Deal.

GIB also committed £50m to the Aviva Investors REaLM Energy Centres Fund, a new fund managed by Aviva Investors which specialises in investments in non-domestic UK energy centres, and £46m as part of a debt package to refinance a 24.8% stake in two Walney Offshore Wind Farms.

The investments made in the first five months of operations are expected to make a material contribution to the UK’s environmental targets, with the current portfolio anticipated to contribute to about 9.5% of the UK’s renewable electricity in 2020.

GIB chief executive Shaun Kingsbury said: “In our first, short year we’ve made great strides in putting in place the foundations upon which we will build an enduring institution. It remains early days but our first results show that we can be successful in achieving our double bottom line of being green and behaving commercially’.

Business Secretary Vince Cable said: “The Green Investment Bank has a pivotal role to play in the financing of our transition to a green economy. It has already made a positive start, with £635m committed to green projects and with every £1 invested leveraging another £3 of private investment. The bank has a number of strong deals in the pipeline, which will help it to build on the solid foundations that have now been laid.”

According to the GIB, the first period of financial results shows a loss as capital has not yet been fully invested and is, therefore, not generating sufficient returns to cover its investment and operational costs. However, the bank stressed that this is expected at this stage of its operations.

For the period to March 31 2013 the GIB Group recorded a net loss pre-tax of £6.2m and a net loss post tax of £5m.

Leigh Stringer

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