UK awards mandates to energy-efficient infrastructure specialists
07 Aug 2012
UK - The UK government has awarded two discretionary mandates, each worth £50m (€63m), to fund managers specialising in energy-efficient infrastructure.
UK Green Investments (UKGI) issued the mandates to Sustainable Development Capital (SDCL) and Equitix to make and manage investments in non-domestic energy efficiency projects.
The contracts are predicated on the recipients' ability to match government commitments with funding from institutional investors.
SDCL co-founder and chief executive Jonathan Maxwell said the fund manager was already working with asset owners and service companies to generate opportunities that would allow institutional investors to invest "prudently" in energy-saving projects.
It has an existing pipeline of projects collectively worth between £130m and £140m.
"We can afford to be selective," said Maxwell. "This isn't an easy sector to invest in. You need both know-how and the capital to do deals.
"Our aim is to create an investable asset class - and to do that, you need a pipeline, a specialist management team and momentum around the sector."
The fund manager will channel UKGI's investment via an existing vehicle, UK Energy Efficiency Investments, which co-invests in commercial, industrial and urban infrastructure assets.
The fund - created in part to meet demand from pension-fund investors without the resources to access the market directly - has a target size of £100m-200m.†
Although the fund is discretionary, Maxwell drew up parameters with UKGI based on criteria including pipeline transparency.
Under the deal, SDCL will be allowed to raise private sector capital at the fund or project level, or alongside UKGI.
Equitix yesterday would not say how it planned to invest its share of the capital and declined requests for an interview.
Equitix's second infrastructure fund closed in May with £333m raised from 15 UK corporate and local authority pension schemes.
The new mandates come ahead of the planned launch of the state-owned UK Green Investment Bank later this year.
The bank will target investments in wind, waste processing and recycling, as well as non-domestic energy efficiency.†
The announcement follows mandates worth £80m awarded in April to Foresight and Greensphere, two fund managers specialising in small-scale waste projects.
Author: Shayla Walmsley