UK government seeks fund managers for non-domestic energy efficiency infrastructure

Focus is likely to be debt funding, says green investments team

The UK government is seeking fund managers to run non-domestic energy efficiency infrastructure investments.

UK Green Investments (UKGI), which is part of the Department for Business, Innovation and Skills (BIS), says it wants one or more managers to run assets totalling up to £100m (€119.3m) “depending on the quality of proposals”.

The firms will be responsible for sourcing a pipeline of energy efficiency projects, including building retro fit, urban infrastructure and industrial energy efficiency. The government will invest “on commercial terms”.

Eligible projects will have to meet agreed environmental goals and financial return targets.

The green investments team says that, due to the nature of the market and anticipated returns, the investment is “likely to be primarily focused around debt funding” – although it would consider equity investments or a mix of debt and equity.

The managers will have to secure at least equal funding from private sector sources. The new tender follows asearch in December last year for mangers for waste infrastructure projects. The deadline for expressions of interest is April 17 with May 21 the deadline for proposals. Managers will be selected by June 11.

The tender states a “strong preference” for fee structures that remunerate managers on the basis of invested capital as opposed to committed capital.

UK Green Investments wants to develop funding aggregation models to improve financing efficiency “and attract new pools of capital into the market” – such as securitisation to institutional debt finance.

Separately, the Financial Times has said former Confederation of British Industry head Sir Richard Lambert and former Environment Secretary John Gummer are on the shortlist to succeed Lord Turner as chair of the government’s climate watchdog, the Committee on Climate Change. It comes as the government yesterday put off again a decision on whether to impose mandatory corporate greenhouse gas reporting.