UK mulls low-carbon infrastructure investment institution, names Hermes for clean tech allocations

Infrastructure announcement made as part of pre-budget report.

The UK government says it is to consider plans for a low-carbon investment institution. The Treasury’s Pre-Budget report yesterday unveiled the creation of Infrastructure UK – to be chaired by former Rio Tinto chairman Paul Skinner – as the focal point for a long-term, green infrastructure investment strategy. The government said the new organisation would “explore, among other options, the case for a low-carbon investment institution.” The move comes as Hermes and the European Investment Fund were named as the fund-of-fund managers for the government’s previously announced Innovation Investment Fund (UKIIF). BT Pension Scheme-owned Hermes Private Equity will run the £125m low-carbon and clean tech part while the EIF will run the £200m technology part. The government will put £50 and £100m into the funds respectively – with an additional £175m coming from as yet unnamed external investors. Responsible reported last month that pension funds and sovereign wealth funds were set to be among investors in the fund. The mandates were awarded “following a competitive tendering process and detailed due diligence”.The UKIIF was launched by Prime Minister Gordon Brown in June with a brief to invest venture capital in technology companies with high growth potential in the life sciences, cleantech, digital and advanced manufacturing areas. It’s targeted to grow to £1bn. Science and Innovation Minister Lord Drayson said: “UKIIF has been a hit with investors.”
Other proposals announced today include additional support for offshore wind projects, a doubling of the UK’s commitment to fund carbon capture and storage demonstration projects and a €100m investment in a European Investment Bank-led low-carbon infrastructure fund. It also pledged £120m for low-carbon industries in the UK, including new manufacturing and testing facilities for offshore wind as well as measures to support energy efficiency at the household level. It also added £18m investment in venture capital through the Carbon Trust – taking to at least £160m of private and public equity support for innovative low-carbon businesses.