Investment reports

UK Infrastructure Bank to transition from investment to fund managers – reports

The bank, which has just celebrated its first anniversary, has previously been criticized for investing £100m in the Octopus Sustainable Infrastructure fund and £250m in NextEnergy Capital’s solar fund.

Last month, Lord Aamer Sarfraz, the Prime Minister’s trade envoy to Singapore, said that while he was sure the bank could play a “valuable role”, it should do “the difficult direct transactions” rather than “under -treating their responsibilities to third parties”. fund managers, because once you invest in a fund, you have very little influence over it”.

“The purpose of the bank is to fill a gap in the market for infrastructure investment and it is not at all clear that it will do so,” he said.

The bank’s chief executive, John Flint, said in an interview with the FinancialTimes that “we absolutely intend to make direct equity investments ourselves”, while defending the practice of investing in funds as “a legitimate technique”.

“We don’t have the skills to do direct equity investing ourselves today, but we’re going to re-energize for it. A year from now, we’ll have the capability.”

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The bank has financed a range of debt-financed projects, such as £50m as co-lender to broadband provider Fibrus and a £107m loan to the Tees Valley Combined Authority for its wharf development of South Bank. However, it is now looking to move into equity financing.

Flint said there is sometimes a “philosophical aversion to third-party managers…but I want to keep an open mind about that. It’s a great opportunity to deploy public funds alongside private.”

“We will retain the ability to use [them] where we think it makes sense,” he said. “We absolutely control the mandate, we decide what the objectives of the fund are and we decide which sectors to go into.

The bank released a report yesterday that sets out its strategic objectives, which include a focus on clean and renewable energy, as well as specific challenges such as increasing the number of charging stations for electric vehicles.

The bank has £22 billion to invest over the next five to eight years and aims to generate a return of between 2.5% and 4%.