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Green Bank plans £1bn fund to power wind farms

The taxpayer-funded Green Investment Bank plans to raise a £1 billion fund to encourage sovereign wealth funds and pension funds to invest in offshore windfarms.

The Edinburgh-based bank, set up by the UK government to fund green infrastructure projects, said it was seeking a suitable group of “long-term co-investors” for the fund, which will buy equity stakes in operational wind projects across the country.

GIB has invested £668 million into 18 new green projects in the year to March 31, taking the total it has committed since its inception in 2012 to £1.3 billion. It bought a 10 per cent stake in the Gwynt y Môr wind farm off the coast of North Wales from RWE, for £220 million. It has also agreed to buy a 50 per cent stake in the Westermost Rough project off the Yorkshire coast with Japan’s Marubeni Corporation.

The bank recorded an operating loss of £5.7 million as most of its investments are still under construction.

The £1 billion fund will be managed by a GIB subsidiary, which is seeking permission from the Financial Conduct Authority to become a regulated fund manager. GIB is targeting a first close on the fund by the end of the calendar year.

GIB said equity investments in operational wind farms could offer a “compelling opportunity for investors seeking long-term, inflation-linked returns”. These attributes, it added, could be well matched to the needs of long-term infrastructure investors such as sovereign wealth funds and pension funds.

Vince Cable, the business secretary and one of the driving forces behind the launch of the bank, said: “GIB’s plans for a dedicated offshore wind fund are a real boost for our industrial strategy in a sector where we have a strong competitive advantage compared to other countries. There are great opportunities for British companies and the industry has the potential to create 30,000 jobs for the UK.”

The Green Investment Bank was set up with £3.8 billion by the UK government two years ago.