UK Infrastructure Bank criticised for investing in third party funds

The UK’s new infrastructure bank has been sharply criticized for transferring millions of pounds from taxpayer money to third-party investment funds rather than to projects that support “rising levels” and tackling climate change.

Based in Leeds, e British Infrastructure Bank Established last June with £ 12bn initial funding to attract private sector funding for infrastructure projects that support the transition to zero zero carbon emissions by 2050 and encourage regional and local economic growth.

It has not yet released a complete strategy but has invested in six projects. It includes £ 50 million as a joint venture with broadband provider Fibrus, which provides high-capacity internet in Northern Ireland, and a £ 107 million loan to the Tees Valley Combined Authority for the development of the pier in its south bank.

However, it is also investing in third-party funds, including a £ 100 million contribution to a new infrastructure fund managed by Octopus Investments, known as the Octopus Sustainable Infrastructure Fund. It has also signed a deal to invest up to £ 250 million NextEnergy Capital’s A £ 500 million solar fund.

Lord Amer Surfers, the Singapore prime minister’s trade envoy and former Conservative party treasurer, said he was confident the bank could play a “valuable role”. But he added: “We need UKIB to make the hard direct deals, not outsource their responsibility to third party fund managers, as once you invest in a fund you have very little influence over it.

“The bank’s goal is to address the market gap in infrastructure investments and it is not at all clear that it is doing so,” he added.

The comments come following a second reading in the House of Lords last week of a bill that would ensure “the bank’s long-term goal as an ongoing institution.” It is intended to ensure that the bank is not sold as happened in another government initiative, e Green Investment BankSold to Australian infrastructure investor Macquarie in 2017.

Steve Coulter, head of industrial strategy at the Tony Blair Institute, said the bank is “a big gamble on the part of the government that they are throwing some public money at the private sector and that it will bring investment when they are most likely risking competition with existing ones.”

Of course there are at least two groups of potential investors Expressed their concerns On the bank’s decisions so far to John Flint, the former boss of HSBC who is the CEO of the institution.

One institutional investor described the decisions as “a bit of a joke”. “It is not clear why they will bring in a third party manager to raise funds to invest in these projects,” she said. “There is a lot of capital to be deployed out there – the Saudis and Australians are queuing up to enter the UK because it is still a good place to invest.”

Infrastructure investors say they need the bank to act as a mediator – find, develop and reduce risk in construction projects and produce a pipeline of projects in which they can invest.

UKIB said it aims to work with project sponsors such as private companies or local authorities to open investments and plans to publish its strategy within weeks.

“We have sought to spread our capital wisely and strategically across a range of product sectors, and as might be expected, we have partnered with Record-based companies to make an immediate impact and start meeting our mandate,” it read. .

The bank, which already employs about 120 people, aims to double the number of employees over the coming year. The initial funding of £ 12 billion consisted of £ 5 billion in capital and a £ 7 billion debt from the Treasury.

An additional £ 10 billion will be provided through the existing one Guarantee program in the UK, Which was used to attract private funding for projects such as the expansion of the northern line. However, it was criticized by the National Audit Office in 2015 as providing low value for money for taxpayers.

Robert Skinner, head of alternative investment at Octopus Investments, said the bank’s commitment would be to fund matching and that there was a “significant funding gap” in emerging sectors, including green data centers, battery storage and charging electric vehicles, which are currently not seen as core investment opportunities for investors. Many institutions. “

“With our existing infrastructure fund, we hope to open up this necessary capital,” he said.

NextEnergy declined to comment.

UK Infrastructure Bank criticised for investing in third party funds Source link UK Infrastructure Bank criticised for investing in third party funds

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