UK investment fund targets recycling, resource recovery sectors

A new fund that targets projects and companies that seek to reduce the solid waste being landfilled in the United Kingdom has received a significant investment from Green Investment Bank, (GIB) a U.K.-government-backed bank with the mission to accelerate the U.K.’s transition to a greener economy. The bank was launched in late 2012 with £3.8 billion of funding from the U.K. government.

Promoting the new fund, U.K. Business Minister Matthew Hancock MP has announced that a £50 million (US$75.5 million) investment from GIB will be used in the fund, called Recycling and Waste LP (RAW), which will target smaller-scale, innovative recycling and waste-related projects throughout the U.K.

The RAW fund will be managed by Foresight Group LLP, which will seek to raise an additional £50 million from the private sector to match GIB’s investment.

Foresight Group is an independent infrastructure and private equity investment manager that has been managing investment funds on behalf of institutions and retail clients for 30 years. The company notes that its environmental infrastructure investment teams are responsible for managing about £150 million of environmental assets, which include the £60 million Foresight Environmental Fund (FEF) and the £68 million mandate from the GIB for U.K. environmental infrastructure.

The new funding mechanism was announced during Hancock’s visit to the Birmingham, U.K. location of a project, currently under construction in Tyseley, U.K., which is being developed by Carbonarius. The project, when operational, will convert up to 67,000 metric tons of recovered wood each year into electricity and heat. The recovered wood will be supplied by U.K.-based JM Envirofuels Ltd.

The Tyseley project was supported by GIB through a previous investment in a Foresight-managed fund.

“This investment by the Green Investment Bank will be used to fund biopower projects that will put the U.K. at the forefront of this innovative green technology, turning local waste wood to electricity. Today I have been able to see first-hand the work that is being done to get projects off the ground. This-state-of-the art plant in Birmingham will be the first of its kind in the U.K. It uses a new type of gasification system and will not only power 17,000 homes and recycle waste more efficiently, but will also boost the local economy and create 100 local jobs,” says Hancock.

Shaun Kingsbury, GIB’s CEO, says, “This new facility is a great example of the modern, advanced-technology infrastructure we need to see across the U.K. It’s the first time this technology will be used in the U.K. and the investment will benefit the local economy, with a local small business supplying the plant with wood that would have otherwise gone to a landfill. We were delighted to provide the finance that allowed the project to go ahead.”

Nigel Aitchison, partner and head of environmental at Foresight, says, The Birmingham BioPower project is a real example of how the first fund we've managed on behalf of GIB can create not only sustainable, skilled jobs, but also contribute to the U.K.’s needs in terms of energy security and waste management. We firmly believe that the second fund can build on this success and continue the momentum of investment in this important element of the infrastructure sector.”

The new fund will be GIB’s second investment in a Foresight-managed fund. The first fund—UK Waste Resources and Energy Investments (UKWREI)—was GIB’s first investment upon becoming operational in 2012.

GIB’s £50m investment in UKWREI was supplemented by £230 million (close to US$350 million) from the private sector.