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GIB chief: We don't need to borrow

Green Investment Bank (GIB) has said the institution does not need to issue debt, indicating a recently announced spin-off fund as an alternative option to mobilise private capital.

GIB was set up with £3.8bn Government money in 2012 and from next year it will be able to borrow up to £500m from a Government fund, a move the business secretary Vince Cable described as the first step towards full borrowing powers.

Barry Gardiner, shadow resource minister, has repeatedly called for the bank to be able to tap into international capital markets to increase funding for green projects.

Shaun Kingsbury GIB

Shaun Kingsbury

But, presenting the bank’s first full year results, chief executive Shaun Kingsbury, right, said the GIB did not need to issue debt, at least for now.

Having invested part of its original capital - £1.3bn to date - the bank still has funding to deploy, he said.

In addition, with most of its backed projects in construction, the bank has not yet turned a profit. The £5.7m operating losses reported for the 12 months to March 2013 would make it difficult to raise debt.

“We are not short of capital and we couldn’t borrow,” said Kingsbury. “Successful businesses have many ways of tapping capital; borrowing is certainly one, but not the only one.”

A new fund dedicated to offshore wind was an example of an alternative way to mobilise more private capital, he added.

Kingsbury maintained that bank would seek to obtain borrowing powers in future, after turning to profitability, but “not this week, nor the next one nor next year.”

Edward Northam, head of investment banking at the GIB, said that if the offshore wind fund proved successful, the bank could consider setting up similar funds to support other technologies within the bank’s remit, which includes the waste sector.

“The fund model has applications across a much broader range of assets,” he said. “What we are doing here is responding to a sector within our remit that has the biggest capital requirements.

“[If] we prove the success of this model and this goes really well, then we would look at raising other funds.”

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