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GIB makes first waste investment

A fund set up as a precursor to the Green Investment Bank (GIB) has made its first investment in the waste sector, ministers have announced.

The UK Waste Resources and Energy Investments (UKWREI) fund, administered by Foresight Group, has invested £2m in central London’s first anaerobic digestion (AD) plant.

Business Secretary Vince Cable said: “This project represents the first waste investment in the run up to the establishment of the UK Green Investment Bank, and sends a clear message to the market and to potential co-investors that we are committed to investing in the UK’s green infrastructure.”

The TEG Group project will cost some £21m to build and be situated in Dagenham, east London, on the site of the Mayor of London’s new 60 acre London Sustainable Industries Park.

In addition to the £2m from UKWREI, TEG secured a further £9m from another pot of funding underpinned by the state and run by Foresight.

Some £9m has been handed to the project from the Foresight Environmental Fund (FEF), which is financed in part by the London Green Fund; a pot established by London mayor Boris Johnson in 2011.

Foresight partner Nigel Aitchison, said: “We have been working with TEG for several months on this project which will see 49,000 tonnes of organic waste matter from Greater London diverted from landfill every year, and will enable householders to have their organic waste put to good use.  

“We are looking forward to making further investments, to drive both growth and job creation in this important sector in Greater London and across the UK in the very near future”

Foresight was appointed by ministers earlier this year to invest £50m on behalf of UK Green Investments, a vehicle set up to allocate funding while the GIB awaits state aid clearance from the European Commission (EC).   

A further £30m is to be allocated by Greensphere Capital.

Individual investments are not likely to exceed £15m.

The GIB has been set up by ministers to “accelerate private sector investment in the UK’s transition to a green economy”.

BIS said offshore wind power generation, waste processing and recycling, energy from waste generation, non-domestic energy efficiency and support for the Green Deal will be the first priority sectors for the GIB, subject to approval by the EC.

Q&A on the GIB’s first investment

What’s the project?

Organic waste specialist TEG Group’s £21m facility will be situated at east London’s Dagenham Dock in the London Borough of Barking and Dagenham.

It will include central London’s first anaerobic digestion (AD) plant.

The new facility will be capable of processing 49,000 tonnes per annum of food and green waste via AD and in-vessel composting (IVC) technology on a 4.7 acre site on the Mayor of London’s 60 acre London Sustainable Industries Park.

The Mayor has committed over £10m for infrastructure development on this site, which the TEG scheme will be the first to benefit from.

Where is the funding coming from?

Foresight Group funds have committed £11m into a new special purpose vehicle (SPV), TEG Biogas (London), to allow for the construction and operation of the new processing plant.

The Foresight Environmental Fund (FEF) has led the project with a £9m investment. The FEF was cornerstoned by the London Green Fund (LGF), and has attracted investment from a number of private sector investors.

The LGF was launched in March 2011 by the Mayor of London, Boris Johnson as part of London’s drive to encourage investment into waste and energy efficiency infrastructure to create economic growth and jobs.

Foresight’s UK Waste Resources and Energy Investments Fund (UKWREI) has invested £2m in the project. UKWEI secured an additional £2m in matching private sector funding from Quercus Assets Selection SCA SICAV-SIF (an institutional fund), raising the equity investment to £13m.

Alongside the equity investment, senior debt of £7.9m is being provided by London Waste and Recycling Board (LWARB) and Investec Bank.

TEG’s introduction to the LGF, in which LWARB originally invested £18m, came through LWARB when the project first applied to the Board’s Waste Infrastructure Fund for investment.

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