Unanswered questions about where and how finance will be provided to the waste and recycling sector have been left by the Waste Review, according to environmental private equity firm Foresight Group.
Speaking to MRW, Foresight industrial partner Nigel Aitchison said: “We were expecting more on how financing would come about.” He added that the three key factors investors look for are clarity, transparency and longevity.
The review document has only six paragraphs under its ‘Finance’ section, which includes a paragraph on the Green Investment Bank.
Aitchinson said the question of waste infrastructure finance was “more about capital than opportunity,” following the reluctance of banks to lend to the sector in recent times. He said: “We would have liked to see more attention paid to how investment is to come through.”
Foresight has its own £70m Foresight Environmental Fund, of which £35m comes from the London Green Fund, to focus on environmental infrastructure in London.
The Group believes this is a good template of how to finance waste infrastructure going forward and that private equity has an important role to play in funding for the sector.
Aitchinson added that the PFI finance model for large plants with 25-odd year contracts was ripe for change. “In our view the model will become a blend of large and medium scale facilities and there will be a need for locally distributed facilities of scale and size that are suitable for each region.”
He added that the role and opportunity for private equity would be in merchant facilities: “From our point of view the opportunity for investment is enormous and without innovative ways of financing there will still be a degree of inertia which will stifle growth.”