The Hermes Fund will focus on investment opportunities aimed at increasing the efficient use of resources (both renewable and non renewable) at all stages of production and consumption.
Gordon Brown, prime minister of UK, said: “The UK has a wealth of innovators and entrepreneurs seeking to create the businesses of tomorrow, businesses that will make the UK a world-leader in low carbon innovation and industry, and help to tackle some of the biggest challenges we face around energy and climate change. This fund will provide substantial investment where it is needed and deliver strong returns for investors.”
The UK Innovation Investment fund was revealed last June by the Prime Minister as part of the government’s strategy for building Britain’s future. Hermes Private Equity and the European Investment Fund were confirmed as fund of fund managers for two separate funds of funds.
Backed by GBP150m investment by the Department for Business, Innovation and Skills, the Department of Energy and Climate Change and the Department of Health, it has already attracted private investment to over match this amount with the total first closing of GBP325m.
David Kidney, energy and climate change minister, said: “Cleaning up our energy supplies and improving energy efficiency will give the UK the opportunity to develop the low carbon industries of the future. This new fund will help the UK to build on existing strengths in the sector and enable British companies to demonstrate and commercialise these technologies.”
Susan Flynn, CEO of Hermes Private Equity, said: “Increased awareness of environmental issues and policies to tackle climate change presents a real opportunity for investors and the innovative companies we will invest in. At this stage in the economic cycle there are many forward-looking companies who may not have funding available to them. The Hermes Private Equity Environmental Innovation Fund (HPEEIF) will ensure that those seeking finance for promising new environmental ventures will have access to a source of funding.”
The UK Innovation Investment Fund intends to drive economic growth and create skilled jobs by investing in businesses where there are growth opportunities. Independent research estimates that the global market for low carbon and environmental goods and services (LCEGS) was already worth GBP3 trillion in 2007/08 and could grow to an estimated GBP4.3 trillion by 2015.
The UK is now the sixth largest low carbon and environmental economy in the world with 3.5% of global market share, according to figures from the Carbon Trust. This brings annual economic benefits and investment to Britain of GBP6-8 billion.
The UKIIF will target small growing businesses, start ups and spin outs including pre-profit and pre-revenue stages of development.
