Rob cormie uk gib investment bank - giff presentation - 12 june 2014

Mobilising capital to build a stronger, greener economy

Presentation to the OECD, Paris 12th June 2014

Rob Cormie Chief Operating Officer

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THE UK’S COMMITMENTS

Notes: 1) vs 1990 levels; 2) from 3% in 2010; 3) vs 1995 levels; 4) Source: Vivid Economics. Estimates of required green investment in the UK varies between £220bn and £500bn depending on sources

Our statutory commitments … … demand unprecedented investment

Up & running Investing Innovating Profitable Growing

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OUR STARTING POINT

Our projected run-rate in green infrastructure investment is consistently half the required amount

Source: BNEF, IJ, GIB

Average annual required


£10bn £8bn

£13bn £14bn £13bn £16bn £16bn

£33bn

2007 2008 2009 2010 2011 2012 2013 2014

Average 2007-13 £13bn

Presenter

Presentation Notes

Notes on data: Green infrastructure includes Water & Wastewater, Grid, Energy Efficiency (incl. domestic), Low Carbon Transport, Small Distributed Capacity, Renewables Note: asset finance includes primary financing and refinancings; does not include M&A

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£3.8bn Capital to invest in green projects

WHO WE ARE

70 Specialist investors and technical experts

Chaired by Lord Smith Independent Board


100% Owned by the UK Government

Mobilise private sector investment

Accelerate the UK’s transition to a green economy

Presenter

Presentation Notes

Our single focus: the UK’s green economy Our organisation is nimble (weekly Investments) and expert . The team: We have the most experienced team of renewables investors in Europe. Between the 70 specialist investors that we have recruited, we have collectively 768 years of experience investing in our core sectors. Our leadership team alone has over 160 years of energy and infrastructure experience. And even more experience in financial services. We have Siemens Wind Power’s former head of European Operations to lead our technical team We have the CEO of Australia's first listed clean energy infrastructure fund running our transaction team We have Standard Chartered’s treasurer heading up our risk team We have Morgan Stanley's Head of European Renewables, who has executed over $30bn worth of transactions, heading up our capital markets team We have the head of Pinsent Mason’s energy projects team as our general counsel We have recruited stellar talent from Goldmans, RBS, Macquarie, Babcock, ABN AMRO, Lloyds and Kleinwort to name a few… The Board: We are governed by an independent Board which run as any other plc board, fully independent with one representative from the Government’s Shareholder Executive. A hugely experienced and influential board spanning commercial, energy and green expertise. For example: Our chair is Lord Smith of Kelvin (finance and energy background). David Nish, chief executive of Standard Life and one of the UK’s largest investors Tony Poulter, PWC’s global head of consulting who is one of the world’s foremost experts on infrastructure investment. Professor Dame Julia King, who is amongst other things, the UK’s low carbon business ambassador. Tessa Tennant, a prominent innovator in green investment who founded the UK’s first green equity investment fund in 1988.

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OUR JOB

Our vision: green and profitable Our task: crowding-in capital

Our markets:

Offshore Wind Waste &

Bioenergy Energy Efficiency

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We have invested in every part of the UK, in all of our

sectors and using all our financial products

WE ARE INVESTING

Our investments will save 1.3 million tonnes of waste from

landfill

We have backed 5 local authority, 3 commercial and 2

anaerobic digestion waste projects

We have backed large and small projects; from a

CapEx of £2m to £1bn

We are building a market in energy efficiency, including

streetlight conversion and 4 NHS projects

Our investments will produce enough renewable electricity to meet energy needs of 2.9

million homes

We’ve invested £623m in 5 offshore wind projects, including

construction equity

We have set up 5 funds, with £250m, to back

small projects

Our investments will cut CO2 emissions equivalent to

taking 1.5 million cars off the road

We have committed £1.3bn of capital to 26 projects, mobilising a total of £4.6bn

Presenter

Presentation Notes

(going from left to right) From Inverness (Tomatin) to Bristol to Derry, from the sea off Wales to off Yorkshire. From a biomass boiler in a distillery to the world’s largest offshore windfarm. Three operating windfarms and 23 new projects In waste. Finishing the job on PPP / PFI and building new markets for Merchant and AD. The most active investor in UK OSW and an innovator in markets. working hard to get momentum and scale behind EE. Significant, nationally important green impact.

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OVER 70 OTHERS HAVE INVESTED WITH US

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Non GIB markets

But, we can only invest in 35-40% of the UK’s green economy:

WE ARE A KEY PART OF THE UK’S GREEN ECONOMY

Source: BNEF, IJ, GIB

We have quickly become the most active investor in our markets:

2012/13 2013/14


GIB markets

43% market share*

56% market share*

* Including Offshore Wind, Waste and BioEnergy (but not Energy Efficiency)

Presenter

Presentation Notes

Very positive story, sustaining the market Numbers based on the total value of the projects we were involved in Our first year, 43% Last year, 56%. We were involved in 10 of the 19 projects in our sectors But, our mandate restricts the markets we can invest in and what we can do within markets

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HOW IT WORKS IN PRACTICE: CREATING A SECONDARY MARKET IN OSW

1 : 3.5

£266m refinancing of Masdar’s stake in

London Array

Creating a stronger market in offshore wind finance

GIB £59m

BTMU, KfW, Siemens, SMBC

1 : 3.9

GIB £46m

Lloyds, Santander, RBS, Siemens

£224m refinancing of PGGM and Ampere’s

stake in Walney

Presenter

Presentation Notes

Operating assets were a good place for us to start, build our capability Our investments allowed developers to recycle their investments into new projects We helped demonstrate the value of OSW construction projects as a new asset class This will help to strengthen and grow the market London Array October 2013 Refinancing of a significant portion of Masdar's 20% equity stake 630MW operational wind farm off the coast of Kent, England Largest operating offshore wind project in the world, and was inaugurated by David Cameron, UK Prime Minister, on 4 July 2013. Owned by DONG (50%), E.ON (30%) and Masdar (20%). Green 8.5 million tonnes CO2e savings over its lifetime Walney Refinancing of Ampere/PGGM 24.8% equity stake 70:30 gearing Capacity of 367.2MW Operational since July 2011 and June 2012 respectively. Owned by DONG (50.1%), SSE (25.1%), Ampere/PGGM (24.8%) Green Equivalent to powering around 340,000 UK households 480,000t of CO2e savings p.a.

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WE ARE INNOVATING… IN MARKETS

Greencoat Capital was the first successful listing of its type in the UK, GIB supported BIS in its cornerstone investment

£210m Private sector capital

£50m (BIS)

£260m

Successful fund listing Capital Raised

Greencoat £260m

Bluefield Solar £130m

TRIG £300m

Foresight £150m

Infinis £234m

Greencoat 2 £83m

John Laing Renewables £160m

TOTAL £1.3bn

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…IN DEVELOPING NEW PRODUCTS

Green Loan

More efficient street lighting

NHS Energy Efficiency Programme

Low fixed rate Up to 20 years term

Designed for Public sector

Energy Efficiency projects

Repayments made from savings

Presenter

Presentation Notes

EE the least mature of our markets We have a role to play in stimulating demand We built a product specifically for the public sector based on spend to save model Early targets Streetlighting, Glasgow NHS, now done four projects. Addenbrookes the largest Names (photo): LSK, Sec State for Scotland Alistair Carmichael, Leader of Glasgow City Council Gordon Mathewson

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Emerging opportunities:

INVESTING IN SCOTLAND

Waste & Bioenergy

Energy Efficiency

Presenter

Presentation Notes

Slow start / market� Better pipeline�OSW > �W&B>�EE>� Community hydro� Wave and tidal� Interconnector� Whisky

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WE ARE MAKING A DIFFERENCE

We are financing new infrastructure that is being built right across the UK

Affordability

Security of Supply


Creating 2,000 new UK jobs

Lowering the cost of capital in our sectors, including by attracting longer term investors

Supporting SMEs – We’ve committed £250m to back smaller projects

Our sector and technical expertise means that our participation is seen to de-risk projects

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WE ARE INVESTING PROFITABLY

Our portfolio is young and weighted towards equity and construction investments

Once operational our current portfolio is projected to deliver an average return of around 9%

Our investments provide returns of between c.5% and 14%


Equity

Mezzanine Debt

Fund

Operation

Construction

Presenter

Presentation Notes

Returns ranging from 5% for senior debt to 11% for equity Portfolio is well balanced between debt (already earning us income) and equity (mostly in construction) All investments performing well, aggregate portfolio IRR is 9%

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OUR PLANS FOR THE FUTURE

Keep investing and innovating

12/13 13/14 14/15


Expand our activities

Hydro Electric

Presenter

Presentation Notes

Job 1 – keep investing in green profitable projects, keep mobilising, keep innovating Building our mandate. Starting with small scale onshore and hydro [Insert details of small scale strategy when we can]

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Rob cormie uk gib investment bank - giff presentation - 12 june 2014

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Transcript of Rob cormie uk gib investment bank - giff presentation - 12 june 2014