It’s taken only seven months for UK Innovation Investment Fund (UKIIF) to launch the first of two funds, the Hermes Environmental Innovation Fund, which has already raised £125m and will continue to seek further funding from investors.
The Environmental Innovation Fund, managed by Hermes Private Equity, will now start investing in low carbon and clean technology funds and co-investing in companies, providing much needed venture capital to help these innovative businesses grow. 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.
Over the past decade, the UK has emerged as a European frontrunner in alternative energy investment and is well positioned to further develop a sustainable market competitive globally. The Hermes Fund will look to benefit from this attractive market framework and expects to commit its capital over the next 2-3 years. Hermes will be launching a new fund of funds, the HPE Environmental Innovation Fund using £50m of UKIIF funding alongside commitments of £75m from private sector investors creating an initial pool for investment of £125 million.
The UK Innovation Investment fund was announced 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 (EIF) were confirmed as fund of fund managers for two separate funds of funds. Backed by £150m 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 more than match this amount with the total first closing of £325m. The UKIIF will target small growing businesses, start ups and spin outs including pre-profit and pre-revenue stages of development.
The UK Innovation Investment Fund will drive economic growth and create highly skilled jobs by investing in businesses where there are significant growth opportunities. Independent research estimates that the global market for low carbon and environmental goods and services (LCEGS) was already worth £3 trillion in 2007/08 and could grow to an estimated £4.3 trillion by 2015.
According to figures from the Carbon Trust, the UK is now the sixth largest low carbon and environmental economy in the world with 3.5% of global market share. This brings annual economic benefits and investment to Britain of £6-8 billion.
Evidence shows that venture capital-backed companies significantly out perform other companies in terms of their ability to create wealth and generate the spill-over benefits including export performance and the creation of high skilled jobs vital to the economy.
