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Pension fund investment helps finance green infrastructure project

25 March 2013

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Pension fund investment has helped to secure a transaction to fund what is expected to be one of the UK's largest NHS energy centres.

Aviva Investors and the UK Green Investment Bank (GIB) will provide approximately £36m of funding for a new energy innovation centre for Cambridge University Hospitals NHS Foundation Trust at Addenbrooke's Hospital.

The centre is designed to deliver financial and carbon emissions savings for the trust and this infrastructure project is being financed by a combination of private sector expertise, pension fund investment and government funds.

Ian Berry, infrastructure and renewable energy fund manager at Aviva Investors, said: "The development of UK energy centres is a very exciting new area for long-term investors such as pension funds. They can achieve stable, diversified and relatively low risk income streams, while also helping to fund important infrastructure projects that deliver long term savings and sustainability benefits to their clients.

"This is a landmark transaction and demonstrates how private sector know-how and pension fund money can be used alongside government funds to finance innovative infrastructure initiatives, and the ongoing development of renewable energy and energy efficiency projects in the UK."

Aviva Investors is funding the project through its REaLM Infrastructure Fund, and GIB will invest £18m in the centre through the REaLM Energy Centres Fund.

GIB has committed £50m to the REaLM Energy Centres Fund and both Aviva Investors and GIB intend to fund a range of other energy centres through the two funds.

Through the new energy centre, the trust is expected to save over £20m in energy costs over the 25 year operational term of the project and make CO2 savings of over 25,000 tonnes per year.

MITIE, a FTSE 250 strategic outsourcing company, has been awarded the contract to develop the energy centre to develop the energy centre and operate it over the 25 year term. The project is subject to final planning approval.

Berry said: "We are delighted to be involved in this development, working with Cambridge University Hospitals NHS Foundation Trust, the UK Green Investment Bank and MITIE to fund, build and operate what is expected to be one of the largest NHS energy centre projects of its kind.

"We are pleased to have been able to leverage our substantial experience in the renewable energy and energy efficiency sectors, to develop a proprietary transaction template which sets us apart as leaders in bringing institutional investment into such assets."

First published 25.03.2013

monique_simpson@wilmington.co.uk