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Invicta Capital: Launches GBP300 Million Fund For UK Biomass Plants

LONDON -(Dow Jones)- Invicta Capital Ltd., a provider of investment opportunities for private clients, Monday launched a new fund seeking GBP300 million to invest in the construction and operation of an identified portfolio of biomass combined heat and power plants in Scotland.

The portfolio will consist of nine medium-sized biomass plants primarily located on existing industrial and business development parks or brownfield sites in Scotland, with a total generating capacity of up to 90 megawatts of electricity, or enough to supply 140,000 homes. The plants will be powered by locally managed and sustainable wood.

"The investment opportunity in renewable energy and in particular biomass is compelling. There is long-term government commitment to resolving the issues of climate change and energy security both in the U.K. and Europe backed by incentive plans making returns in this sector very attractive," said Invicta Capital CEO Mohammed Yusef.

Under its European Union climate change obligations, the U.K. has a binding target to increase the amount of energy from renewable sources to 15% by 2020 from around 2% now. Although companies have invested significant amounts in wind power, spending in biomass is only just starting, unlike in Europe where the technology is already well established.

Invicta Managing Director Niall Bamford told Dow Jones Newswires the fund only needs GBP35 million to get the first plant operational. Based on soft selling so far, Invicta expects to raise the first GBP35 million by February, Bamford said. Raising the entire GBP300 million could take over a year, he said.

During the operation of the plants, the fund is targeting a return of 8% a year after tax to individual members. The investment is designed to produce stable recurring cash flows as the fuel isn't dependent on outside sources such as the weather, and contracts for both the fuel supply and the electricity produced are of a fixed priced nature, removing a significant amount of volatility and inflation exposures.

Invicta is in talks with the two major utilities in Scotland for a power purchase agreement and has identified a number of preferred engineering companies in Scotland that will build the plants.

Electricity generated from the nine biomass plants will qualify for two Renewable Obligation Certificates - a U.K. government support scheme for green power - for each megawatt-hour of electricity generated.

"This gives investors certainty on the income that will be generated from the plant," Bamford said.

Invicta Capital will run the nine biomass plants through Invicta New Park Ltd - a joint venture with New Park Management Ltd., the U.K.'s leading private sector developer of Science and Technology Parks.

The plants will use established pyrolysis and gasification technology with wood supplied from local sustainable and managed sources audited by the Smartwood Sustainable Forestry Division of the Rain Forest Alliance.

Invicta Capital Ltd. was established in 2001 and has since raised over GBP1.3 billion of investment capital.

-By Selina Williams, Dow Jones Newswires +44 207 842 9262; selina.williams@ dowjones.com

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