ES Private Equity yesterday launched its new Environmental Investment Fund (EIF) with £125m of capital at first close, as part of a government programme to underpin the economic recovery by supporting investment in UK growth businesses.
Hermes, along with the European Investment Fund, was last month appointed as one of two fund of funds managers for the government’s UK Innovation Investment Fund (UKIIF).
Chief executive Susan Flynn said yesterday that the government had injected £50m into EIF prior to the first close, with a further £75m invested by the BT Pension Scheme, owner of Hermes Private Equity.
The fund, which is expected to reach its £200m target via capital from other private investors before the end of the year, will mostly invest in private equity and venture capital funds with a specific, but not exclusive, interest in clean technology.
It will also invest up to 30 per cent of the fund in private companies in the environmental sector.
“We are now out of recession, but that recovery is still very fragile,” said Lord Drayson, the science and innovation minister. “It depends on businesses with the potential for growth being able to capitalise on that by gaining access to the capital they need to prosper.”
Drayson added that the government has invested in the return-driven venture on the same terms as commercial investors and “without looking to pursue a political agenda”.
As part of UKIIF, launched by business secretary Lord Mandelson in July, the government has also invested £100m into the European Investment Fund, which will raise up to £100m from its own investors at first close.