Environmental Finance / 21 February 2019
A private equity fund that will invest in regenerating contaminated urban land in the UK has started a £100 million ($130 million) fundraising round, Environmental Finance has learned.
The Ginkgo x igloo Fund has the backing of Edmond de Rothschild Private Equity, which manages €2 billion ($2.3 billion) of assets across 12 strategies, including its Ginkgo land remediation strategy.
The fund is a partnership between Ginkgo, which has previously raised two funds that have invested in land remediation projects in France, Spain and Belgium, and igloo – a sustainable UK property regeneration specialist.
The fund aims to regenerate derelict industrial land and build « attractive and vibrant urban neighbourhoods ».
It will target net internal rates of return of 15%, and will have a 10-year duration, with two optional additional years.
« We realised the UK was a very interesting market – there’s a clear undersupply of housing and a positive regulatory framework, » said Bruno Farber, who founded Ginkgo in 2008 and acts as managing director of Ginkgo Advisor, the investment advisor for the Ginkgo Funds, which have €240 million under management.
For example, the UK’s industrial heritage has created more than 400,000 hectares of contaminated land, and a Land Remediation Tax Relief allows businesses to claim relief of 150% of the cost of cleaning up the site, against their Corporation Tax.
Farber hopes for a £40 million or £50 million first close by the summer, with the remainder to be raised a year or so from now.
He said the fund should appeal to institutional investors « with a taste for impact investing ». Edmond de Rothschild Group has a commitment to the fund as an anchor investor investing ‘pari passu’ with other stakeholders.
£100 million would probably allow the fund to acquire between seven and 12 plots, with a typical project creating between 100 and 150 units, about 35% of which would be commercial and the remainder residential.
The fund will monitor and report on its impact, including the sustainability of the treatment technique for each project, the percentage of material reused on site, and the creation of green spaces.