AIB sets up SME equity fund with Foresight to speed green transition

AIB has joined forces with Foresight Group, a UK-based sustainable infrastructure investment manager, to set up a €75 million fund to invest in equity in SMEs focused on accelerating Ireland's transition to a low-carbon economy.

AIB is providing a cornerstone investment of €30 million to the fund, which will be managed by Foresight and which aims to raise a total of €75 million. The AIB Foresight SME Impact Fund will typically provide equity investments of €2 million to €5 million but it will have the ability to make larger or smaller investments, the companies said in a joint statement on Monday.

"We will seek to invest across the spectrum of the low-carbon agenda, from companies enabling the circular economy, to advanced technology which supports smart cities, from enlightened consumer businesses taking market share from more environmentally damaging competitors, to the services companies that enable the transition to happen," said James Livingston, a partner with Foresight.

“We are delighted to be working with AIB in a partnership that will see us open an office in Dublin and support Irish SMEs across the whole decarbonisation agenda. Energy generation is just the start of the low-carbon journey, and we need to change the way we live, work, what we consume and how we travel.”

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The fund, which will reach first close shortly pending customary regulatory approvals and will be open to firms across the island, is expected to contribute significantly to job creation, alongside delivering economic growth and broader long-term benefits, the companies said.

Green agenda

Cathy Bryce, managing director of AIB's capital markets division, said the equity investment fund complemented the group's green lending agenda, with the bank's goal of having green and transition lending account for 70 per cent of new lending by 2030.

AIB said in a trading update last Thursday that green lending, including discount-rate mortgages for homes with high energy ratings, renewables and funding to companies for specific projects, accounted for 22 per cent of the group's €2.8 billion of new lending in the first quarter of this year. Chief executive Colin Hunt told investors the same day that the green portfolio was the fastest-growing part of the bank's loan book.

Foresight is one of the UK’s most active SME investors and its sustainable infrastructure investment division is one of Europe’s most established teams, managing more than 300 sustainable assets globally and generating power from more than three gigawatts of green energy assets, according to Monday’s statement.

The fund will benefit from Foresight’s “extensive experience of supporting SMEs through various economic cycles and from Foresight’s multidisciplinary approach to sustainable investing”, it said.