The NZ government has set aside up to $30 million to sustain the operations of the recently-created Green Investment Finance (GIF) entity “until it is financially self-sustaining”.
Established under legislation last year, the GIF was set up as a ‘green investment bank’ with initial start-up capital of $100 million.
According to the just-released statement of performance expectations, the extra $30 million of ‘operational capital’ will be doled out by the government as redeemable preference shares (RPS) vested in the two overseeing Ministers of Finance, and Climate Change.
The GIF has already drawn down the first tranche of RPS money to the tune of $6 million to fund the first year of operation ending next June 30.
Additionally, the GIF has received about $2.85 million “to be used exclusively for establishment (non-recurring and exceptional) expenses”.
“The RPS are redeemable after 1 July 2025 and once certain profitability criteria are met,” the government statement says. “Once these conditions are met, the RPS can be redeemed to the value of 50% of NZGIF’s operating profits in each financial year.”
For the 15 months to June 30 next year, the GIF has a prospective budget of $6.6 million, of which over $3.2 million will cover staff costs. Headed by Craig Weise, the GIF already has 10 employees, the government document says.
As well as Weise, the government-funded green investment bank recently made three senior appointments: chief investment officer, Jason Patrick – previously head of boutique energy advisory firm, Real Options; chief operating officer, Ed Montague, ex general manager commissioning at the Social Investment Agency; and, head of communications, Jenny Lackey, who held a senior strategy role at the Energy Efficiency and Conservation Authority.
The freshly-built GIF has “four clear objectives”, the government says, namely:
- to reduce emissions that cause climate change;
- partner with other investors;
- invest on a commercial basis; and,
- provide market leadership in the green investment sector.
“The focus at this stage will be on investments that can deploy NZD$5 – 25 million of its capital over the life of the project,” the GIF website says.
While its investment universe remains flexible, the GIF mandate bars the group from backing several sectors that are either already well-served or otherwise inappropriate including: large-scale renewable electricity generation; forestry; carbon capture and storage (as “not yet proven”); and, central government.
With the GIF, NZ “joins the more than a dozen other national and sub-national governments that have established dedicated green investment institutions”, the statement says.