The chairman of Scotland’s national investment bank wants to speak to companies in the north and north-east that want to get into the next “massive industrial revolution”.
Offshore wind – particularly floating offshore wind – that is planned to be built off the costs of Scotland represents a “massive opportunity”, Willie Watt, chairman of the Scottish National Investment Bank (Snib) confirmed.
However if companies are going to support developers of the 10 gigawatts of windfarms expected to be built through the ScotWind leasing process, they need investors – and soon.
Mr Watt said: “The developers all made big promises of domestic content but the supply chain needs to be ready to provide that content.
“Unless investments are made in the next couple that won’t happen.”
The Scottish Government has set a target that 60% of “content” in the next phase of offshore wind should be delivered by UK companies but, so far, projects that have been built – or that are currently being built – have been cause for disappointment.
But the bank – set up by Scottish Government with a plan to invest £2 billion over ten years – aims to fill this gap.
Mr Watt was raised in Aberdeen and led private equity company 3i, which was an active investor the region for decades – he said he is enjoying becoming reacquainted with the region’s industries.
“We are keen to talk to companies who think they may have a role in the next stage of offshore wind development to come and talk to us,” he said. “We are keen to be a champion for the opportunity in offshore wind.”
The bank has a mandate to support the Scottish Government’s goal of being net zero by 2045.
He admits the £2bn “is not enough” but he is pleased with investment performance in the last year.
He added the bank is currently looking to channel third party funds managed by “impact” investors that share the same aims – while still expecting a healthy return on investment.
Snib has tough start
The two-year old bank has faced a difficult launch.
In March, its chief executive Eilidh Mactaggart resigned suddenly and a replacement has yet to be found.
But Mr Watt points out the bank has now deployed £350m in loans and investments which has unlocked further private sector backing to the tune of £600m.
Of this, over £165m has been invested or loaned to firms with operations in the north and north-east.
This year started with a £30m loan to the Port of Aberdeen and ended with a £50m investment in shipping firm North Star in December.
“We were bound to get off to a slow start because we didn’t have any people, it took us a while to find the people and create the processes and procedures we needed,” Mr Watt said.
“Of course people are impatient and they wanted us to be deploying at full throttle from day one. But it took us some time to get up to a reasonable level of capital deployment.
“Last week was the second anniversary of our launch – we have been talked about for a long time before we were actually launched but we hadn’t been able to make any investments until December 2020.”
Money deployed this year has corrected an initial central belt bias to the bank’s investments.
“There’s a fair bit going on north of Dundee which we are pleased about,” said Mr Watt.
“When we started out in 2020 were mainly in the central belt.
“Given Aberdeen’s scale and also the skills sets and invested capital in the oil and gas industry, one felt there had to be more that could come out of that that would allow us to deploy our mission capital in that part of the world.
“It is looking a lot healthier than it did a year ago in terms of the spread across Scotland of investments that we have made.
“With North Star they have a big oil and gas business but they are trying to pivot towards low carbon future.
“That is absolutely the kind of investment the bank should be making in a company that is trying to make itself more relevant to a low carbon future.”
Another firm, Trojan Energy, also represents the kind of investments the Snib plans to make.
The electric vehicle (EV) charging firm is going to be among the first to move its headquarters and production facility to the Energy Transition Zone within Altens Industrial Estate.
“The team in Trojan Energy, their backgrounds are all in oil and gas,” said Watt.
“It is nice to see skills and experience that were developed in one industry being applied in a very different context – on street electric vehicle charging is a long way from exploration and production of oil.”
Scottish National Investment Bank investments in the north and north-east.
January: Port of Aberdeen £30m loan
January: Highland Coast Hotels £4.45m
May: Elasmogen £8m investment (alongside BGF and Scottish Enterprise)
September: Trojan Energy £9m investment
October: Orbex £17.8m investment
July: Orbital Marine Power, Orkney
August 2021: Gresham Forestry Fund, £50m investment
December: North Star £50m investment
