Invicta eyes up Scottish biomass

Private equity firm Invicta Capital has created a £300m investment fund targeting the Scottish biomass industry.

The fund will invest directly into medium-sized biomass plants located on existing industrial and business development parks in Scotland.

The biomass sites will have a total power-generating capacity of up to 90MW. Nine sites have been selected, spanning Forestry Commission Estates in areas including Glasgow, Aberdeen, and Wick.

The company has chosen Scotland because of its large volume of sustainable wood, which is estimated to reach 10 million cubic metres per year by 2020.

The Scottish government has set a target of 50 per cent electricity generation from renewables by 2020, with an interim milestone of 31 per cent by 2011.

The Scottish government also recently created a Renewable Heat Action Plan designed to drive growth in renewable heating using biomass in more remote locations.

The cash will be deployed instantly, according to Invicta, which also states that the fund will not have any leverage.

The company is hoping for a post-tax operating return of 8 per cent per annum on the fund, along with a 20 per cent internal rate of return - the net return earned by investors from the fund's activity throughout the life of their investment.

Returns will take the form of profit distribution and capital appreciation.

Created in 2001, Invicta has already raised £1.3bn in investment capital.