Scottish National Investment Bank secures completion of 481 MMR homes

Scottish National Investment Bank secures completion of 481 MMR homes

Scottish National Investment Bank CEO Al Denholm (left) and William Kyle, fund director at PfP Captial, visit a new housing development at Kane Neuk, in Newcraighall, Edinburgh where backing from the Bank has delivered 104 homes (Image credit: Nick Mailer Photography)

The Scottish National Investment Bank has secured the completion of 481 mid-market rental homes over the course of the last financial year, its second full year accounts have revealed.

In February 2022, the Bank committed £40 million to aid the construction of affordable housing across Scotland. This investment continues to be delivered to communities through PfP Capital’s Mid-Market Rent Fund, with a target of delivering 1,071 affordable homes by 2040.

So far, more than 481 homes built by funding provided by the Bank are now available for mid-market rent in Edinburgh, Midlothian and Paisley.

The site at Kane Neuk makes up approximately a quarter of the total number of homes backed by the Bank. Built by Scottish developer Springfield, it has 104 new mid-market rental homes.

The site comprises a mix of two and three-bedroom properties, all complete with an energy efficiency rating of EPC-B, meaning lower utility bills for residents. Residents also have access to high speed broadband and electric vehicle charging points.

In a little over two years since it was established, the Bank has committed over £445m of long-term strategic investment. A further £703m has been attracted in from other sources, ensuring the Scottish economy has benefitted from well over £1.1 billion of support.

The Bank’s activity has spanned all its missions. across a range of businesses and projects. All investments must help achieve the missions of supporting Scotland’s transition to net zero, improving places and communities or harnessing innovation.

Over the course of the last financial year, its portfolio has also:

  • Expanded from 14 to 27 investments
  • Helped support 43 patents
  • Placed 30% of the total value of investments into 20% of the most deprived communities in Scotland

Companies and projects such as pureLiFi, Elasmogen, North Star Renewable and Orbex, have all been backed by the Bank, each of which delivered against one or more of the Bank’s missions.

Scottish National Investment Bank secures completion of 481 MMR homes

Image credit: Nick Mailer Photography

Chief executive officer Al Denholm said: “These results show strong progress for The Bank with revenue increasing 463% to £10.7m over the past 12 months, while there was a 55.5% increase in Committed Investment of £220.7m.”

“I believe we can become one of the most respected impact investors in the industry, generating social, environmental and economic returns for the people of Scotland. I look forward to working with the team and our many stakeholders, on delivering the Bank’s missions on behalf of the people of Scotland.”

Jobs supported by investee businesses have reached 2,300, and 100% of businesses have committed to Fair Work First principles.

While delivering impact and commercial returns from its investments, as a development bank it also adopts a higher risk appetite than other investors. Risk is based on the measured judgement of the investment team and is considered throughout the investment decision making process.

An unrealised loss of £17.8m has been recognised in the financial year, the majority relates to adjustments which reflect the underlying performance of investee companies. This includes a £4.5m unrealised loss recognised on Circularity Scotland Limited for the financial year ending March 31st 2023.

The Bank is still in early stages, being only two years old. As a patient capital investor, the Bank will look at opportunities and returns over the long term and while it is inevitable that not all of our investments will deliver a positive return, with this long-term view, fluctuation is expected within the portfolio.

Chairman Willie Watt said: “Our capacity as an organisation to deliver insight, investment and impact has grown significantly.

“As an institution we are moving out of our start-up phase and are becoming an increasingly established organisation, delivering solidly against our business plans.

“The overall economic climate has been challenging for companies seeking to raise investment.

“As a development bank with a particular focus on long-term and strategic investment, we have worked to support innovative, growth-oriented businesses to navigate these conditions while delivering on their ambitious business strategies.

“Despite incurring our first investment loss after the end of this financial year, we continue to work towards a positive net return across our portfolio as a whole, demonstrating both responsible and productive stewardship of public capital.”

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