Ethical investors snap up funds

In contradiction of the commonly held view that in the Netherlands there is too much green capital chasing too few projects, Dutch ethical investment bank Triodos is to almost triple the equity of its Wind Fund with an issue of NLG 44 million in shares between October and January. "Strong growth in the number of investment opportunities in wind energy projects," is the reason for the issue, says Triodos.

Set up in 1993, the Triodos Wind Fund currently amounts to some NLG 24 million invested in various wind projects. As of September 30 it had fully or partly financed a total of 90 turbines, comprising 33.6 MW of capacity, according to the bank's Thomas Steiner. Projects range from complete wind farms to individual units, generating a total of some 74 million kWh, sufficient green electricity for 26,000 households at a saving of 36.9 million kilos of CO2.

Green investment funds such as the Triodos Wind Fund received a massive boost in 1995 when dividends from officially approved green investments were declared tax free. The sudden influx of capital from mainly private investors far exceeded the number of approved projects at the time, giving rise to the misconception that too few green investment opportunities existed to absorb the investment.

The new share issue demonstrates this was a temporary problem. Steiner says the bank's decision to issue the shares in five individual tranches of varying amounts is based on Dutch tax laws which stipulate that so-called green investment funds should have a minimum of 70% of capital invested in approved projects at all times. As such the tranches are tailored to the investment requirements of wind projects as these become available.

Subscriptions to the fourth tranche of NLG 7 million closed on November 14 and the shares were fully taken up, Steiner says. Subscriptions to the fifth and final tranche will close on January 14. The wind fund averages a return on investment of around 3%, Steiner says. "But given that gross returns are equal to net returns [because of the tax break on green investments] this compares with an average 6% return on investment from a normal fund, " he adds.

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