Investment strategies of Scotland's development bank centrally focus on impact investments

The Scottish National Investment Bank (SNIB), established in 2020, is making strides in addressing economic, social, and environmental challenges in Scotland. Launched with cross-party support, the bank operates independently from the government to attract additional funding.

According to Sandy MacDonald, executive director and head of impact for SNIB, the bank was created as a result of a recommendation from the former Council of Economic Advisers (CEA) in 2017. Since its inception, SNIB has invested in 39 companies and five funds, with eligible investments being in businesses or projects based in Scotland or addressing Scottish challenges.

One of the bank's key missions is to scale up innovation and technology. This focus is evident in its most recent investment of £1.5m in April of 2023, which went to NCIMB, a biotechnology company. This investment demonstrates SNIB's commitment to fostering growth in the technology sector.

The bank has also invested in various sectors, including working alongside Katapult and OCTAVE Capital in the Asian ocean fund, and New Forests in acquiring a South African forestry company. These investments reflect SNIB's broad approach to economic development.

The Scottish government has committed to capitalizing the bank with £2bn (€2.3bn) over 10 years. The government has set three challenges for the bank: tackling the climate emergency, place-based inequality, and demographic pressures on the economy.

SNIB aims to deliver on its objectives by investing through impact, which provides a clear structure for measuring and reporting the difference made. For every £1m it has invested, its investees have received on average a further £1.9m from other sources. This demonstrates the bank's ability to attract additional funding and catalyse investments in projects.

The bank has made investments below its threshold, such as £730,000 into DITT Construction for a housing project in the Shetland islands. These investments show SNIB's understanding of the Scottish economy and its ability to promote it to attract additional funding.

SNIB has also partnered with venture capitalists, private equity investors, and other public sector investors including the UK's National Wealth Fund. This co-investment strategy complements and catalyses investments in projects, ensuring that the bank's resources are used effectively.

A condition of any investment made by SNIB is that it must have a minimum of one-to-one co-investment before it gets past its investment committees. This ensures that the bank's investments are backed by a diverse range of partners, further strengthening its impact.

By the end of 2024, SNIB had invested a total of £696.5m, with an additional £1.3bn leveraged from third party investors over the same timeframe. As the bank continues to grow and expand its investments, it is poised to play a significant role in addressing Scotland's economic, social, and environmental challenges.

There is a lot of connectivity between sectors, especially in relation to the just transition, where grid infrastructure needs to happen alongside investment in energy efficiency or housing to cater for particular jobs. SNIB understands this interconnectedness and is well-positioned to make investments that address multiple challenges at once.

In conclusion, the Scottish National Investment Bank is making a positive impact on Scotland's economy. With a focus on innovation, technology, and addressing social and environmental challenges, the bank is attracting additional funding and catalysing investments in projects that will benefit Scotland for years to come.

Investment strategies of Scotland's development bank centrally focus on impact investments