WIREDGOV

The news was announced yesterday morning (Thursday October 23) by the Deputy Minister for Regeneration, Leighton Andrews, at a landmark Regeneration Summit in Swansea.

The fund, which could be operating by 2010, would be a joint venture with the private sector, and would invest in a wide range of regeneration projects across Wales, with the Welsh Assembly Government and its private sector partner sharing in the returns.

An initial scoping study on the scheme, commissioned by the European Investment Bank (EIB) on behalf of the Welsh Assembly Government, and carried out by King Sturge, reported this month.

Mr Andrews said today:

Negotiations are underway with Brussels, and whilst there is a long way to go, I am optimistic that we will be able to develop one of the first urban development funds in Europe under the EU’s JESSICA Initiative.

This would be a substantial multimillion pound fund run by a professional fund manager, with the Welsh Assembly Government and a private sector funder having equal stakes. The private sector partner would be chosen by tender.

Work done on our behalf by the EIB using King Sturge as consultants has demonstrated that there would be interest in partnering the Welsh Assembly Government from a number of leading financial institutions.

King Sturge concluded that the UDF could act as an enabling fund to promote, accelerate and facilitate large-scale regeneration in Wales, focusing particularly on areas where the private sector will not take forward significant development in its own right.

It is envisaged that projects will be promoted and delivered by local project partners from either the public or private sector.

The consultants conclude that this approach would result in significant leveraging of private sector investment, allow synergies to be built at the local level, create economies of scale across the whole fund while laying the foundation for a long-term partnership.

Mr Andrews said this model of alternative financing would be new to Wales and was a better approach than PFI which has traditionally been used in other parts of the UK.

The UDF would invest cash in the form of equity or loans which would be matched by the project partners’ land assets needed to deliver the project. Further project finance could be raised on top of this in commercial lending markets.

More detailed work now needs to be done on the financial structure, governance arrangements and geographic scope of the fund as well as the project selection process. The fund will operate in the context of our strategic investment-based approach to regeneration that I outlined in the Assembly last week.

It is likely that the Assembly Government’s contribution to the fund would be in the form of ERDF monies and land assets.

Officials will continue their discussions with the EIB and the European Commission to take this plan forward. There are several issues which remain to be overcome in relation to Structural Funds rules and State aid rules. These will take time to resolve, but we are optimistic that they can be overcome.

Mr Andrews will be speaking at the first Wales Regeneration Summit later this morning, where he will tell the 300-strong conference that despite the global economic crisis, Wales remains open for business and the Welsh Assembly Government remains committed to supporting and strengthening the construction sector.

Development and investment opportunities throughout Wales will be at the Summit when the key message will be that Wales is open for business.

Leading figures from the world of finance, economic development and regeneration representing the private, public and third sectors, are among national and international speakers.

Key speakers include Chris Brown, the Chief Executive of Igloo Regeneration, Ros Kerslake from the Prince’s Regeneration Trust, Sir Stuart Lipton, the government’s architecture tsar and one of the country’s most respected developers, Peter Head from Arup and Tim Williams, who advises DCLG Minister Caroline Flint on regeneration, planning and housing policy.
Conference delegates will have the opportunity to visit exhibitions and ‘one-stop shops’ of strategic locations highlighted by the Welsh Assembly Government.

They will be able to meet representatives from the local authorities to learn about the range of development and investment opportunities available and how they can get involved.