By Scott Wright

THE chairman of the Scottish National Investment Bank has defended the institution from criticism that it is not moving quickly enough to support emerging businesses, while clarifying its remit in relation to the main economic development agency in Scotland.

The publicly owned development bank officially opened its doors nearly one year ago to help scale up companies that can contribute to its three missions: securing a “just transition” to net-zero, tackling “place-based” inequality, and harnessing innovation to help people flourish.

The Scottish Government is initially bankrolling its operation with a pledge to provide £2 billion of capital for the bank to deploy over 10 years.

But it has been criticised in some quarters for the speed of its delivery. It has also faced questions over its relevance given the broad investor base that is already active in supporting businesses in Scotland, which includes the main economic development agency, Scottish Enterprise.

In the first 11 months of its operation, the bank has provided £120 million of capital to eight companies, with the promise of further deals to be announced in the coming months.

Speaking on the eve of a debate in the Scottish Parliament, which will examine the impact made by SNIB in its first year, chairman Willie Watt defended its record, highlighting the time it has taken to start a development bank from scratch and to assemble its investment team.

Mr Watt told the Herald: “What a lot of people have missed is the job that you need to do to build the infrastructure of a development bank. Our chief executive (Eilidh Mactaggart) came on board in April of last year, and we had a huge job to do to get things fit for purpose in terms of rules, regulations, and get out from under the feet of government in the first few months.

“When it launched, we had two people in our investment team. We have now got over 20 in our investment team, so we have built out a team [and] we are really excited about their ability to do the work of a development bank.”

He added: “We have deployed £120m in terms of commitments, which I think is a reasonable amount. I would have liked to have invested more. We have got a very strong pipeline of projects [and] you will see some announcements in the next month or so of other investments that we have made. These will be sizeable amounts of money in different sectors to what we have invested in the past.

“I think we are on track to deploy the amounts of capital the government has asked us to deploy. I’m very confident that we will meet the expectations that were set for us when we were launched, and before. We did have cross-party support for the launch, which was very humbling and positive for us.”

Mr Watt, who has spent the bulk of his investment career in the private sector, said he had recently spoken to senior figures from public development banks around the world who said there had been “impatience” shown towards them in their early days.

He said: “Certainly, we have experienced that impatience. But I think it’s really important that we put the team in place… There has been a lot of criticism of the wrong kind of public investment in our country, so we are very clear we have got to have the right skills and the right people to make the right decisions.”

He said it is “natural” that there has been some “early scepticism” around the bank, but he said “our jobs is to build the substance of the bank” while listening to and responding to criticism.”

Mr Watt addressed questions over SNIB’s relevance by underlining the different role it plays to Scottish Enterprise, even when in some cases the two organisations are supporting the same business. Whereas Scottish Enterprise can provide firms with grants or early-stage finance, Mr Watt said SNIB will be able take part in successive funding rounds to help a business scale up.

He cites the example of Sunamp, the East Lothian-based heat battery pioneer, which has received support from SNIB and Scottish Enterprise. SNIB has invested an initial £6m in Sunamp and may follow up with an even bigger amount, alongside other investors, to help it realise its potential.

Mr Watt said: “The grants tend to be for very specific purposes and actually don’t cover the scaling up of the business. The grants are foundational, but don’t help to build the edifice of the company.”

Mr Watt, who formerly ran Martin Currie and the 3i investment company, noted that the bank was in the process of becoming regulated by the Financial Conduct Authority. This will allow it to manage third party funds and to be able to borrow on the strength of its own balance sheet. Explaining that returns achieved by the bank will be used to reinvest and expand its balance sheet, he ultimately has aspirations for the SNIB to invest more than the £2 billion that will be provided by ministers for the first decade of its operation.

Asked if SNIB would intervene where a Scottish company is in difficulty, he said this would be guided by “first principles”. Any such investment would have to fit the bank’s missions, and if it is “sensible” for the bank in terms of a offering return. “We need to make sure that we are not doing something the private sector could do,” he added.

Meanwhile, Mr Watt said he does expect to see the bank invest more in companies involved in the transition to net zero. This will not just be in companies developing technology, but in service providers too, highlighting the investment made by the Canadian Infrastructure Bank to support the roll-out a vehicle charging solution across Canada. “I’d like us to find those kinds of opportunities in Scotland,” he said.