Agenda item

Commercial investment fund


The forum received a presentation from the Service Lead – Place, Assets and Commercialisation on the Commercial Investment Fund (CIF), which would be a standard agenda item for the Asset Management Forum.


The Commercial Investment Framework, including the scoring matrices and governance arrangement was approved by Cabinet in early 2019, with up to £20,000,000 being approved by Council.  The monies would likely come through the Public Works Loan Board or other funding available to the Council, being drawn down as and when required.  It was noted that a number of authorities in Devon had a similar framework.  EDDC was taking a cautious and proportionate approach, compared to others.


The framework addressed opportunity in that by investing £20,000,000, the Council could expect to receive a net return of around £450,000 per annum.  There were two funds:

·        £10,000,000 within an income only fund, providing 3% minimum net return.

·        £10,000,000 within an income plus fund (where catalytic benefit) providing 1.5% minimum net return.

The framework contributed to the Council’s Transformation Strategy – to maximise the value of assets through commercial thinking with focus on income generation, sustainability and developing local economies.  There was a clear preference to invest in the district where possible.


The objectives of the CIF were:

·        Income generation reducing budget shortfall.

·        Investing in and optimising the effectiveness of the existing assets and new acquisitions.

·        Promoting new opportunities for local economic growth, wealth creation and productivity improvement.

·        Applying a clear, costed, risk managed and structured programme of investment using rigorous criteria and with appropriate decision making capabilities to respond to market opportunities in an agile but safe manner.

·        In the short term – £450,000 per annum generating return in-year.

·        Longer term – developing pipeline supporting both income generation but also other Council objectives.


It was requested that the CIF also included consideration of environmental impacts and the wider green agenda, in light of EDDC’s climate declaration.  It was noted that the framework was drawn up prior to the climate change declaration, but the scoring matrix could be updated to include this.


The CIF informing investment criterial were:

·        Security – protecting the capital sums invested from loss.

·        Liquidity – ensuring funds invested were available with needed.

·        Yield – an acceptable rate of return.

·        Adoption of weighted scoring matrices – different for each category of investment – to ensure that each opportunity was considered on exactly the same basis.


The Service Lead – Place, Assets and Commercialisation went on to explain the CIF process and governance.  A very similar approach was taken at EDDC to other councils.  It ensured agility in terms of allocation of resource but also in decision making to take advantage of opportunities when they arose, but doing so in a safe, accountable and democratic way.  The process was set out in appendix C of the framework and ensured that all opportunities were considered in a consistent manner, set against the framework, in a stepped process involving outline business case and full business case, which was presented at each stage to designated members and officers before proceeding further.  It was noted that the framework did not require ward member involvement.  The Investment Assessment Team membership would be updated so that the Chief Executive would replace the Deputy Chief Executive.


The greatest challenge to the implementation of the CIF had been around the availability of good quality investments in East Devon.  The Service Lead – Place, Assets and Commercialisation updated the forum on current commercial investments that were being considered.  He outlined the opportunities dismissed, most of which got dismissed following appropriate due diligence.  He also reported on an acquisition due to be imminently completed.


The Service Lead – Place, Assets and Commercialisation was thanked for this presentation.


The Forum received a report giving an update on current work streams on commercial investments, in accordance with the adopted Commercial Investment Framework.


RESOLVED that the update on Commercial Investment Fund be noted.