Is the Green Investment Bank sale on the rocks?

The future of the Green Investment Bank (GIB) was thrown further into doubt this week, as a rival bidder called for a Government rethink on the prospective sale to Australian bank Macquarie.

Macquarie controversially gained preferred status at the end of last year, in the backdrop of criticism over its “asset stripping” reputation and poor management of other large infrastructure firms.

And now green investor Sustainable Development Capital (SDC) – which is itself considering the acquisition of the GIB – suggests alternatives should be pursued to the Macquarie deal. This arrives amid speculation that a flotation on the stock market, as opposed to a sale, is being considered by ministers.

SDC chief executive Jonathan Maxwell said: “We believe that an initial public offering (IPO) by 2020 is viable and this has been an important consideration behind our approach to the privatisation. An IPO should be feasible and attractive once the GIB’s portfolio has been built out, remaining capital expenditures have been invested, earnings have increased and cost efficiencies through economies of scale have been achieved over the next two to three years.”

Deal or no deal?

The GIB has invested £2.7bn on more than 80 green infrastructure projects across the UK since its creation in November 2012. The state-owned institution was expected to be sold for around £2bn to Macquarie.

This now looks more uncertain; following reports earlier this month that the preferred bidder has already lined up a series of potential buyers for the GIB’s most valuable assets, which include wind farms and biomass plants.

Ministers will be forced to clarify their strategy tomorrow at a debate in the House of Commons. Environmental Audit Committee (EAC) member and Conservative MP Peter Aldous believes the Government should retain a 25% stake to benefit from expected growth and bring value for the taxpayer.

“The Government may find that a stake is useful,” Aldous said. “With the Industrial Strategy published, and the Emissions Reduction Plan coming, the Government will need some targeted infrastructure spending, and the GIB could be a useful vehicle for that.”

‘Laser-like focus’

In recent times the bank has provided £7m to an energy efficiency project, announced plans to upgrade a district heating scheme in the north of Scotland, and also raised £355m in the second tranche of investment for its Offshore Wind Fund.

The privatisation has faced a wave of opposition from green campaigners and senior officials in Westminster. Green Party Co-Leader Caroline Lucas accused Macquarie of having a “dismal” environmental record, while former Energy Minister Greg Barker has said control over the bank should be retained by ministers at BEIS who have the “right vision” and “understand its value”.

Last week, Shadow Business Secretary Clive Lewis said: “With our economy stalling because of the Government’s incompetent handling of Brexit, the GIB needs a laser-like focus on developing future low-carbon technologies. Instead it’s had to deal with uncertainty generated by this ideological and ham-fisted privatisation process.”

George Ogleby

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