Green Investment Bank sold to Macquarie in £2.3bn deal
The UK Government has completed the sale of the Green Investment Bank (GIB) to Australian investment bank Macquarie today (20 April) for a sum of £2.3bn.
The deal will see Macquaire pay £1.7bn with a further £600m supplied by UK-based pension fund Universities Superannuation Scheme. The Government will retain a £130m stake in GIB assets which it will keep until a stronger return can be made for the UK taxpayer.
The GIB will look to invest at least £3bn of new investment into the green economy over the next three years under Macquarie’s ownership.
Climate Minister Nick Hurd this morning confirmed the deal after months of delays caused by heavy criticism from politicians and environmental campaigners. Long-standing concerns that Macquarie could asset-strip the GIB were rejected by Hurd, who claimed that the deal will maintain the institution’s green mission and offer the best deal for the public purse.
In response to the announcement, GIB independent chair Lord Smith of Kelvin said the sale was the "best available route" to securing the long-term future of the business and its growing green impact.
“Macquarie has made significant and important commitments to the UK Government to maintain GIB as a discrete entity within its business, maintaining GIB’s investment focus and approach with a target to invest more capital each year than GIB has historically," Lord Smith said. "Macquarie will also uphold GIB’s green investment principles and report transparently on GIB’s green impact. Macquarie will utilise the market-leading expertise of the existing GIB team and will build on GIB’s deep commitment to Edinburgh.
“On the basis of these commitments, we believe Macquarie can be a good owner of GIB and we support the Government’s decision to sell GIB to Macquarie. We look forward to seeing these commitments from Macquarie delivered, in full, in the months and years ahead.
Green groups have been quick to reiterate the importance for the GIB to continue its original aim of delivering low-carbon finance.
WWF chief adviser on economics and development Karen Ellis said: “Now that the sale of the GIB has been confirmed, Macquarie must guarantee that the green mission of the bank is protected and maintained and that it will provide substantial new capital for green investments.
“Numerous market failures are constraining the availability of finance for green investment, so to ensure the GIB continues to deliver on its mandate, it should invest in novel green projects, which are less likely to be funded privately; it needs to focus on crowding in additional finance by reducing the barriers to investment. Green growth has the ability to power our economy, create more jobs and dramatically reduce emissions, and we should not miss out on the opportunities it offers.”
The announcement has been widely-anticipated since the judicial review, initiated by rival bidder Sustainable Development Capital (SDCL), was thrown out of the court last week.
The controversy over the sale surrounds the environmental reputation of Macquarie, dubbed the 'Vampire Bank' for its track record after buying Thames Valley. And with the value of green assets set to rise significantly in the upcoming years, fears exist that the UK taxpayer risks being short-changed by the deal.
Gov to rush through Green Investment Bank sell off b4 election, announcement expected soon. Reckless decision, undermines low-carbon economy— Caroline Lucas (@CarolineLucas) April 19, 2017
The GIB's privatisation has faced a wave of opposition from green campaigners and senior officials in Westminster. Green Party co-leader Caroline Lucas has today criticised the “reckless decision” to sell off the bank as “undermining the low-carbon economy”, 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”.
Commenting on the news, Greenpeace UK policy director Dr Doug Parr said: "At a time when the Government should be shoring up low-carbon industry for post-Brexit Britain, they have given away one of our key tools for advancing green technologies. The hole left by the GIB will slow our transition to a clean energy system, set us back on reaching our climate targets, and mean more of the jobs from new sectors will go elsewhere.
“If the Government picks up its pace, the UK could be a world leader in renewable and green technology. But selling a great British success story, which levered private money into eco-projects, to a controversial Australian bank known for asset-stripping, is a disaster. We need investment in the booming clean technology industry in the UK, for skilled jobs, fairer bills and a healthy economy to see us through the next uncertain few years and in to the future."
Aldersgate Group Nick Molho commented: “Now that the GIB has been fully privatised and the UK can expect to receive less funding from the European Investment Bank post Brexit, the Government must ensure that it has a clear strategy in place to attract private finance to deliver its environmental and low carbon policy objectives. Projects involving new technologies and business models will be required to deliver the UK’s Clean Growth Plan and 25 Year Environment Plan. Targeted government support will be essential to make these projects attractive to private investors such as pension funds.”
Since its creation in November 2012, the GIB has invested £2.7bn in more than 85 UK green infrastructure projects, ranging across wind energy, biomass and energy-from-waste (EfW) facilities.
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 GIB has also raised close to £1bn for the world’s first offshore wind fund, making it the largest renewable energy fund in the UK.