U.K. Sells Green Investment Bank for £2.3 Billion

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Europe's largest renewable energy investor, the Green Investment Bank (GIB), is to be sold to global financial firm Macquarie Group (ASX:MQG) (Sydney, Australia) for £2.3 billion ($2.95 billion).

The U.K. government has agreed to sell its unique renewable investment bank claiming that it will free the GIB from being constrained by "rules governing how public bodies can raise capital." The deal has been delayed for months as rival political parties claimed that Macquarie would "asset strip" the bank.

Since its inception in 2012 as the world's first dedicated green investment institution, the GIB has attracted more than £10 billion in investments for about 100 projects across numerous eco-friendly sectors like offshore wind, waste and bio energy, and energy efficiency. It was established with £3.7 billion in government funding, with offshore wind placed at the top of its priority list. Its goal was to invest in renewable energy projects at a "near commercial" stage of development. For additional information, see June 28, 2012, article - U.K. Green Investment Bank to Back Offshore Wind.

Confirming the sale, Nick Hurd, U.K. Climate Change and Industry Minister, said: "GIB has been a real success story since it was created in 2012--the world's first dedicated green investment bank, established to accelerate private-sector investment into the U.K. green economy. It has fulfilled that mission, supporting almost 100 green infrastructure projects in the U.K. so far, and attracting £3 of third-party funding for every £1 it invests. It has shown, as it set out to do, that green investment can be both green and profitable. Having demonstrated its success, the government decided to move GIB into the private sector, where it can continue its success on an even greater scale."

GIB chairman Lord Smith of Kelvin, commented on the deal: "The GIB Board supported the decision to privatise GIB as it believed that attracting new investors was the best available route to securing the long-term future of the business and its growing green impact. GIB is a highly valued institution, and commitments over its future are important to its many stakeholders. Macquarie has made significant and important commitments to the U.K. 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."

Macquarie has committed to supporting the GIB's goal of £3 billion of new investment targeted over the next three years, which Hurd said "exceeded GIB's track record of committing £3.4 billion of investment over the four and a half years since it was founded."

Defending against claims that the bank would asset strip the GIB, Daniel Wong, head of Macquarie Capital, Europe, told media: "We understand the responsibilities that come with this ownership, and we are fully committed to maintaining its green purpose as we grow the business. By combining the Green Investment Bank with the largest infrastructure investor in the world, we will create a market-leading platform dedicated to investment in the low-carbon economy in the U.K. and beyond."

Industrial Info is tracking many of the GIB's largest co-funded projects, including the Lincs, Galloper and Rampion offshore windfarms.

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