UK sells green bank amid flak over future
The British government will sell the Green Investment Bank (GIB) to a consortium led by Macquarie Bank in a deal worth £2.3bn that critics say fails to guarantee its future.
The Australian bank’s purchase of GIB, which backs green projects with public funds, had been expected since a court rejected the claim of a rival bidder earlier in April, but it has been opposed by environmental groups and some UK members of parliament.
They say Macquarie will strip the bank of its assets, potentially diluting its purpose of investing in green projects.
The government set up GIB in 2012 as a commercial venture to spur private investment in green projects. It has invested more than £2bn in projects such as offshore wind farms and waste management.
The deal comprises a £1.7bn price tag and about £600m in funding commitments for existing GIB projects. As the government has provided £1.5bn since 2012, the transaction price at the date of signing represents a £160m premium on total government funding.
The government decided to sell a majority stake in 2015, saying that would give the bank more freedom to borrow, free it from state-aid restrictions and allow it to attract more capital.
The consortium’s structure — comprising Macquarie Group, Macquarie European Infrastructure Fund 5 and Universities Superannuation Scheme — includes a “special share” arrangement whereby GIB’s mandate would be safeguarded by five independent trustees, Macquarie said.
Macquarie pledged to invest £3bn in green energy projects over the next three years.
There were no guarantees on GIB’s headcount as part of the deal but Macquarie said that it would continue to operate from offices in London and Edinburgh, managing more than £4bn in green infrastructure assets and projects.
LACKS TRANSPARENCY
Critics said that the government had failed to guarantee the future for the GIB’s green credentials and criticised it for a lack of transparency.
Selling the bank was “environmentally irresponsible, and on the eve of an election is politically dubious”, said Ed Davey, former Liberal Democrat secretary of state for energy and climate change, referring to a national election in Britain to be held on June 8.
“The government clearly hopes to avoid parliamentary scrutiny,” Davey said.
Bankers close to the deal, who did not want to be named, said there was little an investor could do with the bank except sell its assets. “The GIB loses money, with two offices it is hugely expensive and there are no synergies between the businesses it runs,” said one.
Daniel Wong, head of Macquarie Capital, Europe, said the bank would stand by its commitments. “We understand the responsibilities that come with this ownership, and we are fully committed to maintaining its green purpose as we grow the business,” Wong said.
Bank Of America Merrill Lynch advised on the sale, a spokeswoman for the UK department for business, energy and industrial strategy said. However, she declined to disclose its fee.
SELLING THE BANK IS ENVIRONMENTALLY IRRESPONSIBLE, AND ON THE EVE OF AN ELECTION POLITICALLY DUBIOUS