Green Investment Bank sold to Macquarie for £2.3bn

New owners reaffirm commitment to lead £3 billion of investment over the next three years

The government has completed the sale of the Green Investment Bank for £2.3 billion to a consortium of investors led by Macquarie.

The new owners have reaffrimed a committed to meet the bank’s target of leading £3 billion of investment in green energy projects over the next three years.

The Macquarie-led consortium was announced as the buyer back in April following the completion of a competitive sales process which began in March 2016.

The government said privatisation will allow the bank to expand its support for green energy projects by giving it access to larger pools of capital. To enable overseas investments, the company will henceforth be known as the Green Investment Group (GIG).

“We led the world in setting up the Green Investment Bank and it is now being copied by others,” said climate change and industry minister Claire Perry.

“Now that it’s in the private sector, it will be able to operate on an international level to tackle the global challenge of climate change. It is also perfectly placed to help us finance green initiatives for our clean growth plan and realise the commitments set out in the Paris agreement.”

Daniel Wong, head of Macquarie Capital Europe, said: “Combined with Macquarie’s resources as the world’s largest infrastructure investor, the Green Investment Group will be uniquely placed to continue in its pioneering role in the world’s transition to a low-carbon economy.”

The sale has faced fierce and widespread criticism due to fears that the bank was being sold for too little; could be allowed to abandon its environmental mission; and could be broken up and stripped of its assets.

Business Secretary Sajid Javid confirmed in February time that a “special share” would be created which would enable the holder – a government-formed Green Purposes Company – to reject any changes to the banks’ green mission. The special share arrangement has now come into effect.  

GIG will be led by Edward Northam who joined the Green Investment Bank in 2012 and most recently served as its head of investment banking. “This new chapter provides the best of both worlds: a deep sector specialism coupled with access to a global platform and deep pools of capital,” said Northam.

“We have ambitious plans for the growth of the Green Investment Group, starting with a continuation of our role as a leading investor in the UK and building on that through an additional international focus.” 

As well as directly paying the government £1.75 billion for the bank, the Macquarie-led consortium also took on £500 million of outstanding commitments to bring the total value of the deal to around £2.3 billion. The government said all taxpayer funding has now been returned with gain of around £186 million. 

The government will continue to hold an interest in a small number of the bank’s existing investments, although these will eventually be sold off when market conditions are favourable. A report on the privatisation of the bank will be issued to Parliament in the autumn.

Commenting on the sale, Renewable Energy Association head of policy James Court said the new owners of the bank must continue its focus on providing finance to early-stage innovative technologies:

“Deep geothermal is a good example of new technologies that the bank can support. Britain has plentiful geothermal resources and the potential to develop an industry, particularly in Cornwall, but a lack of historic projects means that the existing investor community hesitates to provide funding.

“We expect that the on-going Government [contracts for difference] auction for ‘less developed’ renewable energy technologies, which closes today, will highlight the amazing diversity and cost reductions of new systems that are coming onto the market. Support such as that the bank can provide is vital if emerging technologies are to deliver on their potential for jobs and lower energy costs.”