Monday, 29 May, 2017

Green Investment Bank goes private to attract capital

HeraldScotland Controversial privatisation of Edinburgh-based Green Investment Bank 'is completed'
Juana Turner | 21 April, 2017, 00:33

It has invested about £800m per year so far and the Macquarie deal could see that rise to £3bn over three years.

The deal is expected to complete in two months and conditional on certain regulatory approvals including European Union merger clearance.

The £2.3bn involves £1.7bn from Macquarie itself and another £600m partly supplied by the Universities Superannuation Scheme, a pension fund for university staff.

However, the sale, in which the Australian group will pay £2.3 billion for the bank, drew criticism yesterday.

It pledged to strengthen its commitment to Scotland by providing new opportunities for the low-carbon and financial sectors.

The Green Investment Bank will continue the collaboration between UK Climate Investments (UKCI) and the Department of Business, Energy and Industrial Strategy. "Having demonstrated its success, the government chose to move GIB into the private sector where it can continue its success on an even greater scale".

In their statement, Macquarie and its partners also said they will be launching two new ventures at the Green Investment Bank.

Once complete, the GIB will manage or supervise over £4bn of green infrastructure assets and projects, with investors including Macquarie European Infrastructure Fund 5 (MEIF5), USS, GCP Infrastructure, and the United Kingdom government.

Set up by the coalition government, the GIB owns stakes in a large portfolio of projects, including energy-efficient street lighting, wind farms and biomass plants.

The controversial move, criticised by opponents for undermining the bank's original "green" credentials, is said to meet the Government objectives of securing value for money while "ensuring its green mission, free from the constraints of public sector ownership".

Lord Smith of Kelvin, independent chair of the GIB said Macquarie's "significant and important commitments" showed it could be a good custodian of the bank, but warned it would be held accountable.

He said: "There is a compelling logic in the world's first green bank joining forces with the world's largest infrastructure investor".

The controversy over the sale surrounds the environmental reputation of Macquarie, dubbed the 'Vampire Bank' for its track record after buying Thames Valley. "We look forward to continuing our relationship with the Green Investment Bank and finding new opportunities to invest in the low carbon economy in the United Kingdom". 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.

However, the sale has suffered strong opposition from politicians and green campaigners, who point to Macquarie's alleged track record of "asset stripping" its acquisitions and investing in fossil fuel projects around the world.

The bank was launched in 2012 to channel investment into low carbon development. "Under Macquarie's custodianship, the Green Investment Bank will operate in accordance with its green goal and green objectives and in line with the "special share" arrangements".

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