Published: Thu, April 20, 2017
Economy | By Annette Adams

Macquarie buys UK's Green bank for $A3.9b

Macquarie buys UK's Green bank for $A3.9b

The UK's Green Investment Bank (GIB), set up in 2012 by former Chancellor George Osborne to fund renewable energy and low carbon projects, has been sold to Australian investment bank Macquarie for £2.3bn ($2.95bn).

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.

After a drawn-out process, in which the deal has faced strong political opposition and a legal challenge, the government and the consortium, made up of Macquarie, the Macquarie European Infrastructure Fund 5 and the Universities Superannuation Scheme, confirmed the sale this morning.

"The deal raises questions about whether the bank's valuable green mission can be maintained by a private company like Macquarie".

"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 United Kingdom and beyond".

The deal includes a 1.7 billion pound transaction price and 600 million pounds of estimated future funding for existing GIB projects, it added.

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.

A new asset management division is being set up in the Scottish capital. "Macquarie will bring all of this to GIB, along with its own impressive track record of green investments". "The UK will benefit from increased investment in our green infrastructure as we make the transition to a green economy". "We have secured fair value for the United Kingdom taxpayer".

Critics have also argued it is the wrong time to sell the bank, particularly in light of the government's commitments to low-carbon infrastructure in its flagship Industrial Strategy.

To protect the bank's green mission after privatisation, the government has established a "special share", held by a group of independent trustees, who will have the final say over any attempt to change the bank's core goal.

"We understand the responsibilities that come with this ownership, and we are fully committed to maintaining its green objective as we grow the business". We look forward to seeing these commitments from Macquarie delivered, in full, in the months and years ahead.

Responding to confirmation of the sale, a statement by the EA read: "The GIB is a unique institution, and the largest green energy investor in Europe".

Macquarie has previously refused to comment directly on the asset-stripping claim, but issued a statement saying it was one of the world's most committed investors in renewable energy, having invested or arranged £8.5bn of investment since 2010.

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