Climate Change and Industry Minister Nick Hurd has confirmed that the Green Investment Bank has been to sold to Australian investment bank Macquarie Group Ltd in a £2.3 billion deal.

A statement issued by the Department for Business, Energy & Industrial Strategy said the deal, which has the backing of the GIB’s independent board, was secured through a competitive process and will meet the objectives the government outlined when it launched the sales process last year.

Announcing the sale, Nick Hurd said:

“The Green Investment Bank has been very successful in attracting private capital to the UK’s green economy. It now makes sense to move it into the private sector where it will be free from the constraints of public sector ownership, allowing it to build further on its success.”

“This deal gives us the best of both worlds. We have secured fair value for the UK taxpayer. GIB has a well-funded new owner that is committed to the Bank’s green mission, with a track record of success in green investment and an ambition to grow the business. The UK will benefit from increased investment in our green infrastructure as we make the transition to a green economy.”

According to the statement, today’s sale to Macquarie, with a transaction value of around £2.3 billion, ensures that on completion, all taxpayer funding invested in GIB since its creation, including set-up costs, has been returned with a profit.

Lord Smith of Kelvin, chair of GIB’s independent board added that there is “a compelling logic in the world’s first green bank joining forces with the world’s largest infrastructure investor.”

GIB will now become the primary vehicle for Macquarie’s renewable energy investment in the UK and Europe, with a commitment to target £3 billion of new green infrastructure investment over the next three years, exceeding GIB’s track record of committing £3.4 billion of investment over the 4 and a half years since it was established.

Macquarie has separately published a series of commitments for the future of GIB under its ownership, including:

• maintaining GIB’s green purpose and green objectives, in line with the ‘special share’ arrangements to safeguard GIB’s green purpose which will be held by five independent trustees
• maintaining the GIB platform and brand, and to utilise the skills and experience of GIB employees in Edinburgh and London
• GIB’s Edinburgh office will be home to a new revenue generating project delivery business providing services to the green energy portfolios of GIB and Macquarie in the UK

David Fass, CEO EMEA, Macquarie Group, said:

“The addition of the Green Investment Bank, its people and expertise, strengthens Macquarie’s commitment to the green energy sector. Our combined platform will build on the legacy of the Green Investment Bank and, alongside our knowledge of energy and infrastructure, will open further opportunities in low carbon investment both in the UK and further afield. We are excited by a business that will take a leading role in the green economy using the specialist knowledge of our teams in Edinburgh and London.”

As part of the transaction, a number of GIB assets will be moved into a new offshore wind investment vehicle which will be managed by GIB, which will retain a 25% stake. Investors in this investment vehicle will be long-term institutional investors Macquarie European Infrastructure Fund 5 (MEIF5) and the Universities Superannuation Scheme (USS).

The government will continue to hold a £130 million portfolio of a small number of GIB’s existing green infrastructure investments. The assets will continue to be managed by GIB until they are sold on "in a way which returns best value for taxpayers’ money."

In the UK, Macquarie is already involved in a number of green energy projects in offshore wind, solar, waste and bioenergy and tidal energy.

The deal will support GIB’s international expansion into Europe and developing countries. As part of this, the statement says that Macquarie is committed to supporting the UK Climate Investments Initiative, a £200 million pilot joint venture between GIB and the government, established to invest in renewable energy and energy efficiency projects in developing countries.

Completion of the transaction is conditional on certain regulatory approvals including EU merger clearance and is expected to take around 2 months.

The total value of the transaction at the date of signing is £2.3 billion, made up of  the £1.7 billion transaction price and £0.6 billion estimated future funding commitments for existing GIB projects.

The total government funding provided to GIB since 2012 is £1.5 billion. The transaction price at the date of signing represents a £160 million (approximate) premium on total government funding.

Aldersgate Group calls on Macquarie to hounour commitments to invest £3bn to grow GIB activities

Reacting to today’s announcement, Nick Molho, Executive Director of the Aldersgate Group, a leading alliance of leaders from business, politics and civil society, including some of the largest businesses in the UK, said:

“The GIB has added real value to the UK green infrastructure market through a focus on funding novel green infrastructure projects and crowding in additional private sector investment. We are pleased to see that Macquarie has committed to investing £3bn over three years to grow the GIB’s activities. This is a promising start – particularly combined with its recognition of the skills and expertise of GIB employees in both London and Scotland.”

“We call on Macquarie to honour these commitments and ensure the GIB plays its part in financing the green infrastructure that will be essential to delivering the UK’s climate and environmental policy objectives in the years ahead. Going forward, we also expect the GIB to continue to engage with stakeholders and report transparently on the impact of its green investments.”

 “Now that the GIB has been fully privatised and the UK can expect to receive less funding from the European Investment Bank post Brexit, the government must ensure that it has a clear strategy in place to attract private finance to deliver its environmental and low carbon policy objectives.”

 “Projects involving new technologies and business models will be required to deliver the UK’s Clean Growth Plan and 25 Year Environment Plan. Targeted government support will be essential to make these projects attractive to private investors such as pension funds.”