Green Investment Bank sell-off launched by UK government

The process of privatising the Edinburgh-based Green Investment Bank (GIB) will begin today, Business Secretary Sajid Javid has announced.

GIB chairman Lord Smith said attracting new investors was 'vital' for GIB to achieve its goals

In a speech last night at the Lord Mayor’s Trade and Industry Dinner at the Mansion House in London, Javid said the move would involve the sale of existing shares owned by the UK government and the injection of additional capital by new investors.

He said the privatisation of the bank would enable GIB to “maximise investment” into green energy projects by attracting more private sector investment, which has so far been constrained by rules governing how public bodies can raise capital.

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Javid said: “The Green Investment Bank is a world first, and it is a sign of its success that the idea is being copied globally. Having proven the business model works, we now want it to make an even greater impact.

“The special share structure protects the bank’s green mission, meaning the Green Investment Bank will continue to do exactly what it says on the tin.”

It was announced last month that GIB was creating a “special share” that will be held by a separate company, independent of both the lender and the UK government. This means that GIB would not be able to make changes to its “green mission” unless this special shareholder gave its consent.

Since it was set up in 2012, GIB has helped deliver £10.6 billion of investment into almost 70 projects, covering sectors such as offshore wind, energy efficiency and waste.

Its most recent deal saw the bank team up with infrastructure investor Equitix on the £9.8 million acquisition of Ignis Biomass, operator of a renewable energy plant and district heating scheme in Wick.

Plans to move GIB into private hands were first unveiled in June, when Chancellor George Osborne said a privatisation would help it “access larger pools of capital and act more freely to invest in a broad range of green sectors”.

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GIB chairman Lord Smith of Kelvin said: “Attracting new investors is vital if GIB is to fund its ambitious plans to double the size of its business, expand into new parts of the UK green economy and deliver a growing green impact.

“I am confident that the sale process will provide GIB with good new owners who will support GIB’s continued growth and leadership role in the global green economy long into the future. This launch, and the wider plans to introduce new capital and new owners to GIB, has the full support of GIB’s independent board.”

More details about the sell-off will be published by the UK government in a report to the Westminster and Holyrood parliaments. The first phase of the privatisation process will see potential bidders invited to submit expressions of interest, followed by a bidding process later this year.

GIB chief executive Shaun Kingsbury said: “In three years the team at GIB have built a special business that is green, profitable and admired around the world. GIB is an exciting investment opportunity, providing new investors with predictable returns and significant growth opportunities.

“The business is perfectly placed to play a leading role as the world moves decisively towards an unprecedented programme of green infrastructure investment.”