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The Actuary The magazine of the Institute & Faculty of Actuaries

Green Investment Bank moves into private hands in £2.3bn deal

The UK government has today agreed to sell its Green Investment Bank (GIB) to a consortium led by the Australian-based Macquarie Group in a £2.3bn deal.

Deal could "slow our transition to a clean energy system" ©iStock
Deal could "slow our transition to a clean energy system" ©iStock

It is hoped that this will result in at least £3bn of new investment in the green economy over the next three years, surpassing the GIB’s track record of £3.4bn over the four-and-half years since it was established.

The deal will involve Macquarie paying a £1.7bn transaction price, while the UK-based pension fund Universities Superannuation Scheme will supply £600m for existing GIB projects.

“The GIB has been very successful in attracting private capital to the UK’s green economy,” Climate Change and Industry Minister, Nick Hurd, said. “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.

“GIB has a well-funded new owner that is committed to the bank’s green mission. The UK will benefit from increased investment in our green infrastructure as we make the transition to a green economy.”

Despite this optimism, the deal is surrounded in controversy after an investigation earlier this year by think tank E3G and Greenpeace UK uncovered evidence that the GIB may be preparing itself for ‘asset-stripping’.

It was found that the bank had established holding companies and multiple corporate layers within the organisation at the end of last year, action that is often synonymous with practices such as leveraging excessive debt, the stripping of assets, and tax avoidance.

Macquarie has been accused of conducting such behaviour in the UK after its acquisitions of Thames Water and the M6 Toll Road, with Greenpeace UK policy director, Dr Doug Parr, dubbing today’s deal a “disaster”.

“At a time when the government should be shoring up low-carbon industry for post-Brexit Britain, they have given away one of our key tools for advancing green technologies,” he said.

“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.

“If the government picks up its pace, the UK could be a world leader in renewable and green technology. But selling a great British success story to a controversial Australian bank known for asset-stripping is a disaster.”

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

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