UK Government Puts Green Investment Bank on the Block

The UK government has today launched the UK Green Investment Bank plc (GIB) sale process to move the bank into the private sector.

The Lynn and Inner Dowsing OWFs; Image source: GIB

The transaction will involve both the sale of existing shares owned by the government and also the commitment of additional capital for GIB by new investors.

The GIB sale process will involve two separate rounds. In the first round, bidders will be asked to submit non-binding initial bids based on an Information Memorandum containing detailed information about the business and its forward plans.

In the second round, selected bidders will be provided with additional information to enable them to carry out due diligence on GIB, concluding with the submission of formal, final and binding offers.

The government will today publish details in a report to the UK Parliament and the devolved administrations. GIB’s ”green purposes” will continue to be independently protected through the creation of a special share. The intentions of potential investors to commit to and protect GIB’s green values will be taken into account in the government’s assessment of bids.

Announcing the intention to sell GIB in his speech at the Lord Mayor’s Trade and Industry Dinner at Mansion House, UK Business Secretary Sajid Javid said: ”The Green Investment Bank was a world first, and it is a sign of its success that the idea is being copied across the world. Having proven the business model works, we now want to make an even greater impact. The challenge presented by climate change is clear – it is imperative we mobilise more funding for green energy projects. 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.”

The Edinburgh-headquartered GIB is a major investor in green infrastructure projects. In the three years since it was launched, GIB has invested GBP 1.3bn in the UK’s offshore wind sector, backing eight projects with a total capacity of 2.9 GW of renewable power. The bank invests directly in projects in the construction phase and in operational offshore wind farms, allowing developers to recycle their capital.

The bank has also established a third party asset management business with over GBP 800 million raised for the UK GIB Offshore Wind Fund, the UK’s largest renewable energy fund. GIB Offshore Wind Fund’s latest investment was the acquisition of the 194MW Lynn and Inner Dowsing offshore wind farms from Centrica in February 2016.

”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,” Lord Smith of Kelvin, Independent Chair of GIB, said.

”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.”