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Foreign regimes line up as Green Investment Bank put up for sale
The government will confirm today that it intends to sell a stake in the bank which has a £3.8 billion budget to pump-prime renewables projects that find difficulty raising finance.
Advisers from Bank of America Merrill Lynch are said to be working with Whitehall officials to offload a stake in the Bank, which has backed a number of big infrastructure schemes since its launch in 2012.
It was reported in Daily Business earlier this month that the government will sell shares in the bank following a successful capital raising for a bond.
Daily Business also revealed in April that the Abu Dhabi Investment Authority, owned by the Emirate of Abu Dhabi, provided almost a third, or £150 million, of the external finance so far raised by the GIB towards a £1 billion pot for the world’s first dedicated offshore wind fund. Chinese investors are also making their first forays into backing UK renewables assets. They have backed a wind turbine project and also supported a scheme backed by property agent Savills.
Speaking at a presentation in London today, UK Business Secretary, Sajid Javid will say: “The Green Investment Bank has shown that investment in green technologies can be a profitable business. The challenge now is to build on this success.
“The bank will still be green, still be profitable, still be a market-leader in financing environmentally sound infrastructure. But free from limitations on where it can borrow money and EU regulations on state aid, the bank will be able to access a much greater volume of capital.
“This is the right decision for the Green Investment Bank, the right decision for the environment and the right decision for taxpayers.”
Chancellor George Osborne will add: “We can now begin exploring options for moving the bank into the private sector to enable it to access larger pools of capital and act more freely to invest in a broad range of green sectors.
“We want the Green Investment bank to attract more investment and we will use the money we raise to pay down the national debt and deliver lasting economic security for working people.
Responding to today’s announcement, Deputy First Minister John Swinney is urging the UK Government to commit to maintaining a public stake in the bank, and to ensure it retains its original purpose as a green bank.
He said: “Continued investment in tackling climate change and reducing our carbon footprint is essential and I urge the UK Government to provide guarantees on the future of the Green Investment Bank.
“The UK Government must retain a public stake in the bank and the UK Government must also ensure the Green Investment Bank’s headquarters and jobs are retained in Edinburgh, as it was specifically chosen to reflect Scotland’s position at the vanguard of the renewables sector.
“The original purpose of the bank, which was to accelerate the transition to a low carbon economy, must be retained. I am concerned that privatisation is seen as further evidence of the UK Government turning its back on green initiatives, particularly given their plans to cut support for onshore wind energy.
“I would also like reassurances that all of the £3.8bn funding announced for green projects in 2012 for the bank is honoured.”
The state-backed bank has been embroiled in a dispute after unveiling its 50th transaction. A taxpayer lobby group pointed to the £500,000 pay and benefits package awarded last year to its chief executive Shaun Kingsbury (pictured).
Mr Kingsbury’s deal, detailed in the annual report also published today, includes a £147,560 bonus on top of a £325,000 salary, a pension payment of £32,500 and private medical cover. Mr Kingsbury earned the bonus last year as he met 100 per cent of his targets.
Jonathan Isaby of the Taxpayers Alliance, said: “Taxpayers will be choking on their cornflakes at the size of these bonuses. It is extraordinary that, when we’re supposed to be finding savings, a taxpayer-backed institution could be paying such extraordinary salaries and returning so little to taxpayers.”
In its annual report, the bank insists it sets pay at rates needed to “ensure we attract and retain the staff we need to deliver our immediate business goals and our longer term strategic goals”.
The bank revealed that it has now invested more than £2 billion into supporting transactions worth more than £8bn.
It has reported a £100,000 profit, its first since launch in October 2012. The bank has also attracted its first private investment in the shape of institutional money. Daily Business revealed in April that Abu Dhabi Investment Authority has provided £150 million towards a bond it is raising.
The latest investment is a £2m injection into a sewage heat recovery system being installed across Scotland, the first use of the technology in Britain.
The announcement was made at GIB’s annual review event in Edinburgh. Speaking at the event, Lord Dunlop, Parliamentary Under Secretary of State for Scotland, said: “Fifty green energy infrastructure projects have now been backed by GIB, bringing in over £8bn of investment into every part of the UK.
“It’s a win for the UK economy and for our country’s energy needs. In the years ahead I am certain GIB will help many more innovative project ideas become reality, helping the UK stay at the forefront of energy infrastructure and ensuring Scotland fulfils its enormous green energy potential.”
Lord Smith of Kelvin, chairman of the bank, said: “Our 50th investment neatly sums up what we are trying to achieve at GIB. We are backing the deployment of innovative new technology across the UK to produce renewable energy, cut energy use, cut costs and improve the UK’s green performance.”