UK Green Investment Bank Privatisation Process to Launch

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The UK Government (the Government) has confirmed it will launch the UK Green Investment Bank plc (GIB) sale process

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 Government will tomorrow publish details in a report to Parliament and the Devolved Administrations.

Key attributes of GIB include:

  • A leading green investor: In the three years since it was launched GIB has committed £2.6bn of capital to almost 70 green infrastructure projects across the UK. It is the most active investor in UK green infrastructure with leading market share and a clearly identified near-term UK pipeline of new transactions. GIB is well placed to play a leading role in a large and growing global market with compelling long term dynamics.
  • A well-established investment platform: GIB’s existing portfolio of assets is performing strongly and is well diversified across different financial products, sectors, structures, technologies and counter-parties. GIB has a proven track record of enhancing the value of assets under its management.
  • A strong green commitment: 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.
  • An innovative investor: GIB’s position in the market as an expert and highly flexible investor offering a wide range of financial solutions has created a unique market proposition. This has resulted in lower costs, strong partnership relationships and a balanced and well-diversified portfolio delivering attractive and sustainable investment returns.
  • A profitable business: GIB’s current asset base offers investment returns producing a portfolio-wide forecast Internal Rate of Return of over 10%. The business has strong and stable projected cash flow generation, and costs that are below or in line with industry benchmarks for a business of this kind.
  • An expert team: More than 85 investment specialists in a wider team of 129 staff located at GIB’s headquarters in Edinburgh and an office in London.
  • A platform for growth:

o    GIB is well placed to expand into new sectors of the UK green economy including areas like heat networks, low carbon transport and energy storage.

o    GIB has established strong relationships with key strategic participants in the global green infrastructure market spanning technology providers, asset operators and co-investors.

o    GIB has already established a third party asset management business with over £800m raised for the UK GIB Offshore Wind Fund, the UK’s largest renewable energy fund.

o    GIB is also working overseas through a £200m international joint venture with the UK’s Department for Energy and Climate Change.

Lord Smith of Kelvin, independent chair of GIB, 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.”

Shaun Kingsbury, chief executive of GIB, 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.”

Announcing the intention to sell GIB in his speech at the Lord Mayor’s Trade and Industry Dinner at Mansion House, 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.”