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Green Investment Bank privatisation faces judicial challenge

By: Tom Russell 01/03/2017 4C Offshore

General Windfarms

Sustainable Development Capital (SDC) has gone to the the High Court to challenge the UK Government's decision to select Australian investment bank Macquarie as preferred bidder for the privatisation of the Green Investment Bank (GIB).

SDC is challenging the £2bn deal on the grounds that the bidding process was not carried out as stipulated by criteria laid out by the Government in March 2016.

The privatisation will involve both the sale of existing shares owned by the UK Government and also the commitment of additional capital for the GIB by Macquarie. Approximately £1bn (€1.11bn) of the value represents the equity to be paid to the UK Government with a further £900m in committed funding. If successful Macquarie would also be required to commit £700m of lending every year for the next three years.

Reports surfaced in October 2016 that Macquarie had been selected as preferred bidder and an announcement of the sale was expected in January 2017. However the deal is facing strong political opposition and no official announcement of the sale has been made to date.

Concerns are being raised about Macquarie's plans to off-load whole assets and stakes in renewable projects following the finalisation of the deal. Offshore wind farms make up a large chunk of the bank's portfolio and are expected to be part of any sales. In December 2016 two members of the GIB's investment management team dedicated to offshore wind resigned and were recruited by Enbridge Inc., a major Canadian energy company.

Politicians have voiced doubts over Macquire's intentions to continue the GIB's pledge to support environmentally friendly infrastructure and energy projects. Documents surfaced last week that the Bank's independent trustees have limited capabilities to enforce its green purposes or veto investments before they are made. Concerns have arisen that once the GIB deal is finalised a door is opened for the new investor to invest in fossil fuel related projects such as fracking.

The GIB was created by the UK Government with £3.8bn of state funding, its sole shareholder, to provide capital to invest in renewable projects across the UK and mobilise other private sector capital into the UK’s green economy. The GIB has invested in offshore wind, energy efficiency, waste and bioenergy, and onshore renewables, backing large projects with a capital expenditure of more than £1bn and small projects of £2m.

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Green Investment Bank privatisation faces judicial challenge

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