Investments  

Gov’t eyes Green Investment Bank privatisation

Gov’t eyes Green Investment Bank privatisation

The government is exploring options to privatise the Green Investment Bank, with the money raised being used to reduce the national debt.

The bank was set up in 2012 to support investment in the UK’s green infrastructure, following a 2010 Conservative manifesto pledge.

According to FTAdviser sister publication the Financial Times, the government pledged £3.8bn of funding in 2013, meaning it owns the bank entirely.

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During the 2014 to 2015 financial year, GIB began operating profitably, with profit before tax of over £3m in the second half of the year and a modest full year profit of £100,000.

Chancellor George Osborne said the bank has gone from “strength to strength” since inception, committing £2bn and helping to finance 50 green infrastructure projects, including ‘first-of-a-kind’ projects that use innovative technologies in waste management and offshore wind power.

“That is why 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,” he stated.

“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.”

Shaun Kingsbury, GIB chief executive, added that it was always part of the plan to raise additional capital from the private sector to supplement government funding.

He explained that there are a range of funding options, including maintained investment current share capital from the government, recycling of that capital and raising new capital from equity investors.

“Attracting those investors is a key strategic step for GIB. It will not only ensure that we have the capital to grow but it will allow us to borrow and to invest in a broader range of green infrastructure projects,” said Mr Kingsbury.

“We have appointed advisers to support us on this. We are in the early stages of this work and do not expect to make an announcement in the short term.”

Speaking at GIB’s annual review later today (25 June), UK business secretary Sajid Javid is expected to say that the bank should be free from limitations on where it can borrow money.

“This is the right decision for the Green Investment Bank, the right decision for the environment and the right decision for taxpayers.”

donia.o’loughlin@ft.com