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Macquarie pledges £3bn for Green Investment Bank as part of acquisition deal

Macquarie, the Australian infrastructure bank, will meet the UK government's previous commitment to invest at least £3 billion in green projects as part of its acquisition of the Green Investment Bank (GIB), it has announced.21 Apr 2017

The deal, which has the backing of the bank's independent board, is expected to complete in the next two months subject to regulatory approvals, including EU merger clearance, according to an announcement by climate change minister Nick Hurd.

A consortium led by Macquarie will acquire the bank for £2.3bn, which includes a transaction price of £1.7bn and a commitment to fund £600 million worth of planned projects for which funding has already been agreed by the GIB. The UK government has provided £1.5bn in funding to the GIB to date, which means it has "secured fair value for the UK taxpayer" from the deal, the minister said.

The consortium consists of Macquarie Group Ltd, the Macquarie European Infrastructure Fund 5 (MEIF5) and the Universities Superannuation Scheme (USS), which is one of the UK's largest private sector pension schemes.

"GIB has a well-funded new owner that is committed to the bank's green mission, with a track record of success in green investment and an ambition to grow the business," Hurd said. "The UK will benefit from increased investment in our green infrastructure as we make the transition to a green economy."

"The GIB has been very successful in attracting private capital to the UK's green economy. It now makes sense to move it into the private sector where it will be free from the constraints of public sector ownership, allowing it to build further on its success," he said.

Created in 2012, GIB was the world's first dedicated green investment bank. It was set up to provide finance to private sector projects which would contribute to the 'green economy', and is currently funded through a mixture of government and private sector funding.

To date, GIB has supported nearly 100 green infrastructure projects in the UK, as well as a number of projects overseas through its UK Climate Investments joint venture with the government. For every £1 it has invested, it has attracted another £3 worth of investment from third parties, according to the government.

Once the deal is finalised, GIB will become Macquarie's primary method of investment in renewable energy projects in the UK and Europe, with management or supervisory responsibility for over £4bn worth of green infrastructure assets and projects. Macquarie has committed to maintain the GIB platform and brand, as well as its existing offices in Edinburgh and London.

Post-completion, the GIB will establish three new investment vehicles: an offshore wind investment vehicle, a low carbon lending platform and a green infrastructure investment platform. It will also set up a "new revenue generating project delivery business" at the Edinburgh office, which will manage both GIB and Macquarie's UK green energy portfolios.

Daniel Wong, head of Macquarie Capital, Europe, said that the deal would "create a market leading platform dedicated to investment in the low carbon economy in the UK and beyond".

"We understand the responsibilities that come with this ownership, and we are fully committed to maintaining its green purpose as we grow the business," he said.

As previously announced, a 'special share' arrangement will be set up to safeguard the GIB's green purpose following the completion of the sale. Five independent trustees, chaired by green infrastructure investor Tushita Ranchan, will oversee the special share, giving them the power to approve or reject any proposed changes to the company's mission.