Macquarie to Buy U.K. Green Investment Bank for $2.9 Billion
20 April 2017 - 11:20PM
Dow Jones News
By Margot Patrick and Ben Dummett
LONDON--The U.K. government sold the Green Investment Bank PLC
for GBP2.3 billion ($2.93 billion) Thursday to a consortium led by
Australian bank Macquarie Group Ltd., in a deal that was delayed by
political opposition to the sale of the state-backed renewable
energy fund.
Macquarie, already a big investor in the U.K.'s energy
infrastructure, said it will combine its existing investments with
those of made by the Green Investment Bank. GIB, which is
essentially a fund and not a licensed bank, will oversee more than
GBP4 billion in "green" infrastructure and assets such as wind
farms, Macquarie said.
Investors including a Macquarie infrastructure fund, the U.K.'s
Universities Superannuation Scheme and the U.K. government will
invest in some of the projects, Macquarie said.
Nick Hurd, U.K. climate change and industry minister, said the
government will make a profit of around GBP160 million on the sale,
after providing GBP1.5 billion to fund GIB since 2012. The headline
value of GBP2.3 billion includes GBP600 million the government had
committed to the bank but now won't have to fund.
In a written statement to Parliament, Mr. Hurd said Macquarie
will target GBP3 billion in new investments for GIB over the next
three years, more than the government had been contributing.
The plan to sell GIB was announced in March 2016, 3 1/2 years.
The fund was set up in November 2012 as a vehicle to pump
government money into environmentally-conscious projects.
But the sale was held up by political wrangling, though, as some
government officials raised concerns that GIB could be sold too
cheaply or change its green mission. A rival bidder to Macquarie,
Sustainable Development Capital LLC, made a legal attempt to block
Macquarie's winning offer, saying taxpayers could get a better
deal, but failed last month in getting a court to intervene.
No one from SDCL was immediately available to comment
Thursday.
The sale comes at a time when governments globally face
significant costs to replace aging infrastructure and curb their
carbon footprints. Infrastructure investment across transport,
energy and water systems is estimated to total $93 trillion over
the next 15 years to achieve these two goals, the OECD said in a
December 2015 report on Green Investment Banks, which also exist in
several U.S. states and countries including Japan and
Australia.
At the same time, pension funds and other big infrastructure
funds are increasingly targeting renewable projects, taking
advantage of the growing demand for investment to fund these
often-expensive projects.
For the fiscal year ended March 31, 2016, the U.K.'s GIB made a
10% return, investing a total of GBP770 million in 30 projects
including acquiring a 25% equity stake in the Galloper offshore
wind farm off the coast of Suffolk in eastern England, and a
project in Northern Ireland that produces energy from waste.
To appease concerns that the Green Investment Bank might stray
from its environmentally-friendly mandate, a special share will be
held by a committee of independent trustees that could block any
attempt by the private owner's to change the green purposes of the
fund.
Macquarie said GIB will become its platform for investing in
green infrastructure in the U.K. and Europe. Existing investments
include the building of the world's largest bioenergy plant in
northeast England, and the installation of more energy efficient
street lights in the English city of Nottingham.
Write to Margot Patrick at margot.patrick@wsj.com and Ben
Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
April 20, 2017 09:05 ET (13:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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