A consortium led by Macquarie Group has sealed its £2.3 billion ($2.9 billion; €2.7 billion) acquisition of the Green Investment Bank nearly two years after the UK government first moved to privatise the lender.
The much-delayed process has finally concluded with pension fund Universities Superannuation Scheme and GCP Infrastructure joining the consortium led by Macquarie and the €4 billion Macquarie European Infrastructure Fund 5. The UK government said the deal represents a £160 million premium on total government funding. It could not be reached before press time to provide a more detailed breakdown of this figure.
The revamped GIB will integrate Macquarie’s existing renewable energy investments and manage about £4 billion in asset worth, targeting further investments totalling £3 billion over the next three years. These will focus on sectors ranging from the more mature wind and solar markets to tidal energy and battery storage.
Mark Dooley, Macquarie Capital’s head of infrastructure, utilities and renewables in Europe declined to state how much will be invested after the initial three-year period but explained renewables are a “huge and growing portion” of its business and that the Australian manager plans to demonstrate a “growing participation” in this market.
Commenting on the bank’s geographic remit, he also said there was no specific portion of the £3 billion that was strictly allocated to the UK, although he pointed to some of Macquarie‘s largest recent renewables investments, such as the Race Bank offshore wind farm and the Tees biomass project, which did occur in the country.
Future investments will be spread across “a diverse range of capital”, Dooley added, and in addition to the continuation of the GIB’s £1 billion offshore wind fund, a new low-carbon lending platform and a green infrastructure investment platform will be established. Macquarie said further details on these structures will be disclosed in due course.
Dooley acknowledged the “pioneering role” played by the GIB since its formation in 2012 but said in some respects, Macquarie has been “more adventurous” in its renewable energy investments than the GIB, a role it will continue to play while striving to “produce a new level of contribution to the green economy”.
The deal has attracted a barrage of criticism in recent months from parts of the UK political scene which accused Macquarie of planning to “asset-strip” the GIB. Dooley said that only about £230 million of assets will be sold, such as waste-to-energy and investments made where it was a limited partner, in which the GIB’s “job has been done”. The assets are expected to be divested in the near future. A special share will also be held by the a special purpose trustee company to ensure the GIB continues its founding mission.
The Australian group had also attracted criticism following rumours it would initiate several redundancies. While Dooley refused to confirm or deny the occurrence of some job losses, Macquarie unveiled a “new revenue-generating project delivery team” to be based in Edinburgh which will help increase the expertise provided on new-build projects.
The sale to Macquarie received a cautious welcome from the GIB’s chair Lord Smith of Kelvin, who said there was “compelling logic” in the two joining forces.
“On the basis of these commitments, we believe Macquarie can be a good owner of GIB and we support the government’s decision to sell GIB to Macquarie. We look forward to seeing these commitments from Macquarie delivered, in full, in the months and years ahead,” he added.
The transaction is expected to complete in the first half of this year.