The process of transferring the Green Investment Bank (GIB) into private ownership will begin today (3 March 2016) as the government invites private sector investors to register their interest, Business Secretary Sajid Javid has announced.
A transfer to the private sector will allow the GIB to maximise investment into green energy projects by attracting greater private sector investment, which has so far been constrained by rules governing how public bodies can raise capital.
The launch of the sale comes as GIB announced it has supported a new £10 million investment to acquire and expand the renewable energy plant and district heating network in Wick, on the far north coast of Scotland.
Business Secretary Sajid Javid said:
The Green Investment Bank is a world first, and it is a sign of its success that the idea is being copied globally. Having proven the business model works, we now want it to make an even greater impact.
The special share structure protects the bank’s green mission meaning the Green Investment Bank will continue to do exactly what it says on the tin.
Since being established in 2012, GIB has helped mobilise a total of £10.6 billion of investment into almost 70 projects covering sectors including offshore wind, energy efficiency and waste and bio energy. Moving GIB into private ownership will give it access to much more capital than if it remained in government hands, meaning it can increase its investments and have a bigger impact.
The most recent investment has seen £10 million funding to upgrade the infrastructure at the energy plant and district heating network in Wick, and expand the district heating system with the aim of nearly doubling the network. This will save 3,000 tonnes CO2e (carbon dioxide equivalent) each year, comparable to removing 1,300 cars from the road. GIB has provided almost half of the total investment.
Lord Smith of Kelvin, independent chair of GIB said:
Attracting new investors is vital if GIB is to fund its ambitious plans to double the size of its business, expand into new parts of the UK green economy and deliver a growing green impact.
I am confident that the sale process will provide GIB with good new owners who will support GIB’s continued growth and leadership role in the global green economy long into the future.
This launch, and the wider plans to introduce new capital and new owners to GIB, has the full support of GIB’s independent Board.
Shaun Kingsbury, chief executive of GIB, said:
In 3 years the team at GIB have built a special business that is green, profitable and admired around the world. GIB is an exciting investment opportunity, providing new investors with predictable returns and significant growth opportunities. The business is perfectly placed to play a leading role as the world moves decisively towards an unprecedented programme of green infrastructure investment.
The government is now inviting Expressions of Interest from bidders to be evaluated as part of the first phase of the sale process. This will be followed by a bidding process later this year.
Notes to editors:
UK Green Investment Bank plc (GIB) was launched in November 2012. With capital from the UK government, it is the first bank of its kind in the world. It is a “for profit” bank, whose mission is to accelerate the UK’s transition to a greener economy, and to create an enduring institution, operating independently of government.
Due to the remote location, homes and businesses in Wick generate heat predominantly by heating oil or liquid petroleum gas (LPG) or via a local gas grid fuelled by liquefied natural gas tankered at the roadside. A 3.5 MW combined heat and power (CHP) plant has been providing heat and power to the Pulteney Distillery, and heat to local customers including Caithness General Hospital, Wick Assembly Rooms, residences owned by Cairn Housing Association as well as around 200 homes. By March 2017, the upgraded network will incorporate approximately an additional 150 premises.
The Bidder Information Form contains a number of questions to which interested parties will need to respond. The Secretary of State and his financial advisers, Bank of America Merrill Lynch (“BofAML”), will use the responses received to evaluate the capacity of interested parties to participate in the sale process.
Approved parties will then be required to execute a Confidentiality Agreement before being invited to participate in the first round of bidding.
GIB is wholly owned by HM Government. The Company is not authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority. A wholly owned subsidiary UK Green Investment Bank Financial Services Limited, is authorised and regulated by the Financial Conduct Authority.