UK Green Invest Bank: The World’s First Green Investment Bank, Goes Private

By Staff Writer

Mar 03, 2016 08:06 AM EST

Sajid Javid, the UK Business Secretary, has announced on Wednesday night that the government has initiated an auction selling UK Green Investment Bank Plc (GIB). The sell-off has been announced at the lord mayor's dinner in Mansion House, London. The deal is expected to bring £4.2 billion ($5.9 billion) to the public exchequer.

The government expects to complete the deal by the end of this year. The bidding process, seeking to sell 75% to 100% of the institution, is going to be started on Thursday, reports Bloomberg citing an interview with Shaun Kingsbury, chief executive officer of the GIB, as the source.

Shaun has also admitted seeking new owners to invest as much as £800 million a year for the next three years. The bank currently manages assets valuing around £1.8 billion. Thus the value of required investment for the bank stands at £4.2 billion.

The world's first bank dedicated to green infrastructure investments has started its journey in 2012. The sale aims to provide greater access to funding for the bank. GIB is now inviting bidders to make their interest known and a full bidding process is expected to follow later this year, reports Reuters citing a government statement as the source.

Mobilization of more funds for the green energy projects is essential to fight challenges presented by climate change. The special share structure directing reduced government stake, is expected to protect bank's green mission to continue offering investments in green projects, reports The Guardian quoting Sajid Javid.

Critics have expressed optimism over government's views while warning that the bank may switch to funding more lucrative scheme abroad in the future. Shaun has confirmed receipt expressions of interest from private equity investors, sovereign wealth funds and large foreign investment banks.

However, the bank has intended to borrow money instead of using public funds aiming to expand overseas, cites Shaun. He has also admitted considering for funding wind farms in Germany and Holland or even renewable power projects in India.

Environmental Audit Committee has recommended the government keeping a minority stake in GIB to ensure the bank's objectives as well as its long-term strength. The recommendation has been made following signing the Paris climate change agreement late last year.

GIB has 129 staffs at its Edinburgh and London offices. It has been expected producing internal rate of return of more than 10%. The business has strong and stable projected cash flow generation and costs are below or in line with industry benchmarks for a business of this kind, suggest the bank's financial documents.

Sajid Javid, the UK Business Minister has confirmed initiating bidding process for selling majority stake of Green Investment Bank. Mobilization of more funds for the green energy projects is essential to fight challenges presented by climate change. Privatization of GIB will allow it to continue investing more in green infrastructure projects across the globe.

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics