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Green Investment Bank to float in London as sale plans 'torn up'

By Bianca Boorer

Date: Monday 23 Jan 2017

Green Investment Bank to float in London as sale plans 'torn up'

(ShareCast News) - The government will float the Green Investment Bank on the London Stock Exchange as it backtracked on its original privatisation plan for a deal with Australian investment bank Macquarie.
Talks are underway for a £3.8bn initial public offer for the bank's shares, after reports surfaced about Macquarie's plans to asset strip the Green Bank led several MPs to try and block the sale.

The Edinburgh-based bank, which was founded by the then-business secretary Vince Cable in 2012 and uses public funds to encourage the development of green buildings and energy infrastructure, was all set to be sold to preferred bidder Macquarie in October, until the The Sunday Times revealed that 'Vampire Kangaroo' had already started taking steps to strip assets from the bank.

The Aussie lender reportedly held talks with potential suitors for the bank's wind farms and biomass projects including John Laing Environmental Assets Group, Equitix and Universities Superannuation Scheme.

In light of the news, business secretary Greg Clark was on Sunday reported to be ready to tear up the deal and look to push for an IPO instead.

The bank employs 125 employees and has invested over £2.7bn in 80 wind farms, power plants and street-lighting systems in the UK.

Controversy has surrounding the Macquarie deal, with a group of Scottish MPs led by Michelle Thomsom planning to lead an attempt to block the takeover in parliament this week.

"It is vital that the UK government provides greater transparency over its plans to privatise the Green Investment Bank," said Callum McCaig MP, the SNP's spokesman for business, energy and industrial strategy.

Another bidder for the Green Bank, environmentally focused investment bank SDCL, has said its bid would be a better option than an IPO.

SDCL, which manages many of GIB's finances, has asked ministers to reconsider its offer in light of the reports on Macquarie.

Chief executive of SDCL Jonathan Maxwell said at a House of Commons debate last Wednesday that his bid could allow the taxpayer to share in the profits of any future listing rather than rushing into a flotation now.

"An IPO should be feasible and attractive once the GIB's portfolio has been built out, remaining capital expenditures have been invested, earnings have increased and cost efficiencies through economies of scale have been achieved over the next two to three years," he said.

SDCL, which is backed by investors like the Pension protection Fund, Mitsui, the Japanese bank and General Electric, would however offer the government the option of keeping a significant stake in the GIB.

If a flotation is completed anywhere near £4bn, the Green Bank will not only top Royal Mail but also be the largest for over two decades, eclipsing the £1.3bn IPO of defence technology firm Qinetiq in 2005 and the £2bn flotation of Railtrack in 1995.

The valuation of the Green Investment Bank will prove a sensitive subject after the considerable criticism levied at the multi-billion bargain enjoyed by hedge funds backing Royal Mail, which jumped 38% on its first day of trading, and the rash of privatisations by the Thatcher and Major governments.


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