The Green Investment Bank is the first of its kind in the world — it is government-owned and loans money for solely environmentally-friendly infrastructure projects.
Now the British government is planning to sell some of it off. GIB was launched in 2012.
“The Green Investment Bank has shown that investment in green technologies can be a profitable business. The challenge now is to build on this success.
“The bank will still be green, still be profitable, still be a market-leader in financing environmentally sound infrastructure. But free from limitations on where it can borrow money and EU regulations on state aid, the bank will be able to access a much greater volume of capital.
“This is the right decision for the Green Investment Bank, the right decision for the environment and the right decision for taxpayers.”
Javid’s department has hired Bank of America Merrill Lynch to take the lead on the stake sale. It is not known how much will be sold off but the Financial Times reported that the government could make £1 billion ($US1.6 billion) from a 70% stake sale.
GIB announced today that since over the past year, it has backed 22 new green energy projects, with £723 million ($US1.1 billion) of its own capital to projects with a total value of £2.5 billion ($US3.9 billion).
Since 2012, it has committed £2 billion ($US3.1 billion) to 50 UK projects worth over £8 billion ($US12.6 billion).
Once all these projects are built, it is tipped to produce enough renewable energy to power the electricity needs of 4.2 million UK homes each year.
The bank said for every or every £1 invested by GIB, it attracts £3 from other private sector investors. During the last half of its financial year, it operated profitably for the first time, which meant profits reached a “modest” £100 million ($US157.1 million) for the full year.
Meanwhile, Britain’s main opposition the Labour Party is seriously unhappy about the decision.
“The Green Investment Bank was initiated under the last Labour government to support and attract funding to projects which would not otherwise receive finance, helping Britain move towards a low-carbon economy,” said Chuka Umunna, Shadow Business Secretary. “Since it began operating in 2012 it has made a significant contribution, investing billions of pounds in green projects. But because the government has refused to give the GIB the borrowing powers it needs, it has never been allowed to reach its full potential.”
The Green Party also slammed the sell-off.
“[The sell-off] is rash and irresponsible,” said Caroline Lucas, Green MP in a statement. “The government should keep at least a majority stake in the GIB to ensure investor confidence is upheld and the commitment to low-carbon lending remains.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.