More scrutiny for £2bn Green Bank sale

Robert Smith

Updated — The proposed sale of the UK government’s Edinburgh-based Green Investment Bank (GIB) for up to £2 billion is facing increased political scrutiny following allegations that the privatisation process could become an “asset stripping exercise with significant financial rewards for any new owner.”

The Scottish Government’s economy secretary Keith Brown has urged the UK Government to update the Scottish Government on the progress of the bank’s privatisation and to reconfirm a previous commitment to protect the 50 jobs supported at the bank’s Edinburgh headquarters.

Former UK business secretary Vince Cable warned the UK government risks “effectively destroying” the GIB as an institution if it presses ahead with its plan to sell the bank into the private sector.

Cable, who launched the bank in 2012 during his time as business secretary in the coalition UK government, told BusinessGreen he is concerned the GIB could be broken up after a sale and lose its green mission to fund renewable energy projects.

“I think [the sale] effectively destroys it as an institution, which was doing very good work,” said Cable. “It was producing a return, it was very professionally run, and the [sale] process doesn’t seem to me to have taken into account its wider social purpose.”

Clive Lewis, Labour’s shadow secretary of state for BEIS (business, energy and industrial strategy), told BusinessGreen the GIB is at risk of being “broken up, sold off and its green commitments forgotten.”

Green Party MP Caroline Lucas has submitted Parliamentary Questions asking the Department of BEIS to outline the conditions the UK government plans to place on the sale of the bank and explain how they will protect its green mission.

UK government minister Nick Hurd replied: “The sale process is commercially confidential and government will not disclose details of our engagement with bidders.

“The government has committed to lay a report before parliament on the sale of the Green Investment Bank, as soon as reasonably practicable after a disposal of shares has taken place, and this is also a requirement in the Enterprise Act 2016.”

Former Conservative climate change minister Gregory Barker tweeted: “Am increasingly alarmed that sale of GIB will now see it broken up so much it threatens its future as enduring institution.”

Up to three groups had been expected to bid for GIB.

Bloomberg News reported Macquarie Group Ltd was considering a bid either on its own or with other investors and Sustainable Development Capital LLP was leading another group.

GIB was set up in 2012 and is the world’s first bank dedicated to green infrastructure investments.

Its chairman is veteran Scottish financier Robert Smith, who is also chairman of Dundee-based closed end fund specialist Alliance Trust.

The Scottish Government’s Brown has written to the UK Government over concerns about the progress of the GIB privatisation.

The Scottish Government said Brown expressed concerns over reports that the completion of the transaction process “will result in the complete break-up of the bank’s current portfolio, and may result in an asset stripping exercise with significant financial rewards for any new owner.”

Brown also requested that a previous commitment to protect the 50 jobs supported at the bank’s Edinburgh headquarters was reconfirmed.

Brown said: “I am extremely disappointed with the approach that the UK government has adopted around the sale of the Green Investment Bank, which has been characterised by an unacceptable lack of communication throughout.

“In 2015 the then Secretary of State for Business Innovation and Skills gave assurances that he would work to protect the bank’s green purpose, as well as continuing to headquarter the bank in Edinburgh, not only supporting 50 skilled jobs for Scotland’s capital, but also recognising Scotland’s place at the vanguard of the UK’s green economy.

“Since then I have been made aware of some concerning reports that the privatisation has become more of a fragmentation or asset stripping process which runs counter to the previous commitments made to the Scottish Government.

“This is deeply troubling considering the vital role that the bank serves in our green economy.

“The veiled manner in which privatisation is taking place offers no reassurance that the future of the Green Investment Bank is being modelled in line with the reassurances offered to the Scottish Government in 2015 which state that the original purpose of the bank would be maintained.

“The UK Government should update the Scottish Government on the progress of privatisation and provide clarification that previous assurances are being adhered to.

“I also want to be absolutely clear that the Scottish Government will voice any concerns and continue to apply pressure to ensure that our objectives remain a priority as part of the privatisation process.”

more to follow …