Macquarie consortium acquires UK Green Investment Bank and hydro holdings

The British government has sold the UK Green Investment Bank Ltd. (GIB) to a consortium led by Macquarie, an Australian-based bank, for £2.3 billion ($2.96 billion).

The UK’s Department for Business, Energy & Industrial Strategy confirmed the sale earlier this month.

The consortium includes Macquarie Group Ltd., Macquarie European Infrastructure Fund 5 and Universities Superannuation Scheme. GIB will now operate under the name Green Investment Group (GIG).

Macquarie Capital, the advisory, capital markets and principal investment arm of Macquarie Group combined with GIB have investment in the UK across a range of technologies, including tidal energy, energy storage and other renewables.

According to the UK, “The government decided that moving [GIB] into the private sector now would free it from the constraints of public sector ownership allowing it to increase investment in our green infrastructure as we transition to a green economy. GIB’s independent Board of Directors supported the government’s decision to sell the business to Macquarie.”

The UK government also said it will continue to hold an interest in a portfolio of a small number of GIB’s existing green infrastructure investments. These assets will continue to be managed by GIB until they can be sold on in a way that returns best value for taxpayer’s money.

Additional Macquarie acquisitions this month

Earlier this week, a consortium of global institutional investors led by Macquarie Infrastructure and Real Assets (MIRA) completed an agreement with Energetickའa průmyslovའholding a.s. (EPH) on the sale of a 31% stake in EP Infrastructure a.s. (EPIF).

EPH, which owns EPIF, is comprised of over 50 companies structured in two pillars: EPIF and EP Power Europe. EPH owns Czech utility Slovenské elektrà¡rne (SE), which operates 31 hydroelectric plants.

EPH is owned by financier Patrik Tkac, EPH Chairman Daniel Kretinsky and private equity structures of Czech-Slovak financial group J&T. The remaining 69% of EPIF remains with EPH.

The MIRA-managed consortium is led by Macquarie European Infrastructure Fund 5 and includes global institutional investors.

In 2016, after EPH sold a minority stake in EPIF, Kretinsky said, “We have created a leader in energy infrastructure in Central Europe, bringing together some of the strongest EPH assets in one integrated group.”

The Supreme Court of the Slovak Republic in June 2016 upheld a lower court’s decision, the Regional Court in Bratislava, that invalidated the contract for operation of the 720-MW Gabcikovo hydropower plant in Slovakia, which was signed between SE and privately owned utility Vodohospodarska Vystavba S.P.

GIBs

According to the United Nations Organization for Economic Co-operation and Development (OECD), in 2015 about 13 national and sub-national governments have created public green GIBs and GIB-like entities.

Many of the investments GIBs mobilize, according to OECD, are undertaken in urban areas where 54% of the world’s population lived in 2014 and where 66% is projected to live by 2050. Some of the established GIBs dealing with renewables make specific mention of their involvement with hydro, which include the following:

  • Japan — Green Finance Organization supports small-scale hydro and renewals of mid-sized hydro;
  • Austrailia — Clean Energy Finance Corporation Renewable Energy supports tidal and other renewable energy; and
  • USA — New York Green Bank has as its mission to “transform financing markets” and its list of potential target technologies for investment, amongst other renewables, includes ocean and tidal power.

OECD GIB policy perspectives indicate a GIB is a public entity established specifically to facilitate private investment into domestic low-carbon, climate-resilient infrastructure. 

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Gregory B. Poindexter formerly was an associate editor for HydroWorld.com.

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