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Macquarie in box-seat as government prepares for total exit of Green Investment Bank

Oliver Gill
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Richard Branson wants the government to remain involved in the Green Investment Bank (Source: Getty)

The government has ignored calls for it to retain a stake in the Green Investment Bank (GIB) after it emerged that Macquarie Bank was in the final throes of agreeing a multi-billion pound deal to purchase all of the state-owned entity.

The Australian-based infrastructure investor has been given preferred bidder status and while there had been hopes that the government may hold onto some of the equity in GIB, sources close to deal have indicated that the whole of it is to be sold.

Read more: UK bidder urges government to keep Green Investment Bank in British hands

One person who advocated the government retaining a stake in GIB was Virgin founder Sir Richard Branson.

"The UK Green Investment Bank is so important because it is a pioneering, government backed national institution that has led the way in green and low carbon finance.

"It is a flag carrier and it is only just getting started. That's why it's vital that it remains government backed and green post-privatisation, preferably with government retaining a stake.

"To risk it being broken up rather than grown would be a lost opportunity," he said.

The sale of GIB was kicked off in March and although at the time the announcement indicated that the “majority” of the shares were up for sale, it is understood that by the summer politicians had put their support behind a total sale.

Industry sources told City A.M. that after circulating information memoranda to a number of parties in a “straightforward process”, two parties were invited to provide binding bids. The other party is understood to be Sustainable Development Capital, a consortium backed by the Pension Protection Fund, Japan’s Mitsui, General Electric and insurer John Hancock.

Read more: Green bank bidder urges government to push ahead with sale post-Brexit vote

How much Macquarie has bid remains unknown but sources said that the book value of investments alone amount to £1bn. A further £900m of funding is committed to projects in the future and the winning party will also have to commit to fund £700m of further contracts each year for at least three years.

This has led to speculation of a valuation of at least £4bn on the assumption that no premium is ascribed to the deal.

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