The sale of the Green Investment Bank (GIB) has stalled amid speculation that the government fears ending up with egg on its face from a botched privatisation.
The GIB, set up by former business secretary Vince Cable to mobilise private sector capital into the renewables sector, is seeking a new owner to boost investment into green technologies from wind farms to biomass. The Edinburgh-based bank has enjoyed some success so far, ploughing nearly £3bn into a diverse range of UK projects. But it needs more capital.
Australian bank Macquarie has been selected as preferred bidder for the bank but the sale has not been finalised – despite expectations that it would get over the line late last year.
Macquarie has a strong investment track record in the UK, but something is clearly amiss with the GIB sale despite government assertions that all is going to plan. A blizzard of negative headlines over Macquarie’s alleged plans to break up the green bank cannot have helped.
Ministers have a duty of care to get the best value for the taxpayer, who ultimately owns the bank. Not only would a duff deal leave the man on the street shortchanged, but the government, with lofty ambitions for its brand new industrial strategy, would be shooting itself in the foot. For Prime Minister Theresa May, that would simply not do.
So what will happen next?
A float of the bank is seen as unlikely until it has built up some muscle, a process that could take a few years. The scale of investment needed is huge: bidders are being asked to put in £1.8bn.
A UK-based international consortium called SDCL which was shortlisted alongside Macquarie is pushing hard to be reconsidered, saying its bid would keep the GIB “British, green and growing”.
Answers so far as to what is going on with the sale process have been thin on the ground, and the political clamour is growing.
The matter will be debated in Westminster this week. As a matter of urgency we need clarity on what Labour has dubbed a “ham-fisted” privatisation, or the much-trumpeted industrial strategy could suffer a damaging hit to its reputation while still in its infancy.