Pension

Lecturers’ pension fund enrols with Macquarie’s green bank bid

By Mark Kleinman, City Editor

One of Britain’s biggest pension funds has signed up to an Australian-led bid for the UK’s Green Investment Bank (GIB) as it seeks to burnish its credentials amid growing political rancour.

Sky News has learnt that the Universities Superannuation Scheme (USS), which manages the retirement pots of thousands of professors and lecturers, has provisionally agreed to buy a minority stake in the GIB alongside Macquarie.

The development has emerged with Government ministers said to be potentially days away from deciding whether to sanction the £2bn-plus takeover by Macquarie and its partners.

Opposition to the sale has been growing in Westminster and Edinburgh, where the GIB is headquartered, for several weeks, amid concerns aired by some politicians that Macquarie would seek to offload its most valuable assets soon after a takeover is sealed.

The Australian bank is said to be preparing to make a number of public commitments related to jobs and the establishment of a UK hub for its international green investment activities in order to smooth a path for the deal.

Macquarie’s main competitor in the GIB auction – a consortium led by Sustainable Development Capital Limited – has sought to burnish its credentials as a British bidder by including the Pension Protection Fund in its consortium.

USS, the second-largest private sector pension fund in the UK, had been referred to in earlier reports as a possible buyer of some of the GIB’s assets from Macquarie.

However, its interest has evolved to the extent that it is likely to become a co-investor in the overall institution.

USS declined to comment on Saturday.

Ministers have been seeking to privatise the GIB, which has funded dozens of waste and energy ventures since its launch in 2012, for much of the last year.

A “special share” has been created to protect the GIB’s green mandate amid criticism that privatising the organisation risks diluting its original objectives.

Speaking last March, Sajid Javid, the then Business Secretary, said: “The Green Investment Bank was a world first, and it is a sign of its success that the idea is being copied across the world.

“The challenge presented by climate change is clear – it is imperative we mobilise more funding for green energy projects.

“The special share structure protects the bank’s green mission, meaning the Green Investment Bank will continue to do exactly what it says on the tin.”

If it does get the formal,go-ahead, the GIB sale will form part of a massive privatisation programme which includes the taxpayer’s stakes in Lloyds Banking Group and Royal Bank of Scotland, and the £4bn sale of Royal Mail.

A separate £1bn fund to invest in offshore wind projects has been launched by the GIB, with the Abu Dhabi Investment Authority, one of the world’s biggest sovereign wealth funds, thought to be among its largest investors.

The GIB has also advised the Government on its 25% stake in Greencoat Capital, a London-listed vehicle, which it subsequently sold for a profit.

Ministers are being advised on the GIB sale by Bank of America Merrill Lynch, while the GIB’s board is being advised by UBS.

Launched with £3.8bn of public funding, it has so far committed more than £2.5bn to 70 projects, including £35m to a renewable power facility in Tilbury, Essex, and £240m to Sheringham Shoal offshore wind farm near the Norfolk coast.

That public funding has been supplemented by £6bn of private capital, reinforcing the GIB’s status as one of the largest green-focused investment institutions in the world.

Sky News

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