UK to announce plans to part privatise Green Investment Bank

The UK government is planning to sell off a large stake in the Green Investment Bank (GIB), it has emerged.

According to sources, business secretary Sajid Javid will use a speech later today (June 25th) to set out plans for the part privatisation of the GIB. 

Set up by the former coalition government, the Green Investment Bank was designed to support investments in environmentally friendly infrastructure projects.

However, with the conservatives now in control, the government has changed tactics. The move to sell the GIB is part of a wider programme to sell off assets to help pay down the deficit.

Although Mr Javid's speech is unlikely to include detailed plans, sources told the Financial Times that up to 70 per cent of the GIB could be sold, depending on the market. 

Current estimates indicate that a part sale could deliver around $1.4 billion to the UK Treasury. However a full valuation will depend on what happens to the loans that have already been pledged by the state after the bank is part-privatised.

The board of the GIB has been discussing the possibility of part-privatisation for more than a year. Experts belive it is unlikely that the government will give up its powers to appoint a chairman or chief executive or its right to oversee investment decisions.

However, by bringing in a majority of private investors, the bank would be able to borrow in the debt markets for the first time. This would increase its lending powers. A change in ownership could also release the group from EU restrictions that currently prevent it from investing in solar projects.

Privatisation criticised

Critics of the government's plans to privatise the GIB have called the move "reckless".

E3G, a think tank that advised on the original plans for a green bank warned that selling off more than half of the group would damage investor confidence in both the institution and the government's commitment to creating a low-carbon economy.

Nick Mabey, chief executive of E3G said: "Privatisation threatens to destroy investor confidence, which in turn will damage both energy security and the UK economy."

He added that the government needs to keep at least a 50 per cent share in the bank. "On no account should more than 49 per cent of the public stake in the GIB be sold now," he explained.