Ministers to keep green assets stake as Macquarie takeover looms

The Government will keep a stake in some Green Investment Bank (GIB) assets under a revised deal aimed at smoothing political opposition to a takeover led by Macquarie, the Australian lender.

Sky News has learnt that plans are being drawn up for a handful of the GIB's potentially valuable development assets to be ring-fenced - with partial ownership retained by UK taxpayers - under the prospective agreement.

A Whitehall source said this weekend that the revised deal was discussed in the last few days during a series of meetings attended by Nicholas Moore, Macquarie's chief executive, the Scottish First Minister Nicola Sturgeon, and Nick Hurd, the climate change and energy minister.

An agreement has yet to be finalised between Macquarie and the UK Government, but could be signed during the first half of March, the source added.

The headline value of a deal is expected to be well in excess of £2bn, excluding the capital required to fund future investments.

Mr Moore is understood to have pledged that if its takeover of the GIB proceeds, Macquarie would demonstrate a commitment to the green lender's Edinburgh base by relocating other UK employees there.

The Australian bank's other European environmental investments could also be handed over to the GIB over a period of time to be managed by it.

Set up by the coalition government, the GIB owns stakes in a large portfolio of projects, including energy-efficient street lighting, windfarms and biomass plants.

Opposition to the GIB's privatisation has been growing amid concerns aired by some politicians that Macquarie would seek to offload its most valuable assets soon after a takeover is sealed.

Sir Vince Cable, the former Business Secretary, has warned that taxpayers could be left out of pocket if the GIB's assets rise in value under private ownership.

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.

The Universities Superannuation Scheme, the second-largest private sector pension fund in the UK, is working alongside Macquarie on its bid.

An initial public offering of the GIB has been mooted but is "very much a fallback option" if the Macquarie takeover fails to complete, according to a Government official.

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.

Launched with £3.8bn of public funding, it has 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.

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 (LSE: RBS.L - news) , and the £4bn sale of Royal Mail (LSE: RMG.L - news) .

Macquarie declined to comment, while the Department for Business, Energy and Industrial Strategy could not be reached for comment.