A Macquarie-led consortium that includes the UK’s biggest pension fund is to acquire the Green Investment Bank (GIB) from the UK government for £2.3bn (€2.7bn).
The consortium comprises Macquarie Group Limited (Macquarie), Macquarie European Infrastructure Fund 5 (MEIF5), and the £57bn Universities Superannuation Scheme (USS). When the deal is completed, Macquarie will be the owner of the GIB, according to a statement from the asset manager and USS.
USS will invest in two of three new GIB investment vehicles to be created in connection with the bank’s sale to Macquarie.
A USS spokesperson said that the pension scheme had invested in a newly established investment management vehicle that will hold all of the GIB’s existing offshore wind investments. In addition, it has acquired a significant portion of the bank’s existing loan portfolio via a number of its wholly owned subsidiary entities.
One of these is L1 Renewables, which lends to the UK renewable energy sector. The spokesperson said that USS would expand the L1 Renewables platform as part of the GIB transaction. After this was completed, L1 Renewables and other USS subsidiaries would have combined commitments of more than £500m to UK renewable energy.
In late 2014, L1 Renewables acquired a portfolio of around £320m worth of loans in the renewable energy sector.
USS will also invest in a new low carbon lending platform alongside GCP Infrastructure, a UK-listed fund managed by Gravis Capital Partners.
The GIB’s existing offshore wind farm fund had £1.12bn in assets under management as at January. Investors in the fund include UK local authority pension schemes such as Strathclyde Pension Fund, Swedish life insurance and pension company AMF, and a Middle Eastern sovereign wealth fund.
The three new investment vehicles will mean GIB will manage or supervise more than £4bn of green infrastructure assets and projects, according to the statement.
Special shares, designed to safeguard the bank’s environmental purpose, will be held by five independent trustees.
Macquarie said the GIB will become its main platform for principal investments in green infrastructure projects in the UK and Europe.
It said it was committed to the Green Investment Bank’s newly established target of £3bn of new investment in green energy projects over the next three years, either directly or by arranging capital from other investors.
The UK government will invest alongside the GIB in a new green infrastructure investment platform, which the statement said would comprise a small number of the bank’s existing investments.
Mike Powell, head of private markets at USS, said: “This transaction has enabled USS to acquire a portfolio of high quality renewable energy assets on behalf of our members. The assets include offshore wind projects and a portfolio of renewable loans, illustrating our capability to invest across the capital structure.”
USS’s involvement in the GIB deal comes after it entered into a private debt partnership with Credit Suisse earlier this year.