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| Company type | Subsidiary |
|---|---|
| Industry | Investment banking |
| Founded | 2012 (as UK Green Investment Bank) |
| Headquarters | Edinburgh and London, United Kingdom |
| Parent | Macquarie Group |
| Website | greeninvestmentgroup |
The Green Investment Group (GIG), formerly known as the UK Green Investment Bank plc (GIB), is a specialist investment bank focused on financing the energy transition and green infrastructure.
Originally established by the Government of the United Kingdom in 2012, it was the first green bank in the world to be created by a state. Since its privatisation in 2017, the entity has been owned by the Australian financial institution Macquarie Group and operates globally.
Origins and creation
[edit]The creation of the institution was driven by the UK's climate objectives, specifically the Climate Change Act 2008, which mandated significant reductions in greenhouse gas emissions. In 2010, a commission led by Bob Wigley recommended to the Chancellor of the Exchequer the establishment of a dedicated financial institution to address the investment gap in green infrastructure.
The UK Green Investment Bank was officially launched in November 2012 by the then Business Secretary, Vince Cable. It was initially capitalised with £3.8 billion of public funds.[1] The European Commission approved its creation under State Aid rules, acknowledging that the bank addressed specific market failures without distorting competition.
Public ownership (2012–2017)
[edit]Business model
[edit]Unlike a traditional retail bank, the GIB did not take deposits. Its mandate was to operate with a "double bottom line": generating a financial return while ensuring a measurable environmental impact. The central objective was to "crowd in" private capital: for every pound of public money invested, the bank aimed to attract approximately three pounds of private investment (from pension funds or commercial banks) by de-risking complex projects.
Major investments
[edit]During its first five years, the institution played a pivotal role in the development of offshore wind power in the United Kingdom, a sector considered too risky by private investors in the early 2010s. It also financed waste-to-energy projects and the conversion of coal plants to biomass. By 2016, the bank stated that it had backed projects capable of generating enough renewable energy to power over 4 million homes.
Privatisation
[edit]Sale process
[edit]In 2015, the Conservative government proposed the privatisation of the bank to recoup public funds and allow the institution to borrow more freely on capital markets, a capacity limited by its public status to avoid increasing the national debt.
The sale was completed in August 2017. Macquarie Group acquired the bank for £2.3 billion.[2] Following the acquisition, the entity was rebranded as the Green Investment Group (GIG) to support its international expansion.
Controversy and "Golden Share"
[edit]The privatisation faced significant opposition from politicians and environmental groups. The National Audit Office (NAO) and the Public Accounts Committee criticised the government for selling the institution too early and potentially below its fair value.[3] NGOs such as Greenpeace expressed concerns about potential asset stripping and a drift away from the bank's ecological mission.
To safeguard the institution's green objectives, the government established an independent body, the Green Purposes Company. This entity holds a "special share" (or golden share), granting it legal veto power if the GIG attempts to change its articles of association to invest in non-green sectors.[4]
Recent activities
[edit]Since its integration into Macquarie Asset Management, GIG has expanded its geographical scope beyond the UK, financing projects in mainland Europe, North America, and Southeast Asia. The group has diversified its portfolio by investing in battery storage technologies and green hydrogen. In 2022, GIG consolidated its offshore wind activities into a specialized portfolio company named Corio Generation.
References
[edit]- ^ Harrabin, Roger (28 November 2012). "UK Green Investment Bank is launched". BBC News. Retrieved 11 December 2023.
- ^ Vaughan, Adam (20 April 2017). "Green Investment Bank sold to Macquarie in £2.3bn deal". The Guardian. Retrieved 11 December 2023.
- ^ "Green Investment Bank sale 'rushed', say MPs". BBC News. 18 February 2018. Retrieved 11 December 2023.
- ^ "Green Purposes Company". Green Purposes Company. Retrieved 11 December 2023.
Category:Banks of the United Kingdom Category:Investment banks Category:Sustainable finance Category:Companies based in Edinburgh Category:Former government-owned companies of the United Kingdom Category:2012 establishments in the United Kingdom