Investors breathe life into Green Deal scheme axed by ministers

A consortium of City investors will announce next week that it has snapped up the rump of an energy efficiency scheme scrapped by the Government soon after the last General Election.

Sky News has learnt that ministers have signed off a deal to sell the Green Deal Finance Company's (GDFC) assets and remaining loan book in a takeover worth about £40m – a move that will lead to the new owners relaunching the business under a different name.

The transaction will be announced on Monday, according to sources in Whitehall.

One insider said this weekend that the buyers of Green Deal Finance Services and its subsidiaries were Greenstone Finance, a renewable energy investment vehicle, and Aurium Capital Markets, which specialises in financing deals in the energy and real estate sectors.

Their purchase of the GDFC is being supported by Honeycomb Investment Trust, a venture backed by a group of former Royal Bank of Scotland (LSE: RBS.L - news) executives.

While modest by the standards of privatisations such as those of the Royal Mail (LSE: RMG.L - news) or the planned sale of the Green Investment Bank, the sale of the GDFC loan-book means the disposal of a scheme once hailed by ministers as a crucial weapon in the battle to make Britain more energy-efficient.

Launched in 2013, the Green Deal was set up to provide consumers with access to finance aimed at making their homes more energy-efficient.

It provides finance to enable the purchase of new boilers, with the loan then repaid as part of a home-owner’s energy bill, which is then in turn reduced by the savings that have been generated by the measures financed by the loan.

Announcing its closure in July 2015, the then Energy and Climate Change Secretary, Amber Rudd, pointed to low take-up and concerns over industry standards as the reasons for the move.

"It's now time for the building industry and consumer groups to work with us to make new policy and build a system that works," she said.

"Together we can achieve this Government's ambition to make homes warmer and drive down bills for one million more homes by 2020 – and to do so at the best value for money for taxpayers."

Sources said that Greenstone and Aurium would appoint a new management team, with the previous executive line-up departing several months after the Government said it would no longer provide financial support to the GDFC.

Kilian Pender, Greenstone’s chief executive, is expected to take on a leading role in the revamped company, which will resume making new Green Deal loans within the next two months.

More than a dozen parties are understood to have bid to take on the GDFC loan-book, with ministers said to have selected Greenstone and Aurium partly because of their renewable energy expertise and their plans to relaunch the business.

The new owners could not be reached for comment on Saturday (Shenzhen: 002291.SZ - news) .

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