Ministers Plot Exit From £4bn Green Bank

Ministers have drawn up secret plans to sell the Government's entire shareholding in its £4bn Green Investment Bank (GIB) in an attempt to secure a bigger-than-expected windfall from the privatisation.

Sky News has learnt that Whitehall officials have informed a trio of remaining bidders for the institution that they now have a "preference" to sell 100% of the Government's ordinary shareholding, rather than the majority stake previously indicated.

Bidders were told of the revised intention in recent days, and some are now seeking additional funds from their consortium members to pave the way for them to buy the Government's entire stake.

The three parties vying to buy the GIB include a consortium featuring the lifeboat that is poised to rescue thousands of BHS pensioners, and another led by the Wall Street titan KKR.

The organisation has been earmarked for privatisation by Sajid Javid, the Business Secretary, but his plans have been criticised by opponents who believe that its green remit risks being undermined.

One bid includes the Pension Protection Fund (PPF), the industrial behemoth GE, the Japanese trading group Mitsui and John Hancock, a US insurance firm.

The bid, which is being led by Sustainable Development Capital Ltd, a London-based investment firm, is being advised by HSBC and JP Morgan.

Macquarie, the Australian bank which has been among the most prolific investors in British infrastructure during the last decade, acquiring Thames Water and other assets, is one of the other shortlisted bidders.

Royal Bank of Canada (LSE: 0QKU.L - news) is advising Macquarie on its interest.

The third offer is led by KKR, the private equity giant, which has provided capital for lending to UK green energy projects in the past.

It (Other OTC: ITGL - news) is likely to team up with Temporis Capital, a specialist investment management firm focused on sustainability sector investments.

The three bidders are now undertaking due diligence on the GIB and its portfolio of investments.

Ministers are seeking to privatise the GIB, which has funded dozens of waste and energy ventures since its launch in 2012, with the move to attract private shareholders underlining its transition from a state-funded institution into the financial mainstream.

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 in March, Mr Javid 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."

The GIB sale will form part of a massive privatisation programme which includes the taxpayer's stakes in Lloyds Banking Group (Other OTC: LLOBF - news) and Royal Bank of Scotland (LSE: RBS.L - news) , and the £4bn sale of Royal Mail (LSE: RMG.L - news) .

Plans to offload the Land Registry, which has attracted interest from private equity firms, are arousing significant opposition, however.

A separate £1bn fund to invest in offshore wind projects has been launched by the GIB, with the Abu Dhabi Investment Authority, one of the world’s biggest sovereign wealth funds, thought to be among its largest investors.

The GIB has also advised the Government on its 25% stake in Greencoat Capital, a London-listed vehicle, which it subsequently sold for a profit.

Ministers are being advised on the GIB sale by Bank of America Merrill Lynch, while the GIB's board is being advised by UBS (LSE: 0QNR.L - news) .

Launched with £3.8bn of public funding, it has so far committed £2.6bn 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.

The GIB, which declined to comment, moved into profit in the second half of its 2014-15 financial year.