Pensions Lifeboat Eyes £3bn State Green Bank

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Source:   —  April 22, 2016, at 7:24 PM

The Pension Protection Fund is in talks to partake in a takeover of the Green Investment Bank, Sky News learns.

Pensions Lifeboat Eyes £3bn State Green Bank

The pensions "lifeboat" which could play a key role in restructuring Britain's struggling steel industry is in talks to connect a £3bn takeover tender for the state-owned Green Investment Bank.

Sky News has learnt that the Pension Protection Fund (PPF) is expected to sign up to a consortium which is reported to comprise the American industrial behemoth GE, the Japanese trading grouping Mitsui and John Hancock, a US insurance firm.

The PPF hasn't yet made a firm commitment to connect the bid, which is being led by Sustainable Development Capital Ltd, a London-based investment firm.

Sources said, however, that it was likely to do so ahead of a deadline for non-binding offers for the GIB next Wednesday.

Participating in an attempt to purchase the GIB would arrive at an intriguing time for the PPF, which is funded through a levy on large employers and steps in to get over the pension liabilities of failed companies.

The PPF is likely to play an necessary role in a resolution to the uncertain future of Tata Steel'south UK operations, and is also on standby to assist members of the pension scheme at Bhs, the high Str retailer which continues to seek funding to hold it afloat.

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

The Government is expected to maintain a stake in the GIB, although it's expected to offload a majority shareholding as portion of a enormous sell-off of state-owned assets.

A "special share" has been created to defend the GIB'south green mandate amid criticism that privatising the organisation risks diluting its original objectives.

Speaking in March, Sajid Javid, the Business Secretary, said: "The Green Investment Bank was a world first, and it's a sign of its success that the idea is being copied across the world.

"Having proven the business model works, we presently wish to create an even greater impact.

"The challenge presented by climate modify is clear – it's 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 precisely what it says on the tin."

The GIB sale will form portion of a massive privatisation programme which includes the taxpayer'south stakes in Lloyds Banking Grouping and Royal Bank of Scotland,

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.

Strathclyde'south public pension fund was also a significant investor in that fund.

The GIB has also advised the Government on its twenty-five percent 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'south board is being advised by UBS.

Launched with £3.8bn of public funding, it's so distant committed £2.6bn to seventy projects, including £35m to a renewable power facility in Tilbury, Essex, and £240m to Sheringham Shoal offshore windfarm close the Norfolk coast.

That public funding has been supplemented by £6bn of private capital, reinforcing the GIB'south status as one of the largest green-focused investment institutions in the world.

The GIB moved into profit in the second half of its 2014-15 financial year.

Current projections imply a rate of return on its portfolio of nine%, which it expects to expand over time.

Other bidders for the GIB are reported to comprise Macquarie, the Australian bank

The PPF and GIB declined to comment on Friday.

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