LONDON (REUTERS) - Britain is to begin selling stakes in its Green Investment Bank (GIB) to bring it into private ownership and to help it to grow, the government said on Thursday.
The move to privatise the bank also comes a week after the government said it would scrap all new subsidies for onshore wind farms a year earlier than previously planned.
Business Secretary Sajid Javid said the move would give the bank greater freedom to borrow and remove limitations from European Union regulations on state aid and allow the bank to attract more capital.
"In 2012 we set up the Green Investment Bank to support important investment in the UK's green infrastructure and since then it's gone from strength to strength," British finance minister George Osborne added. "That is why we can now begin exploring options for moving the bank into the private sector to enable it to access larger pools of capital and act more freely to invest in a broad range of green sectors."
Since the bank was created as a commercial venture at the end of 2012 to back green energy projects and to spur private sector investment it says it has invested 2 billion pounds (S$4.02 billion) in 50 projects worth over 8 billion pounds including waste management plants and offshore wind farms.
The government said stake sales will need to meet certain criteria such as delivering value for money for taxpayers.
In its annual review on Thursday the bank said it started to operate profitably in the financial year just ended, making a profit before tax in the second half of the year of over 3 million pounds and a full-year profit of 0.1 million pounds. "We are now very close to our expected long-term investment rate of 800 million to 1 billion pounds per year," said Shaun Kingsbury, chief executive. "While capital from the UK government was an important start it will not be enough to sustain our level of investment. From the outset it was always part of the plan that we would need to raise additional capital from the private sector to supplement government funding."
The bank has a range of funding options. It will keep investing its current share capital from the government; recycle that capital; continue to raise money for its fund and work to attract new equity investors, he added.
The bank said it has appointed advisers but was still in the early stages of its work to attract investors and did not expect to make a futher announcement in the short term.