Campaigners and academics have expressed concern about the role of the Universities Superannuation Scheme in Macquarie’s £2.3bn (€2.7bn) acquisition of the Green Investment Bank (GIB).
Although infrastructure giant Macquarie has acquired the government’s entire stake in GIB, the role of the USS, which is the £49bn pension fund for UK academics, is starting to come under scrutiny.
USS has figured prominently in announcements relating to the consortium – led by Macquarie – in acquiring the bank last month, but the pension fund will have no equity stake in GIB and will in effect invest in two of the three vehicles that will be set up on completion of the deal.
USS and a Macquarie fund, MEIF5, will invest in the offshore wind investment vehicle, and the pension fund and infrastructure firm GCP Infrastructure Investments will invest in the low-carbon lending platform. The GIB will remain an investor in the offshore wind investment vehicle and the third investment vehicle – the green infrastructure investment platform.
Tim Valentine, chairman of the steering group at campaign group Ethics for USS, said: “GIB should not have been sold, but we are pleased to see USS’s investments to the renewables sector. Nevertheless, we have concerns about the nature of this deal with Macquarie.”
Christine Haswell, national pensions official at the University and College Union, agreed that USS’s commitment to renewable energy assets was welcome, but added: “The fact that they’re doing this with Macquarie is not great. We are alert to the situation and the fact that some members have raised concerns about the deal – we will continue to monitor this deal closely.”
However David Pitt-Watson, who co-founded Hermes’ stewardship business, noted: “If you look at what Ontario Teachers Pension Plan (OTPP) do, this sort of investment is hardly out of keeping.”
OTPP has worked on several deals with Macquarie, and was most recently reportedly in talks with the Australian investment bank to buy its stake in Brussels airport.USS declined to comment on the specifics of the deal, but a spokeswoman said that following completion of the transaction, USS – through its subsidiaries – will have combined commitments of over £500m to the UK renewables sector.
In late 2014, USS had acquired a portfolio of approximately £320m loans in the renewable energy sector through its subsidiary L1 Renewables.
“We have concerns about the nature of this deal with Macquarie”
The spokeswoman added that as part of the transaction, USS would be expanding the L1 Renewables platform to further increase its presence in the UK renewables sector.
Commenting on the pension fund’s investment in the offshore wind vehicle, she said that a key focus of USS’s investment mandate is to deploy capital in UK infrastructure assets which provide stable, long-term, inflation-linked cash flows.
“This investment is an opportunity to acquire a portfolio of high quality renewable energy assets that will help us deliver our pension promise to our members.”
Mark Dooley, who leads Macquarie Capital’s global renewables business, said Macquarie Capital would consolidate its existing renewables investment business into the Green Investment Bank and take it forward as its principal investment platform for renewables in Europe.
The group has invested over £8.5bn of capital into UK and global renewable energy projects and £2.5bn specifically into UK projects.
“We continue to grow our team globally and in the UK, adding specialists in green energy to meet increased deal activity and to manage our growing portfolio of investments,” a spokeswoman said.