The British government set up GIB, which backs green projects with public funds, in 2012 as a commercial venture to spur private sector investment in green projects. It has invested more than ??2 billion ($3.3 billion) in projects such as offshore wind farms and waste management.

The government decided to sell a majority stake in 2015, saying it would give the bank greater freedom to borrow, removing state aid restrictions, and allow it to attract more capital.

In September last year, it selected a Macquarie-led group as the preferred bidder, but competing bidder Sustainable Development Capital (SDCL) went to court, arguing the consortium hadn't met criteria set out to guide ministers in their decision.

In a statement on Friday, SDCL announced it had lost its judicial review in the High Court.

'Worst kind of company'

The planned sale to Australia's "Millionaires Factory" has grabbed headlines in recent months as several British lawmakers sounded alarm at the prospect of Macquarie taking over the Green Bank, worried that privatising it could lead to job losses and "may result in an asset stripping exercise".

"This is deeply troubling considering the vital role that the bank serves in our green economy," Scotland's Secretary for Economy Jobs and Fair Work Keith Brown warned in a letter to the UK government late last year.

The term "asset stripping" means breaking up a company and selling off its most profitable parts, even if that is not in the company's long-term interests.

The former Liberal-Democrat Secretary Vince Cable in December told Fairfax Media that Macquarie Bank was the "worst kind of company" to be acquiring a bank set up to solely finance environmental projects.

'Ready to sign a binding agreement'

According to the High Court judgement, the British government viewed the bid by the Macquarie consortium, which also includes Universities Superannuation Scheme, as "financially preferable" over the SDCL-led bid for several reasons.

SDCL's funding position was "less secure" because it reduced its offer to buy 100 per cent of the bank to 75 per cent, after one of the members of its consortium pulled out in August.

The SDCL consortium also included a public sector body, which would mean the bank could still risk being classified as government-owned after the sale, going against the privatisation plan, the court found.

"Meanwhile the preferred bidder's offer remains to be signed some six months later, though the government told the court that it was now in a position to sign a binding agreement with the preferred bidder," SDCL's Chief Executive Jonathan Maxwell said in the statement.

Macquarie, which says it has invested ??8.5 billion in renewable energy projects since 2010, declined to comment.

A spokeswoman for the Department for Business, Energy & Industrial Strategy welcomed the ruling but declined to comment further because of the commercial sensitivity of the process.

"As we have said, any government decision on the sale of the Green Investment Bank will be driven by what best achieves our objectives, including continued investment in the green economy and a sale which is in the best interests of the taxpayer."

Reuters/Bloomberg/BusinessDay