The Green Investment Bank, set up by the UK government five years ago, has been sold to Macquarie Bank, with a value of £2.3bn.
The Treasury secures £1.7bn through the process, with a further £600m of liabilities taken on by the Australia-based business lender.
The Green Investment Bank was set up to fund renewable and low carbon projects.
It has invested about £800m per year so far and the Macquarie deal could see that rise to £3bn over three years.
The sale requires the new owner to retain its name and team, headquartered in Edinburgh.
A new asset management division is being set up in the Scottish capital.
Although all the shares are transferring, the government is appointing independent trustees with the power to ensure it continues to have an environmental mission.
UK Climate Change and Industry Minister Nick Hurd, who signed the deal on Wednesday, said the government had turned a profit on the deal.
He added: “The Green Investment Bank has been very successful in attracting private capital to the UK’s green economy.
“It now makes sense to move it into the private sector where it will be free from the constraints of public sector ownership, allowing it to build further on its success.”