LONDON, UK: International Public Partnerships Limited (INPP) has agreed to acquire a small portfolio of UK PPP investments comprising initially interests in Townlands Community Hospital in Henley, Eltham Community Hospital and minority interests in the Building Schools for the Future (BSF) projects STaG 1 and 2 (‘STaG’).
The interests will be acquired from an affiliate of the Company’s Investment Adviser, Amber Infrastructure (‘Amber’), for £3.1 million, following an independent valuation prepared by Newbridge Advisors LLP (‘Newbridge’). Investment in minority interests in a further five BSF schemes from the same portfolio, representing up to £3.0 million of additional investment, will be made by the Company in the coming months.
The Townlands and Eltham projects were developed by Amber and are now at a level of operational maturity that fits the Company’s risk appetite. The interests in the BSF projects were acquired by Amber from a member of the Carillion group of companies on the occasion of that group’s financial collapse. At that time these particular interests (in contrast to other interests already owned by the Company) were judged not suitable for acquisition by the Company due to certain associated contingent liabilities.
Following a significant piece of work involving re-negotiation and a restructure these contingent liabilities have been dealt with and accordingly the risks associated with them removed making them suitable for acquisition by the Company. All the assets in this portfolio are now performing well with either no or minimal operational issues. Overall, the portfolio is strongly yielding and delivers partially index-linked returns.
Details of the portfolio being acquired include:
§ Eltham is a community hospital project located in the London Borough of Greenwich that has been developed under the NHS LIFT framework with an availability-based revenue stream. Amber has been involved in the scheme since its inception and the team have overseen all aspects of project delivery, including design and development. The Company will acquire a 49.8% interest in the subordinated debt of the project.
§ Townlands is a community hospital scheme based in Henley-on-Thames which provides sub-acute care and comprises an ambulatory care centre and a palliative care centre. The project benefits from an availability-based revenue stream arising under a direct contract with the NHS. The Company will acquire a 100% interest in the equity and subordinated debt of Townlands.
§ STAG comprises education facilities in South Shields and Jarrow in the UK. The investment builds on the Company’s existing portfolio of BSF projects, supporting the Company’s commitment to providing a high-quality teaching environment to pupils across the portfolio. The Company will acquire a 8.00% interest in the project’s subordinated debt and a 4.36% interest in the equity.
The Projects all contribute to a number of the UN’s Sustainable Development Goals (‘SDGs’). The investment in the management of healthcare centres and educational facilities acts in direct support of SDG 9 (Industry, Innovation and Infrastructure). The BSF investment directly contributes towards to SDG 4 (Quality Education) and schools also prepare young people for later life supporting SDG 8 (Decent Work and Economic Growth). Through their care provision, Eltham and Townlands contribute towards SDG 3 (Good Health and Well-Being).
Following financial close of the acquisition and draw down under the facility the Company will be approximately £163 million drawn against its £250 million corporate debt facility, including £9 million issued by way of a letter of credit to support the Company’s commitment to invest in the Flinders University Health and Medical Research Building upon construction completion in March 2025.
Protocols provided in the Company’s Investment Advisory Agreement been followed with respect to the sale of the Projects from Amber to INPP, including the establishment of separate buy side and sell side teams within Amber. Newbridge was engaged to provide an independent valuation opinion.
INPP is a listed infrastructure investment company that invests in global public infrastructure projects and businesses, which meets societal and environmental needs, both now, and into the future.