On Friday, Sandwell and West Birmingham Hospitals announced that the Carillion-joint venture has reached commercial and financial close to build and deliver the Midland Met Hospital by October 2018 in Birmingham, UK.

The project SPV, Hospital Company (Sandwell) Limited, is a joint venture between Carillion (50 per cent), Richardsons Capital (40 per cent) and Infrastructure UK (10 per cent). Carillion will invest £13 million of equity in the project, which Carillion will build at a capital cost of £297 million.

Carillion will also deliver hard facilities management and life cycle maintenance that is expected to generate approximately £140 million of revenue over the 30-year life of the concession contract.

The Midland Met Hospital will be delivered through a Public Private Partnership under a 30-year concession contract using the UK Government's PF2 model.

The new hospital scheme will cost GBP 340 million, includes 670 beds and 15 operating theatres, as well as a new public park. The new accident and emergency department will replace emergency care facilities at City Hospital and Sandwell and is expected to treat more than 140,000 patients a year.

The European Investment Bank (EIB), Europe's long-term lending institution, said in a press release it has agreed to provide GBP 107 million to support the project. Details about the rest of financing have not been revealed so far.

The PF2 project will be financed by £109 million of senior debt provided by Credit Agricole, KfW and SMBC.

This is the first healthcare project to be backed by the new European Fund for Strategic Investments (EFSI), the heart of the Investment Plan. EFSI was established earlier this year by the EIB and the European Commission to enable increased lending crucial projects by the EIB in strategic sectors such as renewable energy, digital infrastructure, social infrastructure, transport and R&D; as well as financing for SMEs.

According to Sandwell and West Birmingham Hospitals, the multi-million pound hospital will be built, and at a significantly lower cost than was originally planned. The OBC (outline business case) in 2014 anticipated an annual unitary payment of £27 million, however the project has been closed with an annual unitary payment of under £19.6 million. The contract has also been signed some four months earlier than expected.

Adam Green, Managing Director, Carillion Construction Services commented:

"Carillion is delighted to have reached financial close and we look forward to working with Sandwell and West Birmingham Hospitals NHS Trust to deliver a state-of-the-art hospital that will enable the Trust to achieve its objectives for delivering significant improvements in healthcare services for the local community for many years to come."

NHS Trust Chief Executive, Toby Lewis added:

"We have anticipated this day for some time and welcome financial close as a pivotal moment for our Trust. A new hospital for half a million people locally in 2018 is imperative if we are to improve outcomes of care and make the local NHS a fantastic place in which to work."