International Public Partnerships Limited, has announced the acquisition of an additional interest in the Australian rolling stock public-private partnership, the Reliance Rail PPP Project.

INPP has invested  around AU$154 million (US$117,09 million) and will now own a 33% interest in the project with the remaining interest held by AMP Capital’s managed funds.

The Project is a traditional public private partnership (PPP) investment and generates a fully availability-based revenue stream extending to 2044 with the ultimate counterparty being Transport for New South Wales, an executive agency of the New South Wales government.

Reliance Rail was responsible for the financing, designing and manufacturing, and continues to be responsible for maintaining 78 next-generation electrified “Waratah” train sets (comprising 626 traincars) serving Sydney in New South Wales Australia. The project is fully operational and yielding and has enjoyed an average availability rate of 99.92% since May 2014. Operational performance risk is fully subcontracted.

INPP has held a small minority interest in the project since 2006 but since 2012 this has been carried at nominal value only.  While the operational performance of the project has been excellent, equity value has been repressed by the complexity of the project’s original structure. 

The current investment and associated refinancing  is the result of several years of restructuring activity supported by AMP Capital, Amber Infrastructure (the Company’s Investment Adviser), the project’s management team and the New South Wales government.  The restructuring process has included the exit of some other original shareholders, the removal of monoline insurers from the capital structure and a complete restructuring of the project’s senior debt resulting in a de-leveraged, lower cost and more sustainable structure.

Once completed, the transaction is expected both to restore the original value of the company’s existing investment and, on a blended basis of the new and existing capital, to provide the company with an attractive return in comparison with other operational PPP projects in the company’s portfolio.

The new investment was funded through the company’s existing corporate debt facility. Following this investment the facility is now either drawn or committed to identified opportunities at a level of around £100 million (US$133,13 million) out of a total available capacity of £400 million (US$532,55 million)