News / MegaProject 717: Pension Insurance Corporation invests in Thames Tideway Tunnel

MegaProject 717: Pension Insurance Corporation invests in Thames Tideway Tunnel

🕔 June 20, 2016
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Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension funds, has invested £100 million (US$143 million) in debt secured on the Thames Tideway Tunnel (TTT) project in London.

As we reported in early June, Tideway, the new company established to construct the Thames Tideway Tunnel, priced a bond issue for the above-referred amount to finance the project.

Tideway is the trading name of Bazalgette Tunnel Limited, established in August 2015. The company's shareholders are Allianz, Amber Infrastructure (through International Public Partnerships Limited (INPP)), Dalmore Capital and DIF.

On 24 August 2015 the Bazalgette Tunnel Limited consortium received the licence from the Water Services Regulation Authority (Ofwat) to own and finance the project. 

Linked to the Retail Price Index, £50 million of the bond issue will mature in 2048 and the remaining £50 million in 2054. Listed on the London Stock Exchange, the bonds have deferred purchase dates of June 2020 and June 2021.

Tideway will be financing £3.1 billion of the project's total £4.2 billion cost, with the remainder coming from Thames Water, the main provider of water and waste water services across London and the Thames Valley.  

On 12 May 2016, Tideway agreed a £700 million loan from the European Investment Bank (EIB). A total of six banks have also provided senior debt to the project, including Royal Bank of Canada, Lloyds Bank, Credit Agricole, SMBC, BTMU and Santander

Pedro Madeira, Treasurer at Tideway, said:

“We are very happy to have concluded this transaction with PIC and we believe it is a great result for both parties. PIC was flexible in helping us conclude this transaction and there was a high degree of cooperation and goodwill in working around the clock to agree documentation. PIC is exactly the kind of investor that we want to invest in Tideway.”

The TTT is a new part of the sewerage network which will carry sewage and storm water discharges from the broader London sewerage system. It will be a 7.2 metre diameter 25 kilometre sewer tunnel running up to 65 metres below the River Thames. Starting in West London, the main tunnel will follow the route of the Thames to connect with the existing Lee Tunnel, with sewage being transferred to the Beckton Sewage Treatment Works in East London.

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