MegaProject 776: HICL Infrastructure invests in road refinancing
- InfraRed Capital Partners
- ACS Group - Iridium Concesiones de Infraestructuras
- AMEC Environment and Infrastructure
- KBR (UK) Ltd.
- MBIA UK Insurance Limited
- Ambac Financial Group
- European Investment Bank (EIB)
- Royal Bank of Scotland (RBS)
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HICL Infrastructure Company Limited, the listed infrastructure investment company advised by InfraRed Capital Partners Limited, has announced the purchase of a proportion of the Road Management Services (A13) PLC Index-Linked Guaranteed Secured Bonds 2028 for £50.1 milion (US$66.1 million).
The bonds were issued in 2000 to finance the A13 Thames Gateway PFI Project and have the benefit of an unconditional and irrevocable financial guarantee from the monoline MBIA UK in respect of all payments of interest and principal.
The bonds are repayable in 2028. As a senior secured debt investment, with direct RPI-linkage, they are expected to deliver a total return of circa.7%.
The project is a £220 million (US$290 million) 30-year PFI concession to design, build, finance and operate and maintain (DBFOM) a 20km section of the A13 road between Limehouse, London and Wennington, Essex on behalf of Transport for London (TfL).
A consortium formed by Carillion Private Finance, Amec, ACS & KBR are in charge of the development of the project. The initial financing package for the project consisted of EIB loan and GBP index linked guaranteed bonds priced.
The project formed part of TfL's policy to improve transport links and access throughout East London along an axis from the M25 to the City of London. The design reflected an integrated transport strategy, focusing on greater use of public transport, cycling and walking as well as reducing accidents and congestion.
The consideration paid by the HICL Group for the investment was funded through a combination of existing cash resources and a drawing on the group's dedicated revolving credit facility. Following the purchase of the bonds, the group has a net current funding requirement of approximately £76 million which is due to increase to £148 million once the conditional investment in the A63 is acquired in Q1 2017.
Tony Roper, Director, InfraRed Capital Partners Ltd said:
"We are pleased to have secured this investment via a relationship of ours. Most senior debt investments do not offer the appropriate balance of return, duration and inflation linkage, but when they do, we will consider them for the Group."