Legal & General Investment Management refinances London Gateway port

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Legal & General Investment Management refinances London Gateway port

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Legal & General Investment Management (LGIM), on behalf of Legal & General Retirement (LGR) and the Pension Protection Fund (PPF), have announced a long term debt investment of £400 million (US$565.1 million) in DP World’s London Gateway Port, forming part of a £580 million (US$819.4 million) secured re-financing transaction.

LGR and PPF have invested £250 million and £150 million respectively, in senior debt for the project over a 30 year loan term, managed by LGIM Real Assets. Two additional investors provided a further £180 million of debt.

The money will part refinance the existing project finance loan, and help to finance the port’s third berth, thereby significantly extending its current capacity. The loan was arranged by Citi, on behalf of London Gateway’s owner and developer, DP World, the fourth largest global port operator.

The project had been refinanced by a 20-year GBP540 senior term loan provided in December 2011 by Royal Bank of Scotland (RBS), Société Générale, Investec, HSH Nordbank, UniCredit, DNB Bank, National Australian Bank (NAB), WestLB and KfW. The EIB also provided an additional GBP100 million in senior debt facilityand a GBP100 million tranche of subordinated debt through its Loan Guarantee Instrument for Trans-European Transport Network Projects (LGTT) programme.

Situated on the doorstep of London, with deep-water access, and road and rail links to the whole of the UK, London Gateway is a state-of-the-art, highly automated deep-sea container port. Uniquely combined with Europe’s largest logistics park, it is able to meet long term demand brought about by the growth in ship sizes while significantly improving UK logistics chain inefficiencies. Enabling shippers from across the UK to make substantial savings, reducing delivery times, haulage costs and fuel consumption, it will also have a significant impact on the UK’s road congestion and carbon emissions, with an estimated future saving of more than 65 million HGV road miles and 148,000 tonnes of CO2 every year.

The UK’s first new port in over two decades, London Gateway, situated on the Thames estuary at Stanford-le-Hope, Essex, is set to add 3.5 million container TEUs (twenty-foot equivalent units) per year to Britain’s port providing a natural hub for international trade. 

Kerrigan Procter, Managing Director of LGR, said: 

"The investment in the port is a win for the UK infrastructure, UK growth, and UK pensions. Funding the port with long-term capital will help UK businesses grow by increasing global trade; in return pension funds will derive an income to pay their pensioners."

Barry Kenneth, Chief Investment Officer at the Pension Protection Fund commented:

"Infrastructure investment is a key part of our investment approach. We want to invest in assets that give us long term stable cash flows to ensure that we are able to meet our long term obligations to our members. By partnering with L&G in this opportunity we can benefit from the scale of our combined balance sheets to support delivery of key UK infrastructure."

Sarah Wall, Portfolio Manager at the Pension Protection Fund added: 

"The PPF continues to build out its exposure to alternative hedging strategies. These provide diversification benefits, as well as an attractive risk adjusted return to benefit our members and levy payers. We look forward to working with L&G and others to be involved in future opportunities as exciting as London Gateway."

Silja Turville, Head of LGIM Infrastructure, commented: 

"Backed by a strong sponsor, this deal offers an attractive risk adjusted fixed rate financing opportunity. Yet again it represents our ability to bring together our external and internal sources of capital to invest in large-scale infrastructure transactions that are economically crucial and require long term finance."

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