Amber Consortium has secured £137 million (€191.8 million; $213.9 million) in funding for eight secondary schools in the Midlands region, one of five batches of schools that are being privately financed through the UK’s Priority Schools Building Programme (PSPB), said in a statement the International Public Partnerships Limited (INPP), a London-listed infrastructure investment firm and a member of the consortium.
Of the £137 million, INPP, which is advised and managed by Amber Infrastructure Group, will provide £9.8 million. The consortium’s other members – Aviva Investors, the asset management arm of the UK insurer, and the European Investment Bank (EIB) – will each be providing £63.6 million. The total capital expenditure for the schools in this batch is approximately £142 million. The project’s sponsors – Carillion Private Finance, Equitix Infrastructure 3 and IUK Investments, an investment unit of Her Majesty’s Treasury – will cover the remaining £5 million of the estimated total cost.
The PSPB is a centrally-managed government programme set up to upgrade or replace schools that are in urgent need of repair. Overall, the programme comprises 261 schools that will be rebuilt or improved by 2017 and is effectively a scaled-down version of the previous Labour administration’s £50 billion Building Schools for the Future (BSF) scheme.
Of the 261 schools in the programme, 46 – separated into five batches – are being delivered by the private sector through the PF2 framework, the successor to the Private Finance Initiative (PFI), and are expected to cost approximately £700 million.
In July 2014, Amber Consortium was selected as preferred bidder to provide financing for all five batches. The group proposed the ‘aggregator’ scheme which would provide a central source of finance across all five batches, which would be more efficient than financing each project individually.
According to a press release issued at the time, the consortium stated, “This ‘aggregated’ model was also originally developed to address issues of availability of long-term debt, which was not readily available at the time the PSPB was procured.”
The Midlands Priority Schools Building Programme which entails designing, building and operating the new schools for a period of 27 years, is the fourth batch for which Amber Consortium has secured financing and includes the following schools: Alfreton Grange Arts College (Derbyshire); ARK Kings Academy (Birmingham); Greenwood Academy (Birmingham); Plantsbrook School (Birmingham); President Kennedy School (Coventry); The Phoenix Collegiate (Sandwell); The Queen Elizabeth Academy (Warwickshire); and Top Valley Academy (Nottingham).
Shortly after Amber Consortium’s announcement, ratings agency Standard & Poor’s (S&P) issued a note assigning a BBB- and stable outlook to the senior secured loan. “The stable outlook reflects our forecast that construction will be on time and within budget and that operations will be managed effectively,” S&P stated.