Finance for €520m German hospital PPP

KfW IPEX-Bank is part of a six-strong banking group providing debt capital for the University Medical Center Schleswig-Holstein project.

Germany’s KfW IPEX-Bank and five other commercial banks, together with the European Investment Bank (EIB), are financing the University Medical Center Schleswig-Holstein (UKSH) public-private partnership (PPP).

The overall investment volume for the project – which involves comprehensive expansion, restructuring and conversion measures on the medical centre campuses at Kiel and Lübeck – amounts to €520 million.

In what KfW IPEX-Bank describes in a statement as a “complex financing structure”, it is acting as syndicate partner of the bank club which will provide debt amounting to approximately €82 million plus an additional tranche of around €100 million made available to UKSH on a bilateral basis. The loans will be repaid over the course of the 30-year term of the project.

The financing follows an international bid process run by the federal state of Schleswig-Holstein which was won by a syndicate consisting of Dutch developer Royal BAM Group and Austrian hospital services provider VAMED, which is part of Germany’s Fresenius SE & Co.

The redevelopment of the Kiel and Lübeck campuses will include the establishment of outside facilities and open spaces and will comprise Germany’s largest PPP building construction project to date.

“PPPs are becoming increasingly popular in Germany,” said Christian Murach, a member of the KfW IPEX-Bank management board, in the statement. “The financing for the Medical Center that has now been closed is another example of how the flexible financing option of PPP is able to use the ample liquidity of private investors in order to renew and expand social infrastructure while at the same time easing the burden on public sector budgets.”

Germany, along with the Netherlands, is being seen as one of the hotspots for PPPs in 2014 in the context of relatively subdued activity across the continent. Towards the end of August, Germany’s €600 million A7 road project reached financial close – in the process becoming the first German PPP to benefit from the EIB’s project bond initiative.