Miller Equitix, a joint venture between UK developer Miller Construction and fund manager Equitix, has announced financial close on the £50 million (€59 million; $77 million) Inverness College UHI campus project.
The new further education college is the first college project to have resulted from Scotland’s Non-Profit Distributing (NPD) financing model, which caps private sector returns. Under the model, there is no dividend-bearing equity and any surplus is directed in favour of the public sector.
Equitix and Miller Construction are both providing 50 percent of the finance, with the latter providing design and build services and ongoing facilities management for 25 years. Senior debt funding will be provided by Aviva, while law firm Harper Macleod advised Miller Equitix on the deal.
A statement from Miller Construction said that financial close had been achieved within 17 months, which was “unprecedented given the size and complexity of the project”.
The project will comprise a new 13.3-acre development at Inverness College which will provide state-of-the-art facilities to more than 8,500 students. Work is expected to start on the site immediately, with completion expected by the start of term in 2015.
The NPD model was introduced as a Scottish alternative to the UK’s Private Finance Initiative, which became controversial due to allegations of private sector windfalls and a lack of value for money for the public sector.
The current NPD pipeline includes: two other college projects in Kilmarnock and Glasgow; the M8 and Aberdeen Western Peripheral Route road projects; and the Royal Hospital for Sick Children/Division of Clinical Neurosciences project.
The UK government is shortly to begin rolling out projects under its own alternative to PFI, known as Private Finance 2 (PF2). This model also claims to offer better value for money for the taxpayer but annoyed market participants by putting the brakes on deal flow in exchange for what some viewed as merely cosmetic changes.