INPP buys UK government school stakes for £60m

The investment, INPP’s ‘largest single commitment to date’, will see the listed fund acquire stakes in 48 projects from the now-defunct Building Schools for the Future (BSF) programme. The purchase will add to INPP’s existing 106 schools, with schools now comprising 32% of its portfolio value.

International Public Partnerships (INPP), the UK-listed investor in public-private partnerships (PPPs), has acquired the UK government’s stakes in a portfolio of school projects that have been financed by the private sector.

“This is a significant acquisition for INPP and our largest single commitment to date,” Giles Frost, director of Amber Infrastructure, INPP’s advisor, commented in a statement, referring to the £60 million (€68 million; $98 million) purchase price. The deal will be funded with debt and equity, INPP added, without elaborating on the breakdown between the two.

The school projects are part of the £55 billion Building Schools for the Future (BSF) programme, an initiative started in 2004 by the previous Labour government to rebuild or refurbish every secondary school in England within a 20-year time period. BSF was cancelled just over a year ago by the current Coalition government, axing 715 outstanding projects.

The portfolio sold to INPP includes the government’s holdings in 48 schools that had been procured as project finance initiative (PFI) projects, the UK’s standardised procurement process for PPPs. The majority of the assets, or 70 percent, are already in operation with the remaining to finish construction mostly by autumn 2012. 

All the projects are backed by predominantly inflation-linked availability payments – public contributions paid in exchange for making the assets available in good condition. The stakes also come with pre-emption rights that will allow INPP to increase its share in these projects should other shareholders seek to exit them.

The new acquisitions will add to INPP’s existing 106-school portfolio, with schools now making up 32 percent of the listed fund’s net asset value. The majority of the new assets have an average remaining life of 24 years.

INPP hit the headlines recently with a raft of project closings. Late in July, the fund was part of a consortium that reached financial close on a £52 million UK offshore transmission project. Prior to that, the firm managed to secure financing for an A$800 million (€582 million; $833 million) light rail project in Queensland, Australia.