Macquarie consortium closes on one of the last UK PPPs

The Silvertown Tunnel project was pursued by Transport for London, rather than the UK’s central government, which last year abolished PPPs.

A consortium comprising Macquarie Capital, Aberdeen Standard Investments, Cintra, BAM PPP PGGM and SK Group have reached a £1 billion ($1.3 billion; €1.2 billion) financial close on what could be the UK’s last major PPP project.

The RiverLinx consortium has closed on the Silvertown Tunnel PPP, which has been in the works since 2015. The twin-bored tunnel under the River Thames – between the Greenwich peninsula and Silvertown in the east of the city – aims to ease congestion in the existing Blackwall Tunnel and will introduce tolling for both.

The project has overcome several uncertainties on its way to reaching financial close, including the UK’s then chancellor (chief finance minister) Philip Hammond vowing in October 2018 that “I have never signed off on a PFI contract as chancellor and I can confirm today that I never will”. However, the project has been pursued by Transport for London and approved by the mayor of London, Sadiq Khan, acting through devolved powers.

The awarding of the contract to RiverLinx was suspended amid a legal challenge by rival bidders that contested the scoring mechanism used to rate the bids. The suspension was lifted last month following an appeal by TfL.

David Lee, a partner and global head of infrastructure at law firm Allen & Overy, which advised RiverLinx, said in a statement: “This PPP deal is a significant UK infrastructure project which will bring huge benefits to South-East London. “It is worth reminding ourselves that since the project began in 2016, we have seen a Brexit vote, two London mayors, two general elections announced and three different prime ministers.”

Allen & Overy added that the Silvertown project was financed via 15 lending institutions, and that the financing included senior debt, an export credit agency-covered tranche and an equity bridge facility.