PPP round-up

EUROPE

DIF swallows additional stake in Dutch wastewater 

Amsterdam-based fund manager DIF has increased its shareholding in the Delfluent project, a Dutch wastewater public-private partnership (PPP).

The fund manager has acquired the stake from French utility Veolia, boosting its holding of the business from 32.5 percent to 43.5 percent. This is DIF’s second add-on acquisition in Delfluent after its purchase of Rabo Private Equity’s share of 24.5 percent in December 2012.

Delfluent is a €350 million wastewater treatment plant PPP that reached financial close in 2003 under a 30-year concession agreement. In operation since 2008, the project initially consisted of the design, build, finance and operation of the Harnaschpolder plant and the refurbishment of the Houtrust plant. Both are located close to The Hague.

Construction works were completed after a five-year period and Evides Industriewater, Holland’s second-biggest drinking water business, is now responsible for the operational performance of the project.

The transaction will be funded by DIF Infrastructure II, which closed on €571 million in September 2010. The firm has since been busy raising its third vehicle, which hit its revised hard cap of €800 million last March. The fund had an original target of €600 million.
Wastewater plant

INPP buys asset from its adviser 

International Public Partnerships Limited (INPP), the London Stock Exchange-listed infrastructure fund, has acquired a 90 percent equity stake and 100 percent of the subordinated debt in a PPP project that will deliver Berlin’s new Federal German Ministry of Education and Research (BMBF) building.

The equity and debt interests were acquired from Amber Infrastructure for €11.9 million following an independent valuation process undertaken by financial services firm KPMG. Amber Infrastructure is INPP’s investment adviser.

In order to follow investment advisory agreement protocols, Amber established separate buy- and sell-side teams. In addition, law firm LPA Rechtsanwalt Steuerberater independently managed the contractual negotiation on behalf of INPP.

Amber has been responsible for the development of the BMBF project since August 2011 following a European Union-wide tender process run by the Federal Bureau of Real Estate Projects (BIMA).

Construction of the BMBF project is being delivered through a turnkey contract with BAM Deutschland, which retains a residual stake in the share capital of the project. The construction programme is currently running to schedule and is expected to complete by the end of July this year.

The building will provide space for around 1,000 employees, with Amber continuing to provide asset management services.

JLIF wants to broaden asset base

John Laing Infrastructure Fund (JLIF) said it was seeking to amend its investment policy “to provide greater optionality and flexibility in investment decisions”.

The fund, which has raised £525 million (€638 million; $862 million) of primary equity capital since launch in November 2010, wants to double the amount it can invest in projects under construction from 15 percent of total fund assets to 30 percent.

In addition, it wants to be able to invest up to 10 percent of total assets in infrastructure assets that are not government-backed public-private partnerships (PPPs) but have “substantially the same risk profile and characteristics as PPP projects”.

JLIF also said it had signed a new First Offer Agreement (FOA) with its parent developer John Laing in order to include rail assets such as the UK’s InterCity Express Project. At the same time, the existing FOA is being amended to exclude waste assets.

JLIF estimates the upshot of this will be a net increase in the pipeline coming from John Laing of approximately £115 million over the next six years. In total, JLIF expects the pipeline of John Laing-owned assets to be worth approximately £400 million over that six-year period.

NORTH AMERICA

Arizona advances first road P3

The Arizona Department of Transportation (ADOT) is moving forward with the concept of constructing the South Mountain Freeway, a ring road in downtown Phoenix, as a public-private partnership (PPP; P3) project, issuing a Request for Information (RFI) in early February.

The state transportation agency issued the RFI after reviewing an unsolicited proposal submitted by a Kiewit Development-led consortium in August 2013 for the third segment of Loop 202 also known as the South Mountain Freeway, a beltway encircling Phoenix, the state’s capital and its largest city.

The first segment of Loop 202, ‘Red Mountain Freeway’, was opened in 2008, while the second part, ‘Santan Freeway,’ was completed in 2006.

Despite having enabling P3 legislation for transportation infrastructure in place since 2009, Arizona has been slow in adopting the model.

Other projects – such as State Route 189, a 45-mile corridor linking Phoenix to Tucson, and an interstate route connecting Phoenix to Las Vegas – which the agency had considered in the past as P3 projects, never advanced.

In April 2012, however, Arizona signed a bill authorising electronic tolling enforcement into law.

Eleven teams respond to Illiana RFQ

The Request for Qualifications (RFQ) issued by Illinois and Indiana – the two states are working together on Illiana, a 47-mile greenfield, controlled access highway that will link Northwest Indiana with Chicago’s southern suburbs in Illinois – drew responses in January from 11 bid teams, many comprising the same companies for both portions of the highway.

The consortia responding to Indiana’s RFQ for the 12-mile portion of the toll road project, which accounts for $270 million of the $1.3 billion total, are:

– Illiana East Mobility Partners – led by Cintra;
– Illiana Open Road Innovators – teaming SNC-Lavalin Capital with UIF GP, and Zachry Construction Corporation;
– Indiana Corridor Transportation Group – with ACS Infrastructure Development and Fengate Capital Management;
– Indiana Mobility Partners – teaming Fluor Enterprises with Plenary Group USA;
– Isolux Infrastructure Netherlands BV LLC – led by Isolux Infrastructure Netherlands; and
– WM Indiana – Illiana Partners LLC – led by Meridiam Infrastructure and Walsh Investors.

A week earlier, Illinois had announced the five teams responding to its RFQ:

-‘Illiana Open Road Innovators,’ teaming SNC-Lavalin Group, Union Labor Life Insurance Company (Ullico) and Zachry Construction Corporation;
-‘Illiana West Mobility Partners,’ led by Cintra;
-‘Illinois Corridor Connection Group,’ with ACS Infrastructure Development and Fengate Capital Management;
-‘Illinois Mobility Partners,’ comprised of Fluor Corporation and Plenary Group, and;
-‘WM Illinois – Illiana Partners,’ teaming Meridiam Infrastructure and Walsh Construction Company.

New director for Virginia’s P3 agency

Virginia’s newly-elected Governor Terry McAuliffe appointed J Douglas Koelemay as the new executive director of the state’s Office of Transportation Public-Private Partnerships (OTP3) in early February.

With more than four decades of experience in business, government and non-profit sectors, Koelemay joins OTP3 from Science Applications International Corporation (SAIC) where he most recently served as vice president, community relations.

Koelemay is no stranger to government posts. Between 2006 and 2012 he served on Virginia’s Commonwealth Transportation Board as an appointee of then-Governor Tim Kaine. He also served as an appointee of another Virginia Governor, Mark Warner, on the state’s Research and Technology Advisory Commission from 2002 to 2006.

The former SAIC executive replaces Tony Kinn, who became OTP3’s first director shortly after the office was established in June 2011. Kinn stepped down on January 10, a day before McAuliffe was sworn into office, succeeding Bob McDonnell as Governor.

OTP3 works with Virginia’s Department of Transportation and other state agencies to coordinate and oversee transportation P3s. In 2012 alone, the office closed P3 projects worth more than $5 billion.

ASIA & ROW

Sydney light rail on track

New South Wales’ (NSW) Minister for Transport, Gladys Berejiklian, says the private sector will take encouragement from the shortlisting of three bid teams for early works on the A$1.6 billion (€1.05 billion; $1.4 billion) CBD and South East Light Rail project in Sydney.

Having received eight bids for the early works contract, Transport for NSW has whittled them down to a three-bid shortlist: Laing O’Rourke Australia Construction; Leighton Contractors; and a joint venture between Downer EDI Works and Parsons Brinckerhoff Australia.

The project comprises two contracts: one for early works and the other a public-private partnership (subject to value for money) for financing, design, construction, operation and maintenance.

“This strong response from a range of private construction firms is a vote of confidence in the CDB and South East Light Rail project,” said Berejiklian in a statement.

She added that early works would be “critical to the wider success of the project” and would make it “clear to the private sector that we are getting on with the job of building this important transport project for NSW”.

Vinci targets emerging markets

In a press conference, French developer Vinci stated its intent to tap growing airline traffic in emerging markets by targeting concessions in countries such as Chile and Peru. It also said it was interested in airports in Asia, regional platforms in Southern Europe and the US and motorway concessions in Colombia.

The group already proved active on the acquisition trail last year, most notably through its €3 billion takeover of Portuguese operator ANA – completed in September – which added 10 airports to Vinci’s portfolio. The developer also bought an additional 4.7 percent stake in Aéroports de Paris from the French state and the French strategic investment fund, bringing its total holding in the business to 8 percent.

Other notable acquisitions included Colas’ 16.67 percent stake in Cofiroute, a French toll road operator, for between €780 million and €800 million. The deal gave it full control of the company.

Malaysia seeks international bidders

The Malaysian government has launched a tender for its second waste public-private partnership (PPP), and for the first time is seeking international bidders for the construction and operation of a 1,000-tonne per day capacity waste-to-energy treatment facility, according to a government statement.

Malaysia is seeking bidders from many different fields, including “technology providers, civil engineer contractors, and waste management companies,” particularly those that can group together as consortia. However, international bidders will have to enter into cooperation with Malaysian companies in order to qualify for the PPP. As long as one of the companies has 51 percent Malaysian ownership, the exact structure of the consortium was not further specified.

The size of the PPP was also not specified, as it will depend on the technology solution that the bidders choose.

“The Government expects to reach a Value for Money solution for the Project by having an international open tender exercise,” a government spokeswoman told Infrastructure Investor. With Malaysia’s solid waste increasing due to the country’s rapid development, the government believes waste-to-energy is the most efficient way to manage its waste.

The bidding process will start with a pre-qualification round, in which the government will evaluate outline proposals and assess consortias’ previous experience in the sector. Interested bidders will have to fill out a questionnaire.