PPP Round-Up

EUROPE

LITHUANIA APPROVES FOUR PRISON PPPS

The Lithuanian government has approved a new “Prison Modernisation Programme”, with the aim of modernising its detention facilities by 2022. Four of the proposed projects making up the programme will be implemented on a public-private partnership (PPP) basis.

The programme includes the construction of a new remand prison on the outskirts of capital city Vilnius as well as in Siauliai, Klaipeda and Panevezys, as well as the completion of Pravieniskes Prison.

Lithuania is allocating more than €30 million in state budget funds to the programme with a further €3.5 million coming from Norwegian Financial Mechanisms, a form of foreign aid provided by Norway to certain European Union (EU) member states. These funds do not include the projects to be implemented on a PPP basis.

“The programme accommodates four PPP projects attractive to investors,” said Jonas Kimontas, project manager at Invest Lithuania – a government body responsible for attracting foreign investment and PPP promotion – in a statement. “We can see that they are already generating interest and we expect that competent companies with expertise in such projects will ensure proper competition during the tenders.”

The statement said that the Vilnius detention facility, comprising 1,620 beds, will be the first project to be tendered, with a Request for Qualifications (RFQ) expected in the middle of next year. The second project in the pipeline will be the Siauliai detention facility, with 800 beds.

INPP DIVESTS FRENCH HOSPITAL STAKE

International Public Partnerships Limited (INPP), the London Stock Exchange-listed fund manager, has disposed of its holding in the Amiens Hospital public-private partnership (PPP) in France.

In a statement, INPP described the sale as “opportunistic” as it followed an unsolicited offer from Atlante Gestion, a Paris-based firm which specialises in PPP asset management and origination.

A unit of Atlante Gestion, known as Atlante Property Management, purchased the 95 percent equity and subordinated debt interest for what the statement said was a premium to the company’s valuation for the project.

INPP was motivated to sell as the interest was “sub-scale” in terms of its broader portfolio, representing less than 0.05 percent of its net asset value as of 31 December 2013. INPP said it expected to reinvest the proceeds of the sale in its current pipeline of new opportunities.

“The divestment of Amiens highlights the continuing investor demand for high-grade PPP assets across Europe,” said Rupert Dorey, chairman of INPP.

Listed in 2006, INPP has 114 investments in social and transport infrastructure projects in the UK, continental Europe, Australia and Canada.

ALLIANZ IN £130M NORTHERN IRISH DEBT RESTRUCTURING

Allianz Global Investors (AllianzGI), the investment unit of German insurer Allianz, has completed a restructuring of the financing package behind Northern Ireland’s DBFO2 public-private partnership (PPP).

The £250 million (€314 million; $429 million) project, which began construction in 2007 and has a 27-year maintenance period, involves building 38 kilometres of new road. These comprise 12 kilometres of new tracks on the A1 and four new junctions – completing the upgrade to dual carriageway of the road from Belfast to Dublin – as well as more than 20 kilometres of the A4 from Ballygawley to Dungannon.

The restructuring transaction saw AllianzGI acquire all of the bonds issued by Amey Lagan Roads Financial, the project company, amounting to a total value of around £130 million. The unit invested on behalf of third-party clients – including UK pension funds – as well as other Allianz Group entities.

The news came just a day after Allianz launched its debut UK debt fund, which has a target of £500 million. Although the DBFO2 deal was funded via money the firm holds in separately managed accounts, Allianz says its profile is within the remit of the transaction universe the vehicle will be targeting in the near future.

NORTH AMERICA

IDOT issues RFI for new Chicago airport

The Illinois Department of Transportation (IDOT) has issued a Request for Information (RFI) seeking input from airport developers, investors, operators as well as passenger and freight air carriers, in structuring a business plan for the South Suburban Airport which it will most likely procure as a public-private partnership (PPP; P3).

The Illinois General Assembly authorised IDOT to build the new airport in partnership with the private sector by passing Senate Bill 20 (SB 20) in May 2013.

To date, IDOT has paid $85.85 million to acquire 3,857 acres of the 5,800 acres needed for the project. Should the project be realised it will be the first ever greenfield airport P3 in the US.

The South Suburban Airport (SSA) would be located in Peotone, Illinois, a suburb 40 miles south of downtown Chicago.

According to a document issued by Will County, where Peotone is located, SB 20 is based on the public-private agreements for the Illiana Expressway, a $1.3 billion toll road project linking Indiana with Illinois, which both states are procuring as separate P3s.

The RFI for SSA comes nearly a year after a second attempt to privatise Midway Airport, the second-largest airfield in the Chicago metropolitan area after O’Hare, failed.

Eight bidders for Pennsylvania wireless P3

The Pennsylvania Department of Transportation (PennDOT) received eight submissions in response to a Request for Qualifications (RFQ) issued for its wireless telecom public-private partnership (PPP; P3) programme.

The programme will use the agency’s or state property to build wireless telecommunications infrastructure.

The bidders are: Municipal Communications LLC; Parallel Infrastructure; On Target Acquisition; Milestone Communications; Crown Castle USA Inc.; Site Acquisition Services, Inc.; American Tower Corporation; and Grain Management LLC.

A shortlist will be announced in September.

The Department will ultimately select a firm that has an interest, qualifications and relevant experience in providing turnkey facilities and services necessary to support PennDOT’s Wireless Telecommunications Partnership Program. Services include the design and implementation of a revenue-generating programme and managing the usage of property for wireless telecommunications infrastructure.

The preferred bidder will pay PennDOT a percentage of the revenue generated from contracts with leaseholders, licensees or permittees, according to the RFQ released in May.

Revenue generated for PennDOT from this project will be used to fund capital projects that will enhance the agency’s ability to provide a safe intermodal transportation system that attracts businesses and residents and stimulates the Pennsylvania economy.

Balfour Beatty scores C$600m Canadian hospital PPP

UK developer Balfour Beatty has been named selected bidder for two new acute care hospitals in Vancouver, British Columbia in Canada.

The 30-year public-private partnership (PPP; P3) project on behalf of the Vancouver Island Health Authority will cover the financing, design, construction, and facilities management for the Campbell River Hospital and Comox Valley Hospital. The deals are worth a total of C$600 million (€407 million; $552 million), according to reports.

Balfour Beatty is expected to invest C$17.2 million into the project, which represents 50 percent of the equity required. Its joint venture partner Graham Group will undertake the construction and Balfour Beatty will be responsible for the delivery of soft facilities management services.

Both companies are currently working with the Vancouver Island Health Authority to finalise financing and other aspects of the project, Balfour Beatty said in a statement.

The transaction marks the second major healthcare development for Balfour Beatty in British Columbia this year. Last April, Balfour Beatty Investments, as part of the Affinity Partnerships consortium, sealed a C$350 million (€237.9 million; $322.1 million) financing package for BC Children’s & BC Women’s Redevelopment Project (Phase 2). Under the PPP contract, the company is to provide financing, construction and facilities management services over a 30-year concession period.

ASIA & ROW

Financial close for NZ$1bn road PPP

The Wellington Gateway Partnership (WGP) consortium has achieved financial close for the delivery of the NZ$1 billion (€630 million; $850 million) Transmission Gully motorway in New Zealand.

The project is availability-based and arises from an agreement between WGP and the New Zealand Transport Agency. WGP includes: Leighton Contractors, the Australian construction firm; HEB Construction, the New Zealand construction firm; Bank of Tokyo-Mitsubishi UFJ (BTMU), the Japanese bank; and the New Zealand Accident Compensation Corporation (ACC), a Crown entity which provides compensation for personal injuries.

InfraRed Capital Partners, the UK fund manager, is providing around NZ$55 million in equity for the project (which is about 40 percent of the total equity) while Leighton Contractors and ACC are also providing equity. BTMU is financial advisor to the project, with funding being provided by unnamed local and international banks.

The consortium – which was named preferred bidder in December last year – will finance, design and construct the project, with work set to start imminently and the project expected to employ up to 700 people at the peak of construction. The consortium will be in charge of operating and maintaining the motorway from 2020 for a period of 25 years.

Vietnam embarks on PPP framework with ADB-AFD help

Egis, a French engineering state-owned company, and Adetef, an inter-ministerial agency assisting emerging economies with institutional reforms, have signed an agreement with Vietnam’s Ministry of Planning and Investment (MPI) to assist the Vietnamese government in setting up a public private partnership (PPP) infrastructure investment programme.

The Asian Development Bank and the Agence Française de Development are backing the project with a co-investment totaling $3.5 million over a period of 5 years.

The technical assistance will consist in the Egis-Adetef consortium advising state agencies on behalf of the MPI. Egis and Adetef have gathered a total of 30 experts on this project, comprising 10 international experts and 20 Vietnamese experts with strong sectorial backgrounds.

“What really makes the difference when Adetef comes in on a project is usually the diversity of experts involved and most importantly how complementary the different expertise are. We often work on a consortium basis which enables us to adapt to the specific demands of our international partners”, said Adetef.

The technical assistance consultancy team will provide recommendations on PPP strategy, including screening of sound PPP projects, as well as institutional and sector issues. Sectors involved will include energy, transport, education, health, and water/ sanitation. The assistance will extend to economic, financial and legal advice, with knowledge transfer and capacity building of government counterparts – both at MPI and the state agency levels – given a strong focus.