Vinci, Barclays Infra Fund close London road PFI

The consortium has secured an £88m loan from Bank of Tokyo Mitsubishi, KfW and DZ Bank to help fund an initial £100m of works to refurbish and maintain several hundred kilometres of roads and pavement across the London Borough of Hounslow. The total contract is worth £650m.

A consortium of French developer Vinci Concessions and Barclays Infrastructure Fund has reached financial close on a contract to refurbish and maintain a highways network in the London Borough of Hounslow, Vinci announced in a statement yesterday.

The £650 million, 25.5-year (€818 million; $1 billion) contract will call on the private partner to upgrade, repair and maintain 432 kilometres of roads and 763 kilometres of pavements. The team will be remunerated via availability payments from the public sector in exchange for maintaining the assets in good condition.

Initially, the Vinci/Barclays consortium will have to invest around £100 million in the project, which it will finance with a 24.5-year, £88 million loan from Bank of Tokyo Mitsubishi, DZ Bank and KfW and some £20 million in equity. Construction and refurbishment works are earmarked to start in January 2013 and will be carried out by Eurovia subsidiary Ringway.

Vinci has been making inroads into the UK Project Finance Initiative (PFI) roads market, with Hounslow marking its first win in the sector.

Yesterday, Infrastructure Investor reported that the Isle of Wight Council has given the all-clear for a £1.2 billion contract that will see Vinci, together with Ringway, manage and maintain some 800 kilometres of roads across the island as part of a 25-year contract.