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Investment fund looking to resurrect cancelled PFI projects

Waste-to-energy PFI projects that were dropped as part of the Government’s comprehensive spending review could be resurrected by a US-based infrastructure fund.

Using investment from more than 80 of the world’s largest pension funds, the fund will work through its own investment manager and is represented in the UK by global alternative capital advisors Equility Capital. 

Equility Capital said all of the waste-to-energy PFI projects being built for UK local authorities cancelled as a result of the October spending review qualify for funding under the programme, with transactions able to be completed within 90 days. Its UK Infrastructure Funding specialist Paul Carten told MRW: “I can say that this programme represents a step change in the approach to how infrastructure projects of all kinds should be financed in the UK. 

“It strips away many of the complexities and nearly all of the costs that come with traditional PFI and introduces a streamlined, structured and proven funding process.  We will provide 100% funding for ‘shovel ready’ projects ranging between £10m and £1bn+.  So, not only can projects cancelled under PFI be immediately resurrected and taken forward, but the programme itself can also be a main element in delivering massive savings in the procurement of infrastructure to the over-burdened tax-payer.”

Equility Capital chief executive David Rose explained that the 80+ pension funds who invest in this programme must meet certain investment criteria for the funds they manage.  At the moment, they are over-burdened with gilts/Treasuries, are wary of equity markets and have too high a proportion of liquidity.  This new programme is designed to open a new route for them to channel funds into suitable investment grade rated opportunities so that they can add a stream of predictable long-term returns for their pensioners or life policy holders.

As the funding is provided as a capital lease, the investing institutions take ownership of the plant for the duration of the funding term, leaving the local authority and/or contractors in complete management and financial control.  On completion of the funding term the plant is returned 100% to the local authority or special purpose vehicle at no cost.

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