Consolidation of Building Schools for the Future

RNS Number : 0696Z

International Public Partnership Ld

03 February 2014

 



3 February 2014

INPP makes disposals and acquisitions to consolidate Building Schools for the Future (BSF) portfolio

-    Acquisition of additional shares in Kent BSF and the divestment of minority interests in multiple BSF projects highlights schools sector as providing enhanced value opportunities -

International Public Partnerships Limited (INPP) is pleased to announce that it has agreed to a number of transactions within its Building Schools for the Future (BSF) portfolio, consolidating its position within the UK schools sector.

Acquisition of additional interests in Kent BSF

Working with Kent County Council, INPP has contracted to acquire 60% of Kier Project Investments' 80% interest in the Kent BSF education project.

The opportunity to acquire the interest in the project has arisen through pre-emptive rights that INPP gained as part of its 100% stake in Building Schools for the Future Investment (BSFI), which it acquired from the Department of Education and Partnerships UK in August 2011.

INPP will invest £7.2 million and will own 58% of the project, with Kent County Council owning the remaining 42% on completion of the transaction.  The project comprises three secondary schools on separate sites located across Kent, all of which align with INPP's key investment criteria:

·     The investment debt is non-recourse at the project level and matched to the life of the project;

·     The investment has a long operational pipeline, with an average remaining life of 22 years;

·     The investment conforms to a typical UK PFI project funding structure with well established and standard form risk framework;

·     The project is operational and yielding and will contribute to INPP's portfolio return immediately upon acquisition.

The investment has been completed at a level of projected return that INPP regards as attractive compared to both current market conditions and the evidence of the value obtained by INPP on the disposals referred to below.

Rupert Dorey, Chairman of International Public Partnerships, said: "INPP is delighted to have acquired this additional interest in the Kent BSF project and to work more closely with Kent County Council.  The acquisition demonstrates the value of the pre-emption rights INPP acquired as part of the original BSFI investment and our intention of being a long-term supportive infrastructure investment partner." 

Strategic divestment of six minority BSF interests

In two separate transactions, INPP has agreed to divest its minority interests in the Hull, Leeds, Newcastle, Rochdale and Sandwell BSF¹ projects to the Dalmore Capital Fund, and its minority interest in the Leicester BSF project to Semperian Investments, two secondary market investors in the infrastructure sector who already have significant investments in these school projects.  INPP determined that it had no realistic scope to increase its holdings in these particular projects to majority controlling holdings and therefore considered, based on the price offered, a sale would be in the best interests for the Company.   

The proceeds of sale due to be received following completion of the disposal transactions is approximately £18.75 million which is well in excess of the price paid on acquisition in August 2011; offers a significant premium to the 8-9% internal rate of return ("IRR") target of the Company²; and illustrates the strength of the secondary market for these assets.

INPP expects to re-invest the proceeds from the sale in the current pipeline of new infrastructure opportunities being developed by it and its investment adviser.

Mr Dorey added, "The divestment of these minority BSF interests highlights the Company's willingness to optimise its portfolio for investors in situations where opportunities to increase the Company's minority position are not available and attractive prices can be achieved."

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¹ Disposals are subject to third party rights to match Dalmore’s offer to INPP

² IRR target is based on the Initial Public Offer issue price of 100 pence per Ordinary Share and to be achieved over the long-term

About the BSF portfolio

The BSF programme was an initiative launched in 2004 by the previous government, with the aim of rebuilding or re-modelling every secondary school in England over a 20 year period.  Although the longer term BSF programme has now been cancelled by the Government, the schools which were the subject of the programme prior to its cancellation continue to be actively developed and managed.

INPP originally invested into the BSF programme when it acquired the government's interest in the BSFI in August 2011.  Since this time, the Company has built up considerable experience in managing investments in schools delivered under PFI and PPP programmes, and the acquisition of this new interest compliments the existing portfolio of over 200 individual schools across the UK.  In total, school projects now represent c.27% of the net asset value (NAV) of the fund.

For further information:

Erica Sibree                                                    [phone]

Amber Fund Management Limited                                

Nick Westlake/Hugh Jonathan                            [phone]/1263

Numis Securities       

Ed Berry/Jack Hickey                                        [phone]/7196
FTI Consulting

Notes to Editors:

About International Public Partnerships (INPP):

International Public Partnerships (INPP) is a listed infrastructure investment company which invests in global public infrastructure projects developed under the public private partnerships (PPP), private finance initiative (PFI), regulated asset and other similar procurement methods.

Listed in 2006, INPP is a long-term investor in 123 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and utility and transmission projects in the U.K., Europe, Australia and Canada. INPP seeks to provide its shareholders with both a long-term yield and capital growth through investment across both construction and operational phases of 25-40 year concessions.

Amber Infrastructure Group (Amber) is the Investment Advisor to INPP and consists approximately 70 dedicated staff who manage, advise on and originate projects for INPP.

Visit the INPP website at www.internationalpublicpartnerships.com for more information.

 

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