Financial Close for Lincs OFTO Project
4 November 2014
Financial Close for Lincs Offshore Transmission Project
International Public Partnerships Limited ("INPP" or the "Company"), the FTSE 250 listed infrastructure investment company, is pleased to announce that Transmission Capital Partners, the consortium comprising INPP, Amber Infrastructure and Transmission Investment, has achieved financial close and INPP has completed its investment in the Lincs offshore transmission project.
This is the fifth offshore transmission project that Transmission Capital Partners has closed under Ofgem's tenders for the long-term licence and operation of offshore transmission assets in the United Kingdom and is the Company's single largest investment to date.
INPP has invested approximately £171 million, which was funded from the Company's existing cash and debt resources, to acquire 100% of the equity and junior debt of the project, with the senior debt being provided by the European Investment Bank. The Company's projected returns from its investment in the Lincs project will be in line with the returns it is receiving from its existing portfolio of transmission assets and will be RPI linked. This will enhance the proportion of revenues from investments in the Company's portfolio that are inflation linked to 84%. The investment is expected to provide immediate yield to the Company.
The investment represents c.17% of the Company's portfolio and will see the Company's overall investment in the offshore transmission1 sector increase to c.33% of the portfolio (based on 30 June 2014 NAV). However each of these investments, like all others in the portfolio, have been acquired on a stand-alone basis with no recourse to the Company or other projects within the portfolio.
The project links the 270MW Lincs windfarm to the National Grid via 100 kilometres of subsea cables and other related infrastructure including substations. The Company takes no exposure to electricity production or price risk but is paid a pre-agreed, availability-based revenue stream over 20 years which is fully linked to UK inflation (RPI).
Key features of the project are:
· A 20 year revenue term
· An availability-based revenue stream, with protected downside (potential deductions capped at 10% of base revenue in any year), and fully linked to UK RPI
· An availability-based revenue stream with no exposure (either revenue or penalties) to wind farm performance or credit
· Revenues contracted by National Grid Electricity Transmission plc (NGET), a subsidiary of National Grid, in their statutory ring-fenced role as national electricity systems operator (NGET rated 'A-' S&P; 'A' Fitch)
· A robust financial structure with no refinancing risk
· The asset has an established operating record.
Of the 13 projects tendered by Ofgem under the first two rounds of bids, ten offshore transmission projects have now reached financial close, with Transmission Capital Partners being responsible for five of them, reinforcing its reputation as a market leader in this asset class.
As a result of this investment being partly funded from the Company's £175 million revolving debt facility, the Company will have drawn debt of approximately £110 million.
The Company continues to look forward to an exciting series of future opportunities in both the offshore transmission sector and the wider infrastructure market. For instance in August 2014, the consortium was also shortlisted by Ofgem for a further two OFTO projects: Westermost Rough and Humber Gateway both located in the North Sea off the coast of Yorkshire with a combined investment value of £400 million. Preferred Bidder status is expected to be announced during 2015. Elsewhere the Company and its investment adviser continue to review and work on a wide range of attractive opportunities in each of the UK, European, Australasian and North American markets.
Commenting on the acquisition Rupert Dorey, Chairman of INPP said: "The scale of the investment makes this a significant transaction for INPP and further reinforces its leading position in the offshore transmission sector. The asset is an appealing addition to our portfolio with exactly the sort of characteristics that we like to invest in. We believe the long-term, fully inflation-linked revenue that arises from this asset fits well with INPP's ongoing investment strategy and should enhance the attractiveness of the Company to investors."
A copy of the Ofgem press release can be found at www.ofgem.gov.uk
For further information:
Erica Sibree +44 (0)20 7939 0558
Amber Fund Management Limited
Hugh Jonathan/Nick Westlake +44 (0)20 7260 1263/1345
Numis Securities
Ed Berry/Mitch Barltrop +44 (0) 20 3727 1046/1039
FTI Consulting
Notes to Editors:
About International Public Partnerships:
International Public Partnerships Limited (INPP) is a listed infrastructure investment company which invests in global public infrastructure projects developed under the public private partnerships (PPP) and private finance initiative (PFI) procurement methods.
Listed in 2006, INPP is a long-term investor in 115 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and renewable energy projects in the U.K., Europe, Australia and Canada. INPP seeks to provide its shareholders with both a long-term government-backed yield and capital growth through investment across both construction and operational phases of 20-40 year concessions.
Visit the INPP website at www.internationalpublicpartnerships.com for more information.
About Amber Infrastructure Group:
Amber Infrastructure Group (Amber) is a leading international infrastructure specialist, providing asset management and investment advisory services in respect of over £4 billion of assets in the UK, Europe, Australia and North America. Amber's core business focuses on sourcing, developing, advising on, investing in and managing infrastructure assets within the utilities, PPP, transport, renewable energy and regeneration sectors.
Amber provides investment advisory services to International Public Partnerships
Limited as well as private investment funds, specialising in urban regeneration. Amber is headquartered in London with offices in Munich, Sydney, Melbourne and San Francisco and employs approximately 75 people, making it one of the largest
international infrastructure specialists.
About Transmission Investment:
Transmission Investment was established in 2008 to procure, construct, own and operate transmission assets, initially those in the UK being tendered through the new offshore transmission regulatory regime being overseen by Ofgem. It also provides transmission development advisory services to electricity industry stakeholders, including many offshore wind developers. The senior management team has over 100 years experience in the UK electricity supply industry, the majority of which has been focussed on the development, procurement and construction of major offshore transmission and wind projects.
This information is provided by RNS
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