International Public Partnerships Regulatory News (INPP)

24 August 2015

BAZALGETTE Consortium awarded licence to own and fiNance thames tideway TUNNEL

- Thames "super sewer" marks International Public Partnership's largest single investment to date -

International Public Partnerships Limited ('the Company', 'INPP'), the listed infrastructure investment company, is pleased to announce the Bazalgette Consortium comprising INPP (through Amber Infrastructure), Allianz Capital Partners, Dalmore Capital Limited, and DIF has been awarded by the Water Services Regulation Authority's ("Ofwat") the license to finance the construction of the Thames Tideway Tunnel. This finalises the Company's investment undertaking into the project.

The Thames Tideway Tunnel is one of the most significant UK infrastructure investment opportunities. Up to 39 million tonnes of untreated sewage are currently discharged into the tidal River Thames in a typical year and the project will significantly reduce this.

The Company has committed to invest up to £210 million and now has a 15.99% stake in the project. The remaining risk capital is being funded by the Company's consortium partners. The project has a design life of 120 years and is expected to provide yield to its investors for the whole of this period.

The Company's commitment to the project has been secured through the issue of a letter of credit under the Company's corporate debt facility. The Company's investment will be funded as the Project's milestones are met with the final injection expected in early 2018.

Following this transaction, the Company's £300 million corporate debt facility will be approximately £262 million drawn or committed. Once fully subscribed in March 2018 (and other things being equal) TTT will represent 16.1% of the Company's portfolio.

The Company's investment in the project will increase the projected weighted average life of the Company's portfolio (once fully subscribed in March 2018 and other things being equal) from 21 years to 43 years and is expected to be accretive to overall returns. In the Company's view the project has an attractive risk profile, in line with that of other assets in the Company's portfolio. In particular the project benefits from a government support package which provides significant mitigation to some of the more severe risks of construction.

In addition to the risk capital invested by the Company and its consortium partners, six banks have provided senior debt to the Project, including Royal Bank of Canada, Lloyds Bank, Credit Agricole, SMBC, BTMU and Santander. The debt on the Project has received a rating of Baa1 by Moody's.

Rupert Dorey, Chairman of International Public Partnership said: "We are delighted to receive regulatory approval to complete this transaction. This is the Company's single biggest investment to date and demonstrates our ability to source and execute attractive low-risk, inflation-linked government-backed investment opportunities. The construction of the Thames Tideway Tunnel is a landmark project that will improve greatly the environmental health of London."

Project background

The Thames Tideway Tunnel is a new part of the sewerage network which will carry sewage and storm water discharges from the broader London sewerage system. It will be a 7.2 metre diameter 25 kilometre sewer tunnel running up to 65 metres below the Thames and will effectively replace the Thames as a "sewer of last resort".

The project will feed overflow sewage to a pumping station at Abbey Mills in East London. At Abbey Mills, the sewage will enter the Lee Tunnel, which is owned by Thames Water (due to be completed in 2015) for further transport to Beckton Sewage Treatment Works.

Design and construction of the project will be under three main construction contracts which have been procured separately by Thames Water. The construction contractors are:

· Joint Venture of BAM Nuttall Ltd, Morgan Sindall Plc and Balfour Beatty Group Limited) selected for the West contract,

· Joint Venture of Ferrovial Agroman UK Ltd and Laing O'Rourke Construction) for the Central contract

· Joint Venture of Costain Vinci Construction Grands Projets Bachy and Soletanche) for the East contract.  

Construction is expected to commence in 2016 and reach completion by 2023. 

During construction, the project will benefit from a bespoke regulatory framework that will allow it to start generating revenue when construction begins. Once fully operational, Ofwat will regulate the project in line with other water and sewerage company's regulatory cycles.

A copy of the Ofwat press release can be found at www.ofwat.gov.uk.

For further information:

Erica Sibree +44 (0)20 7939 0558

Amber Fund Management Limited

Nick Westlake/Hugh Jonathan +44 (0)20 7260 1345/1263

Numis Securities

Ed Berry/Mitch Barltrop +44 (0) 20 3727 1046/1039FTI 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 118 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 typically 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 £5 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 PartnershipsLimited 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 over 80 people, making it one of the largest

international infrastructure specialists.