Out-Law News | 08 Aug 2013 | 2:31 pm | 1 min. read
The 'Aggregator Funding Vehicle' would be responsible for sourcing public funding to help attract private sector investment in 46 schools identified by the Government as being in priority need of rebuilding or repair.
Under the Government's Priority School Building Programme (PSBP) 46 out of 216 schools identified as being due for rebuilding or repair are to be financed through the new 'PF2' private finance programme. The funding is to be managed by a fund manager, the 'aggregator', which would be able to access both bank debt and the capital markets in order to pull together the public sector's share of the funding and make the money available to the successful private sector bidder for the repair or rebuilding contracts.
"The contracting authority is proposing to procure a funding vehicle which will be expected to access finance (short and long term lending as appropriate) and on-lend to the PF2 projects within the Priority School Building Programme," the contract notice issued by the EFA said.
"The PF2 Projects will be procured in accordance with PF2 principles and will involve the design, construction and provision of hard facilities management services in respect of multiple schools. The proposed term of the PF2 contract will be 25 years from the service commencement date of the final school to be completed in each PF2 Project. This Notice and the scope of the Aggregator funding solution relates solely to the PF2 Projects. The PF2 Projects contain 46 schools with an estimated total funding requirement of [£700 million]," it said.
"The Aggregator funding solution works on the basis that the funding requirements of several projects are aggregated to allow access to competitive funding solutions which may include bank debt and capital markets solutions. It is anticipated that the underlying PF2 Projects will attain BBB-credit ratings and that the on-loans to those projects by the Aggregator will be made on the basis of standard documentation agreed at the outset," the EFA's contract added.
Infrastructure law expert Kate Orviss of Pinsent Masons, the law firm behind Out-Law.com, said: "It is heartening to see the progress being made by EFA in relation to PSBP generally and the Aggregator Model specifically. With two batches now in the market and the procurement process started for the Aggregator Funding Vehicle momentum is really building which is welcome relief in the current climate and very positive news for the industry."