HICL buys PFI stakes from Kier

23rd May 2011 07:03

Infrastructure investment specialist HICL Infrastructure Company Limited has formed a new joint venture with long-time partner Kajima Partnerships to buy stakes in three Private Finance Initiative (PFI) projects.The joint venture, which will be 75% owned by HICL, is paying £17.2m for a 50% stake in the Sheffield Schools PFI project and 100% stakes in the Norwich Area Schools and Oldham Secondary Schools PFI projects.The stakes are being acquired from house builder Kier and European banking group Dexia. Kier said it received £9.2m in cash for its 50% stakes in the Oldham and Norwich Schools projects.The aggregate consideration gives rise to a profit of £4.3m, which will be disclosed in Kier's current full year results and represents a valuation discount rate on the base case cash flows of around 7%.Though it has divested its interests in the schemes, Kier will continue to provide the facilities services under the current contracts for a further 21 years in the case of the Norwich schools, and 22 years in the case of the Oldham schools. Tony Roper, director of InfraRed Capital Partners, HICL's investment adviser, expressed pleasure at having made the acquisitions, which takes the number of infrastructure investments in the group's portfolio to 40. "The acquisitions add to the group's existing portfolio of schools projects and build on the successful relationship which we already have with Kajima Partnerships Limited. We look forward to working with each local authority and the other stakeholders to ensure that these projects continue to be well-managed and successful," Roper said.---jh