The Government has highlighted Thames Water’s £4.2 billion Tideway Tunnel as a major opportunity for overseas investors to invest in UK infrastructure, together with flagging up the fact that a “Government Support Package will further protect investors”.
Chief Secretary to the Treasury, Danny Alexander MP, was showcasing over £15 billion of opportunities to invest in UK infrastructure with the launch of a Guide compiled by HM Treasury and UK Trade & Investment at the Commonwealth Games Business Conference in Glasgow.
In a brief overview of why overseas investors should consider investing in the UK water sector, the Guide states:
“The water industry has attracted significant ownership by financial investors due to
- Non-cyclical revenue streams supported by stable economic regulation
- Inflation-linked prices– set on the basis of RPI +/-X
- Also significant debt issuance available to investors because of stable revenues.”
The Guide includes the following overview of why Thames Water’s Tideway Tunnel is an investment opportunity:
“A unique opportunity to invest in a new UK regulated utility company
- Total estimated cost of the project is c.£4.2bn
- £1bn equity opportunity
- Investment grade debt package
Bespoke regulatory framework reflecting project specific features, based around familiar building blocks:
- Cost of capital bid by investors and fixed up until Project Acceptance
- Investment remunerated during construction – revenue flowing from Project Licence Award (and dividend yield during construction)
Government Support Package will further protect investors:
- Sharing / mitigation of exceptional risks
- Total investor funding requirement capped at pre-defined maximum
Investors do not need to bring project delivery expertise:
An experienced project team, project manager and management team will be transferred to the Infrastructure Provider at Project Licence Award.'
The Guide to investing in UK infrastructure outlines 14 individual infrastructure programmes and projects worth over £15 billion that are open to investment, as well as explaining how the government is making it easier than ever before to invest in UK infrastructure.
New figures released from UK Trade & Investment show the UK has attracted the most inward investment projects since records began in the 1980s because of its growing economy, transparent legal system, strong regulatory framework and competitive tax regime. Within the 1,773 investment projects set up by foreign businesses in the UK during the 2013 to 2014 financial year, 310 were in infrastructure and energy resulting in 31,261 jobs.
The guide is aiming to build on this success by ensuring that investors are aware British infrastructure continues to be an attractive prospect because of its long term and stable returns, plus unique support in the UK from policies such the Green Investment Bank and UK Guarantees Scheme.
Opportunities to invest in projects across the UK listed in the Guide include:
- Thames Tideway Tunnel – a 25km sewage system that will meet London’s needs through to the 22nd Century
- The Shetland Investment Fund –expanding and upgrading the infrastructure needed to access the oil assets that lie to the north west of those islands
- Estover Energy – who are developing a number of new small‐scale Combined Heat & Power plants’
- The Green Investment Bank Offshore Wind investment Fund – which is seeking to partner with third-party institutional capital
- Carnbroe Energy From Waste Plant – which when operational will produce 22MW of electricity from waste
- Liverpool Waters – The rejuvenation of Liverpool’s historic docks, providing Residential, Commercial, Retail and leisure facilities that will facilitate the city’s economic growth in the 21st century
The latest update of the Government’s Infrastructure Pipeline, released today, will show that planned infrastructure investment has now increased to £383 billion to 2020 and beyond. The National Infrastructure Plan pipeline summer 2014 update includes a projected AMP6 capital spend for the period 2015-20 of £15 billion-plus by the water and sewerage companies, and £1.62 billion by the water-only companies. The pipeline also includes an estimated total capital spend of £3 billion-plus on flood infrastructure projects to 2020 and beyond.
Click here to download the Guide Investing in UK Infrastructure
Click here to access the National Infrastructure Plan pipeline summer 2014 update
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