Secondary market for UK PFI takes off
equity providers to
drive down costs
A secondary equity market is growing up in UK private finance initiative (PFI) and public-private partnership (PPP) projects that could offer investors high returns and boost liquidity. At least half-a-dozen secondary funds are investing or seeking assets. Making the running are such investors as Secondary Market Infrastructure Fund (SMIF), a five-partner team bought out from Abbey National and Babcock & Brown last year; Innisfree; and Barclays Private Equity.
When Star Capital Partners bought SMIF in December, it had acquired a portfolio of 23 project assets with an underlying gross asset value of £2 billion. These included Carillion's 30% share in the Dartford and Gravesham Hospital PFI and HSBC Infrastructure's interest of over 85% in the Falkirk Schools PFI. Barclays has set up Infrastructure Investors (I2) with Société Générale to invest in projects as they become operational. Each bank has committed £150 million ($269 million) to I2, which has a target of £450 million.
Innisfree manages three primary funds and a £150 million secondary fund via a joint venture with M&G Investment Management.