Aviva provides £109m for new Scottish hospital

Aviva Investors has invested alongside the European Investment Bank in a senior debt financing of roughly £218 million, PDI understands.

London-headquartered Aviva Investors has provided a £109 million ($162.7 million; €149.8 million) loan for the construction of a new district and general hospital in Dumfries and Galloway in Scotland, a spokesman for Aviva Investors confirmed to PDI.

The asset management arm of insurance company Aviva is a co-lender on around £218 million in senior debt with 26 year duration against the project finance deal, alongside the European Investment Bank (EIB), PDI understands.

EIB co-lent £109 million on the deal for the construction of the new 350-bed acute hospital, which will provide services from the Royal Infirmary for National Health Services (NHS) Dumfries and Galloway.

The EIB loan represents around half of the project cost, the EIB said in a statement on 11 March.

NHS Dumfries and Galloway Health Board is the project promoter and the project sponsors are Aberdeen Asset Management and Laing O’Rouke.

Susannah Stock, fund manager at Aviva Investors, said in a statement: “Aviva Investors is delighted to have worked with the Dumfries and Galloway Health Board and the project sponsors in bringing this exciting project to a successful close.”

Once complete in 2018 the new Dumfries hospital will serve 150,000 people living in the south-west of Scotland and replace the current hospital.

The deal is the second new hospital in Scotland to be supported by the EIB this year, following its provision of £83 million in senior debt for the new Royal Hospital for Sick Children in Edinburgh, agreed in February. UK-based insurer Prudential, through its asset management firm M&G Investments, provided £85 million in senior debt against that private public partnership (PPP) deal, led by financial advisor and junior debt holder Macquarie Capital, which was also sponsor on the deal.

It is also the second hospital to be built under the Scottish government’s non-profit distribution (NPD) model, an infrastructure scheme overseen by Scottish Futures Trust, which had £2.5 billion committed to it in 2010 and another £1 billion committed in 2014. The Royal Hospital for Sick Children was also financed through the NPD model.

Projects financed by the EIB in Scotland last year included completion of the M8 motorway link between Glasgow and Edinburgh and the Aberdeen western bypass, upgrading Scotia Gas Networks and Scottish Hydro’s gas and electricity networks and investment in social housing in the New Gorbals in Glasgow.

Aviva Investors operates in 15 countries in Asia Pacific, Europe, North America and the UK with assets under management of £240 billion, as at 30 September 2014.