Eton issues £45m private placement

One of the UK’s most well-known schools has, for the first time, tapped the debt market to invest in its endowment trust.

Eton College has borrowed £45 million (€63.1 million; $70.2 million) at a fixed-interest rate of 3.63 percent by issuing a private placement to a UK institutional investor, the school said. The tenure is 45 years.

The private boy’s school, which hasn’t borrowed before, issued the debt to Friend’s Life, Reuters reported. The investor is a subsidiary of life insurance company Aviva. Friend’s Life declined to comment.

Nineteen of Britain’s prime ministers have been educated at Eton. The proceeds will be used to leverage the net investment returns of the college’s endowment portfolio and partly fund the next phase of the school’s building programme, Eton College said in a statement. The investment will also help boost the amount of student fees the school pays through scholarships and other support initiatives.

Eton bursar, Janet Walker, said that it decided to borrow in early June in order to lock-in historical low interest rates. The deal was completed this week. Rothschild advised Eton College on the placement.

Another UK boarding school Christ’s Hospital and some Oxford and Cambridge colleges have also used the private placement market recently, PDI understands. 

The Eton endowment fund had £227 million in securities, as at 31 August 2014, managed by Partners Capital. The school also has around £70 million in commercial property managed by an in-house investment property director.