Trio provides £185m for new children’s hospital

Prudential invests £85 million in Macquarie Capital-led UK infrastructure partnership.

UK-based insurer Prudential has provided 25-year debt financing, alongside the European Investment Bank and Macquarie Capital, in a £185 million (€249.8 million; $284.2 million) facility for the construction of a new children’s hospital in Edinburgh, Scotland.

Macquarie Capital, which led the competitive funding process, has provided £15 million in junior debt. The remainder of the facility is split between a £150 million senior tranches and £20 million in senior subordinated debt, which Prudential, via its investment unit M&G, and EIB financed pro-rata, each committing £85 million.

The construction of a new building, which will replace the existing Royal Hospital for Sick Children and include services from the Department of Clinical Neurosciences and Child and Adolescent Mental Health Services, is due to begin immediately.

It is the first acute hospital to be delivered under the Scottish Non-Profit Distributing (NDP) model.

Simon Pilcher, chief executive of fixed income at M&G Investments, said in a statement: “Both Prudential and M&G are committed to investing in infrastructure projects that benefit the UK and we are proud to play our part in the opening of the new hospital.”

Macquarie Capital partnered with design and build contractor Brookfield Multiplex Europe and facility management provider Bouygues Energies & Services to form the IHS Lothian consortium. The alternative lender acted as sole sponsor and exclusive financial advisor to the group, delivering more than 15 percent savings through financing enhancements for the Scottish Futures Trust and NHS Lothian Board, a statement from the firm said.

“The project demonstrates Macquarie Capital’s commitment to offering innovative and market leading funding solutions to clients. This is the first dual tranche senior debt and senior subordinated debt solution to Scotland’s NPD model”, Mark Bradshaw, head of European public private partnership, commented.

Susan Goldsmith, finance director at NHS Lothian, said: “We have worked closely with our partners IHS Lothian throughout this process and I would like to thank them for their efforts. We are delighted to have reached financial close on this significant project and we now look forward with anticipation and excitement to seeing the new facility taking shape over the coming years.”

ISH Lothian were appointed the preferred bidder for the site in March 2014 and planning permission was granted in August 2014.

In early February, Macquarie Capital reached a financial close on the £100 million Flemish Bus Depot PPP Cluster II project. Long term debt financing was provided by AG Insurance and BNP Paribas Fortis.