Case study: UK Priority Schools Building Programme – North East Batch

Portland Advisers acted as financial adviser to Galliford Try/Miller from PQQ to financial close on their successful bid for the PSBP – NE Batch project, consisting of the construction of six secondary and six primary schools in the North East of England at a cost of approximately £100m together with Hard FM and full lifecycle replacement responsibility over a period of 25 years.

Achieving financial close in March 2015, the project included a number of notable features:

• It was the first project to close in the UK Government’s Priority Schools Building Programme, requiring a number of technical, commercial and financial issues to be addressed for the first time and setting the precedent for subsequent batches within the PSBP programme.
• It was also the first project to close under the UK Government’s PF2 procurement model, incorporating significant revisions to the previous PFI template in areas such as risk allocation, the involvement of public sector equity and third party equity competition.
• It was the first project to employ the use of blended senior/mezzanine debt from the Aggregator Fund (Amber Infrastructure, EIB and Aviva) and the first UK PFI project to be rated by S&P under their new ratings methodology.

Portland’s senior team worked closely with Galliford Try/Miller throughout the bid process, preferred bidder negotiations and financial close procedure. The services we provided included:

• Preparation of a convincing financial experience story within the PQQ evaluation.
• Design of a dynamic financial model that allowed the client to road-test various bid strategies based on the authority‘s key evaluation criteria.
• Advice on key issues affecting the commercial structure and financial competitiveness of the bid.
• Thorough understanding of S&P ratings methodology and good working relationship with the S&P team, critical when developing the range of variant bids.
• Preparation of financial aspects of the bid document.
• Ensuring financial model was fully compliant with bid requirements, capable of producing bid forms, information required by public and private sector shareholders, Aggregator and S&P, sensitivity analysis and clean model audit.
• Hands-on involvement in authority meetings/negotiations, due diligence process and drafting of finance documents.
• Leading role in developing the protocol for interface with the Aggregator and managing the multi-party dry runs and close procedure.