Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension funds, has invested GBP250 million in debt issued by the City of London Corporation for an ambitious programme of major projects designed to benefit the Square Mile, London and the UK.
The projects include the proposed relocation and development of three of the city’s historic wholesale food markets – Billingsgate (fish), Smithfield (meat) and New Spitalfields (fruit, veg and flower) markets – to a former power station site in Barking and Dagenham. It would also help fund the Museum of London’s relocation to West Smithfield.
The investment will not be drawn down by the City Corporation until 2021, locking in borrowing costs. The transaction was jointly arranged by Lloyds Bank and Santander.
PIC was awarded the largest share of the GBP450 million transaction, reflecting the company’s reputation as a significant investor in social infrastructure. The proceeds will refinance a GBP125 million bridge loan used to acquire the Barking site, as well as preparing the site for development. The City Corporation is the governing body of the Square Mile and the oldest continuous municipal democracy in the world.
Jeremy Mayhew, Chairman of the Finance Committee at the City of London Corporation, says: “We are pleased to have secured this funding from PIC. The team showed great flexibility and knowledge in structuring this investment so that it meets our need to draw down the funds this year and in 2021.”
Allen Twyning, Head of Debt Origination at PIC, says: “We are proud to be supporting the future of these impressive institutions with this significant investment. It has been a pleasure working with the Corporation, who have been clear in what they are trying to achieve from the outset. This type of long-dated investment provides a good match for PIC’s long-term liabilities with a tailored maturity profile.”
Stephen Valvona, Director, Private Placements at Lloyds Bank, says: “This is an important financing which demonstrates strong investor interest and confidence in the City of London. The transaction reflects the flexibility of the private placement market, enabling the City of London to achieve a broad spread of maturities from 25-45 years, attract a mix of delays to funding to suit their requirements, and secure favourable long-term pricing. We were delighted to be involved in such an important financing for a unique institution which helps deliver their strategic goals and aligns with our work in helping Britain prosper.”
Tony Fordham, Managing Director, Head of Private Placements at Santander, says: “It was a pleasure to work on this ground-breaking transaction for the City of London Corporation. With no public debt rating, all parties worked together to ensure this uniquely strong credit was fully understood by the investor base. The transaction also demonstrated the capability of the Private Placement market to offer long term, and in this case, delayed funding to enable the City Corporation to confidently plan long term infrastructure projects.”