KfW IPEX-Bank arranges ECA facility for PPP financing of Silvertown Tunnel project in London
Press Release from 2019-11-27 / KfW IPEX-Bank
- First-ever involvement of an export credit agency (ECA) in a major European PPP
- Vital contribution to further development of PPP financing structures
- Flagship project for London's transport infrastructure
KfW IPEX-Bank has joined forces with numerous other international banks and institutional investors to finance the Silvertown Tunnel PPP project in London. Transport for London (TfL) has procured the new tunnel under the River Thames in east London to link the Greenwich Peninsula with the district of Silvertown. The new tunnel will play a major role in alleviating traffic in and around the congested Blackwall Tunnel, which dates back to Victorian times and was originally designed for carriages.
The financing structure is marked by a novelty in PPP business in Europe: for the first time, cover from the Korea Trade Insurance Corporation (K-SURE), the South Korean ECA, has been put in place for a major European PPP. Owing to its many years of ECA expertise, KfW IPEX-Bank is involved in the deal as Mandated Lead Arranger and ECA Facility Agent and, as such, played a vital role in structuring the ECA-covered tranche. With a financing volume of GBP 175 million and as the biggest lender in the ECA tranche, KfW IPEX-Bank is making a substantial contribution to the further development of PPP financing structures.
Total project costs are approx. EUR 1.2 billion. Construction is scheduled to start next year, and tunnel operation should begin from the year 2025.
For the city of London the new tunnel aims to reduce journey times and to enable more reliable deliveries of goods and services. One lane in each direction will be reserved for zero emission buses. The tunnel will also be within London’s Ultra Low Emission Zone. Overall, the new tunnel, along with planned user charges, will ensure that exhaust emissions from congestion will be reduced and air quality will improve.
Infrastructure projects are part of KfW IPEX-Bank's core business. Andreas Ufer, member of the Management Board of KfW IPEX-Bank, commented: "This project underscores KfW IPEX-Bank's ability to perform in demanding, highly individual PPP structures, with Europe's first-ever PPP with ECA cover. We are pleased to be contributing to this flagship project together with such experienced and established partners."
The new road tunnel will be built and operated by the Riverlinx consortium, which was awarded the contract following a public tender. The group of financial sponsors comprises Macquarie Capital, Aberdeen Standard Investments, the Dutch Royal BAM Group, the Spanish Ferrrovial Group and the South Korean S&K Group. Construction will be carried out by an EPC consortium comprising Royal BAM Group, Ferrovial Group and S&K Group. KfW IPEX-Bank has already worked together with many of these partners on other successful PPPs such as Mersey Gateway Bridge in the UK.