NIBC seals European PPP deal of the year

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Pi2 is a consortium led by construction company Ballast Nedam and technical services firm Royal Imtech. In September 2013, the Dutch Government Buildings Agency awarded Pi2 the concession to design, build and operate the Zaanstad prison for 25 years. Ballast Nedam and Imtech are the sponsors of this project. The EUR 300 million Zaanstad Prison project is the first Dutch PPP (Public-Private Partnership) project to be funded with institutional funds at the financial close.

Ballast Nedam is one of the largest construction companies in the Netherlands, with annual turnover of over EUR 1.2 billion in 2012.

Royal Imtech is a European technical services provider in the fields of electrical solutions, ICT (information and communication technology) and mechanical solutions. Royal Imtech books annual revenue of approximately EUR 5.4 billion and has around 29,000 employees.


It is currently in the construction sector quite difficult to acquire financing for major infrastructure projects, as most banks have withdrawn from long-term lending in the wake of the financial crisis and there is little sign of them re-entering the market in the foreseeable future. The sector has therefore, together with banks, been looking to attract long-term funding from other financial institutions, such as pension funds and insurance companies for quite some time. This deal proved that it is indeed possible to broaden the investor base in the construction sector for large-scale infrastructure projects.


Ballast Nedam opted for financing based on NIBC’s and ING’s PEBBLE-Commute structure, consisting of approximately EUR 195 million of debt facilities, as the deal meets the company’s short-term and long-term financing needs for the project. NIBC also played an intermediary role in bringing together the different parties. As Ballast Nedam CEO Theo Bruijninckx noted at the time: “This is an important step in the development of public-private partnership in the Netherlands. NIBC and ING have proven that they can attract long-term capital through institutional investors. This reinforces our ambitions in integrated projects, which revolve around the best possible life-cycle solution for all stakeholders.”

Thanks to government subsidies, the debt/equity ratio for the project will be around 90/10. A key element of the protection piece debt provided by NIBC and ING is that it has a shorter life than long-term debt. The credit-enhancement facility is in fact aimed at guaranteeing the riskier construction phase and the beginning of the operation, while the long-term management phase is left uncovered. This feature distinguishes the Pebble tool from other private credit-enhancement instruments, which covered a longer period in the life of the asset and made the debt more expensive. The subordinate loan will also be drawn first compared with the institutional tranche, rather than simultaneously.

ING and NIBC are to provide short-term bank debt for the project and have sourced the long term funding needs of the project from institutional investors. Appetite for the PEBBLE-Commute structure was strong, with investors keen to participate in the financing of high quality European infrastructure assets. As one of the first transactions of its kind, the PEBBLE-Commute structure brought together financing sources from the Netherlands, Belgium, France and Germany, ultimately providing best value financing for a key Dutch infrastructure project.


NIBC won the PFI Award for the PPP Deal of the Year 2013 for the financing of the new-build prison in Zaanstad, the Netherlands. PFI said the Pi2 consortium deal stood out in year that saw the come-back of credit-enhanced structured bond-style financing in the project finance market. The Pi2 deal also marked NIBC’s and ING’s first deal using ING’s Pebble structure combined with NIBC’s Commute model for the EUR 300 million construction and management project. 

Jeroen Drost, CEO NIBC, comments: ‘We are happy to have played an important role in making this project possible. It underlines NIBC's longstanding background and expertise in PPPs and our strategy to intensify long term PPP project financing in close cooperation with institutional investors and public organizations. This deal will broaden the funding base for Dutch PPP projects substantially, which will benefit all stakeholders. NIBC is committed to playing a major role in these new financing structures.’

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