Finland's Espoo Schools PPP project debt priced
On 9 June the Espoo Schools PPP project financing in Finland reached financial close on an up to €170 million ($184.2m) DFI-backed loan to fund the scheme.
Kumppanuuskoulut Oy – an SPv sponsored by YIT Construction (20%) and Meridiam Investments II (80%) – has signed a 20-year construction and service agreement with the City of Espoo for five schools and three daycare centres. The total value of the PPP concession is around €300 million for the whole service period.
The procuring authority had to overcome a number of hurdles during the tender process as this is a first-of-its-kind project for Finland, and its success/failure will define the future pipeline of social infra projects in the country. Completion of the first facilities is scheduled for 2022-24
The 21-and-a-half-year facility was provided by the EIB (€60 million), Nordic Investment Bank (€75 million) and OP Corporate Bank (up to €35 million). The deal was priced at 120-130bp over Euribor.
The margin was agreed in April-May in the teeth of the coronavirus pandemic. Both Nordic Investment Bank and OP Corporate Bank have opted to go for a debt cap rather than a fixed amount “to allow them some flexibility in financing”.
Given this project is primarily brownfield, the exact cost of works may vary and it was decided that putting a ceiling on the loans gave the sponsors greatest flexibility in delivering the facilities within the projected capex.
