3.55 The shareholders in a PFI project provide it with equity capital, by investing in ordinary shares or subscribing for long term subordinated debt. Typically this investment will comprise approximately 10 per cent of the project's up-front costs and is the element of the financing most at risk to loss. This equity capital is usually provided by those providing services to the PFI project, whether they be the construction contractor or long term facilities manager and increasingly, specialised financial institutions.
3.56 An equity investor only benefits from its investment in a PFI project after it is complete and successfully in operation as unitary charges are only paid once an asset becomes available. Also, the value of the project to the investor is determined by the expected performance of the project over its whole life. This incentive to create a public asset with long-term value enables construction contractors to take a long-term interest in the project, even after they have completed their construction task. This also enables the various contractors to the PFI project and investors to work together with a common interest in creating an optimum, whole-of-life, cost-effective project and provides the right incentives to seek the best performance in the form of the performance regime set out in the PFI contract and actively remedy deficiencies.