Q101 Mr Khan: You are happy with it. Fine. Do you think that it is moving the goalposts if we say that you should share the proceeds of equity with the taxpayer?
Mr Kingman: I think that that would be a very different thing, yes, for the reasons that I have given. Equity transactions are a different variety of transaction, which does not affect the public sector's rights in the same way.
Q102 Mr Khan: Let us come to that in a second. What is quite clear is that investors, whether they are in refinancing or on the equity side of things, are making huge sums of money from PFI projects. Do you accept that?
Mr Kingman: There have been some projects where investors have made significant sums of money, and other projects where a great deal of money has been lost.
Q103 Mr Khan: Could that mean that the original deals were not priced properly at the outset?
Mr Kingman: It might mean, with the benefit of hindsight, that they could have been priced better, but they were priced on the terms available at the time. The real test should be whether they were good deals. Were the projects good, were they delivered on time and so on?
Q104 Mr Khan: Right. In those examples where they may have been priced a bit too generously, do you accept that people in the equity markets have made huge sums of money because of it?
Mr Kingman: I accept that there is the potential for money to be made in PFI, either from projects or from selling on the projects at a profit or a loss. That can happen in any market.
Q105 Mr Khan: So why not agree to move the goalposts in the equity situation, as you have agreed to do vis-á-vis refinancing?
Mr Kingman: Because it is a different variety of transaction. For reasons that I have attempted to give, one affects and changes the public sector's interest and exposes the public sector to liabilities, and we need to consider that and get a benefit out of it; the other does not.
Q106 Mr Khan: Do you accept that there are similarities with, for example, the impact that secondary investors may have on the management of PFI projects?
Mr Abadie: It may impact. In one of my earlier responses, I referred to potential efficiencies that the portfolio investors may bring to bear on the projects, which may have an impact.
Q107 Mr Khan: That is a positive impact?
Mr Abadie: A positive impact, yes, but I want to clarify and add to what John has said. Who the investor is does not affect the underlying contracts-Government contracts with a special purpose company. That is who we contract with; we do not contract directly with investors, so if the investors change, the underlying contract does not change.
Q108 Mr Khan: Sure. So let us be clear: your position is that the Committee's obsession with making sure that the taxpayer is not dealt with unfairly is unnecessary, because projects are finishing on time, or perhaps ahead of time, and under budget? Is that fair?
Mr Abadie: It clearly does not stop there: the objective of PFI goes beyond just the build phase; it goes right through the life of the contract.
Q109 Mr Khan: Do you have idea of the financial rewards that those who invest in the equities market are making in share sales and stuff?
Mr Abadie: We do.
Q110 Mr Khan: You do? What sort of sums are we talking about?
Mr Abadie: I can quote publicly available information, which is easily available on the public websites of some plcs. Carillion, which is one of the investors, probably owns about 20 PFI projects. It sold some of its investments quite recently to secondary market investors, and the proceeds that it received were about £46 million. The cost of the investment that it reported was about £24 million.