The growth of the secondary market and sale of equity in PPP projects was first quantified in Global Auction of Public Assets (Whitfield, 2010). A more comprehensive study was published in January 2011 based on 240 PPP equity transactions and a 154 PPP project sample that identified the level of profit (Whitfield, 2011). A BBC Radio 4 File on Four programme highlighted these findings and the lack of information and disclosure in June 2011. A summary of the evidence was submitted to the Treasury Committee and the Public Accounts Committee investigations into PFI (House of Commons Treasury Committee, 2011 and House of Commons Public Accounts Committee, 2011). The National Audit Office later undertook an audit of equity transactions in a sample of 99 PPP projects (National Audit Office, 2012).
The financial model that underpins each PPP contract is highly complex. The determination of profit/loss in PPP contracts part way through the operational phase can only be indicative and is only one source in which profit is extracted from PPP projects. The return to the company disposing of its equity share reflects the expected known future cashflows at that particular stage of the projects lifetime and does not take into account additional profits derived from further sale or resale of equity later in the project, the refinancing of project debt, annual profits obtained by the SPC and the revaluation of PPP assets in annual reports and accounts.