The sale of PPP equity reported to date is in projects that were signed from mid 1990s onwards with most signed after the year 2000. The time gap between the date of financial close and the sale of PPP equity has reduced from an average of 6.72 years in 2003-2007 to an average of 5.89 years in the 2010-2011 period, see Table 3, based on the 99 projects in the NAO analysis of sale of PFI equity (National Audit Office, 2012). In other words, PFI equity is being sold about a year earlier than in the 2003-2009 period.
Table 3: Time between financial close and sale of PFI equity
Date | Average time gap (years) NAO research | Average time gap (years) ESSU research |
2003-2007 | 6.72 | 5.26 |
2008-2009 | 6.48 | 5.98 |
2010-2011 | 5.89 | 7.83 |
Average | 6.44 | 6.03 |
Source: National Audit Office, 2012 and European Services Strategy Unit PPP Equity Database 2012.
The average time between financial close and the start of operation of PFI projects is 21 months (20.97 months) based on an analysis of 200 PFI projects in the North East, North West, West Midlands and South East regions in the Partnerships UK Project Database (accessed 16/02/2012). The date of completion of construction is important because construction risk constitutes a key element of the overall risk. The sale of PPP equity does not usually occur until the project is operational.
"We have sold 32 PPP equity investments generating proceeds of some £341.1 million and a pre-tax profit of over £128.4 million." Carillion plc, Interim Report 2011 |