Private sector stakeholders
1.9 The key private sector parties involved in PFI contracts (Figure 4) are:
• Special purpose vehicle (SPV): The authority contracts a private company, sometimes called an SPV, to finance, build and deliver the services and take responsibility for performing systematic monitoring of the assets and reporting back to the authority.
• Management service company (MSC): SPVs will often use an MSC to manage the day-to-day activities on its behalf. A separate contract between the SPV and MSC, known as a management service agreement, will be put in place.
• Shareholders: Investors in the SPV provide financing in the form of share capital or loans.
• Lenders: Banks or bond holders will typically provide the majority of the project financing.
• Subcontractors: Contracts for the provision of services such as facilities management (cleaning and catering) can be awarded to smaller, specialised companies.
Figure 4 Illustration of the key stakeholders in a typical private finance initiative (PFI) project Every PFI contract involves a multitude of public and private parties
Notes 1 See paragraphs 1.8 and 1.9 for definitions of the parties. 2 This illustration is a simplification and the parties involved may vary depending on the contract. Source: National Audit Office analysis |
