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M25 mega-deal edges closer as RBS looks to put in £100M

The £5bn upgrade of the M25 looks to be nearing financial close after it emerged that government-owned banking giant RBS is in talks to invest up to £100M.

According to NCE sister title Infrastructure Journal RBS is currently doing due diligence and is looking to invest between £70-100M.

It is believed that around £2bn in private finance is needed to get financial close, but that the scheme is still £400M short.

A senior banker within RBS told IJ: “We are looking at it. There was a time when GBM [Global Banking and Markets] looked at this deal, but at that time we were moving away from 27-year tenors.

“There is more of an appetite in other parts of the bank - including UK banking - to support this type of transaction. The result of that is that the UK corporate banking element has more appetite and as such we are looking at the transaction because it is a big UK deal.”

The Government admitted yesterday that it was “not yet determined” whether the Treasury’s new PFI funding pot would be used to plug the shortfall.

Under questioning from Conservative shadow transport minister Stephen Hammond, transport minister Paul Clark would not reveal current etimates for widening junctions 16 to 23 and junctions 27 to 30 of the M25, saying the information was “commercially sensitive” until the contract is formally awarded to the preferred bidder Connect Plus, on financial close of the PFI.

“As these works are being procured through a Private Finance Initiative (PFI) contract it is planned that they will funded by borrowings from the private sector which are recovered from the Highways Agency out of availability payments over the life of the contract.

“These payments are subject to contractor performance. In light of current financial circumstances the Government may elect to lend to the project if insufficient private sector funds are available, however this is not yet determined,” he said.


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