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Transmission Capital Partners, a consortium comprising International Public Partnerships Ltd (“INPP”), Amber Infrastructure Group and Transmission Investment (the “Consortium”) successfully reached financial close for the long-term ownership and operation of the Moray East Offshore Transmission assets (the “OFTO”) on 15 February. The project will be the Consortium’s eleventh OFTO investment and relates to the transmission cable connection to the Moray East wind farm located approximately 22km off the coast of Scotland in the Moray Firth. The wind farm consists of 100 turbines that can produce 950MW of clean energy, enough to power over 1.4 million homes. The OFTO includes a 220kV 3-cable connection to the wind farm and the new onshore substation facilities at New Deer in Aberdeenshire. Newbridge advised the Consortium on the raising of project level senior debt from a group of banks and institutions plus associated interest rate and inflation hedging.

2023 has been a busy year across the infrastructure and development markets. On Development and Regeneration Newbridge has advised over 15 clients on over £2bn worth of projects including Homes England, Meridian Water and Network Rail. On Capital Markets, Newbridge has placed in excess of £1bn of debt for in excess of 20 housing associations and other clients. This is in addition to assisting clients with their treasury and swaps strategies, investor relations, restructurings, ratings advice and managing ESG accreditation. In the Infrastructure sector Newbridge has advised a confidential client on a HoldCo financing of a PFI project (closed March), the shareholders on the £120m refinancing of Bradford BSF (closed March), Skanska on the £1bn (equivalent) E10 PPP road in Norway (closed June), Semperian on the £210m refinancing of Fife Hospital PFI (closed December) and a confidential student accommodation project (also closed December) where Newbridge was both the financial advisor and joint bond manager. This is in addition to various solar and other work. We look forward to working with you in 2024!

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Transmission Capital Partners, a consortium comprising International Public Partnerships Ltd ("INPP"), Amber Infrastructure Group and Transmission Investment (the "Consortium"), successfully reached financial close for the long-term ownership and ongoing operation of the East Anglia One Offshore Transmission assets (the "OFTO") on 16th December. The project will be the Consortium's tenth OFTO investment and relates to the transmission cable connection to the offshore wind farm located approximately 50km off the coast of Suffolk. The wind farm consists of 102 x 7MW wind turbine generators with an installed capacity of 714MW connected to the offshore substation platform located within the boundaries of the East Anglia One wind farm. The OFTO has the capacity to transmit enough renewable electricity to power the equivalent of over 600,000 homes. Newbridge advised the Consortium on the raising of project level senior debt from a group of banks and institutions plus associated interest rate and inflation hedging. Newbridge is also working with the Consortium on Moray East OFTO, where the Consortium is preferred bidder.

The water sector in England has made a public commitment to be carbon net zero by 2030. Newbridge Advisors, as strategic, commercial and financial advisor, worked with Yorkshire Water to establish a solar framework of experienced developers / investors which will help Yorkshire Water achieve its 2030 goal. Newbridge also advised Yorkshire Water prior to the award of the first phase under the framework – an agreement with one of the framework partners to design, build, finance and operate approximately 23MW of solar assets and sell power directly to Yorkshire Water. Speaking after the award of the first phase, Daniel Oxley, Yorkshire Water commercial programme manager, said: “This project is a significant step in reaching our aims of carbon net zero by 2030. Due to changes in the treatment process at our sites over recent years, many have been left with surplus operational land which can be used for the generation of renewable energy." “These have been identified and will become home to new solar panel arrays. Once completed, the first deployment of solar panels will generate 4% of our annual power needs, increasing our renewable energy use, reducing our exposure to energy price volatility and reducing the operational costs of our sites, which will provide better value for money for our customers.” Paul Woodcock, Partner at Newbridge Advisors said “We are delighted to have supported Yorkshire Water in finding experienced partners who will support and deliver Yorkshire Water’s solar ambitions." "Newbridge was ideally placed to support Yorkshire Water: the team’s private wire renewables experience and in-depth knowledge of the underling investor base, combined with our experience of achieving best value, meant Yorkshire Water were confident they were running a highly competitive process that was focused on delivery as well as pricing."

Newbridge was delighted to have advised Sanctuary Group with the £150m tap of its 2.375% secured bonds due 2050. Sanctuary, which manages over 105,000 homes across England and Scotland, is rated A2 (stable) and A (stable) by credit rating agencies Moody’s and Standard & Poor’s respectively. It is one of the largest housing associations in the UK. The deal priced below the Group’s existing cost of capital, at a spread of G+163bps, improving on the original spread of G+170bps when the initial bond was issued in April 2020. The blended yield across the 30-year bond is 2.9%, representing good value for money for the Group. Ed Lunt, Sanctuary’s Chief Financial Officer, said: “We are pleased to have secured this tap issue, particularly in the turbulent economic conditions, with the bond proceeds supporting our corporate priorities of growth and investment in our homes for the long-term benefit of our customers.” Chris Evans, Director at Newbridge Advisors commented: “When exploring the capital markets, there will often be an element of volatility but, with the significant economic and political headwinds issuers currently face, many have needed to delay / postpone issuance plans. Sanctuary however, successfully generated a final orderbook that was over 5x subscribed, a fantastic outcome which demonstrates the strength of the underlying credit story”.

Download PDF If you would like to discuss carbon credits and offsetting in more detail, please contact the author of this article Chris Evans - chris.evans@newbridge.co.uk,  +44 7738 556 155.

Newbridge is delighted to have advised Chelmer Housing Partnership (“CHP”) with the creation of its Sustainable Finance Framework. The framework represents an important tool for CHP in supporting it to achieve ambitious environmental and social targets. Future financing will play a key role in meeting these targets and the framework facilitates the formal connection to debt being linked to ESG. It received external accreditation from Sustainalytics, which gives lenders as well as investors confidence that the framework aligns with industry standards. Rich Wilsher, Head of Corporate Finance “I'm thrilled to issue our first Sustainable Finance Framework. Supported by Newbridge, we've set ourselves some bold and transparent ESG objectives, and I'm looking forward to working with our lenders and investors to bring these to life.“ Newbridge has supported a number of clients in establishing their frameworks, a prerequisite to labelling a listed debt instrument as green, social or sustainable. It also can be used for Private Placements as well as Term Loans and Revolving Credit Facilities.

Newbridge is proud to have donated to Disasters Emergency Committee (DEC) Ukraine Humanitarian Appeal to support those affected by the war in Ukraine. If you'd also like to donate to the appeal, please click here.

Newbridge acted as financial advisor for the sale of £75m retained bonds. The bonds were originally issued in August 2020. Joe Reeves, Executive Director of Finance and Growth, said: “We're delighted to have sold a further £75m of our £250m retained bonds in the capital markets. This money will be put to good use as we develop 4,000 high quality, affordable homes by 2025, modernise our retirement living offer and invest in the comfort and safety of our existing homes.” Barclays acted as sole bookrunner, Newbridge as financial advisers and Trowers and Hamlin as legal advisers.

The Local Government Association commissioned Newbridge Advisors and PRD to produce a good practice guide on PPPs –  Public Private Partnerships: Driving Growth, Building Resilience. The guide aims to support councils and their partners to plan and establish more effective public-private partnerships that can deliver the investment, development and services that are essential to boosting economic growth and recovery. Through consultations with industry practitioners, we have explored how councils, investors and developers are shaping partnerships to respond to challenges such as housing, fuel poverty, decarbonisation and supporting successful places. The guide provides a market summary, case study examples and practical insights for delivery of successful PPPs through seven ‘steps’ across the project lifecycle: Step 1: Define an overarching vision and long-term, market-facing outcomes This should consider the perspectives of place and potential partners, giving clarity to define the project, offering surety for the partner that upfront investment will result in outcomes, but with flexibility to respond to change. Step 2: Build the Brief to define ‘red lines’ and undertake due diligence Translating the vision into a ‘brief’ is an important early activity to define and agree with stakeholders. This will pay dividends downstream by unearthing areas of divergence and key information gaps to be addressed. Step 3: Review partnership options for achieving the desired outcomes PPPs come in multiple forms – contractual, corporate, investment and collaborative. Form must follow function, and time committed to review the optimal structure that delivers the desired outcomes and to test the market. Step 4: Identify and choose the right route to market Selecting the right procurement or appointment route is key for all parties and best value must be demonstrated regardless of route. Explore frameworks for suitability and consider (with legal advice) whether procurement is needed at all e.g. for land and investment transactions. Step 5: Effective preparation and making a strong start Plan well to start well. Look to establish the first business plan and ‘early wins’ to build confidence in the partnership. Ensure the council has appropriately skilled people with time to invest in the partnership and provide the ‘intelligent client function’. Step 6: Manage the partnership in its ‘steady state’ Uncertainty after the first flurry pf projects may bring inertia and this period needs a distinct route map for delivery, including a business planning cycle, stakeholder engagement, KPI monitoring and regular lessons learned. Start 7: Finish well and moving on successfully The end will appear very distant at the outset but will arrive and needs planning for. The parties need to: communicate any preferred future involvement; make clear provisions for winding down the partnership; review the contract for issues or challenges; assess the need for TUPE (Transfer of Undertakings Protection of Employment); and to develop a continuity and communications plan to mitigate disruptions to services. The LGA Guide – “Public Private Partnerships: Driving Growth, Building Resilience” was published in January 2022 on the Local Government Association website: https://www.local.gov.uk/publications/public-private-partnerships-driving-growth-building-resilience To find out more please contact: Delia Beddis at delia.beddis@newbridge.co.uk and Amber Fisher-Clark at amber.fisher-clark@newbridge.co.uk

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Newbridge supported Longhurst Group forward place a tap of its 3.250% May-2043 across three settlement dates. The £100m tap, which was priced at a significant premium to par, will settle in April 2022 (£25m), September 2022 (£25m) and April 2023 (£50m). Having been selected once again as a Homes England strategic partner, the proceeds will be used to support the next stage of Longhurst’s delivery of new affordable homes. Robert Griffiths, Deputy Chief Executive and Chief Financial Officer said: “We were really pleased to have worked with Chris and the team at Newbridge on arranging the tap to our 2043 bond and were delighted with the result. The £100m forward sale will help support our forward development programme and long-term Strategic Partnership with Homes England.” Chris Evans, Director at Newbridge Advisors commented: “We are delighted to have supported Longhurst in securing future finance at an extremely competitive rate which significantly de-risks its development pipeline. Furthermore, this innovative financing structure came from a new investor to the group, increasing the likelihood for further appetite in the capital markets going forward.”

Optivo has successfully sold all of the remaining Retained Bonds of their 2035 bond issue, a nominal amount of £100 million. The transaction was executed in mid August and saw Optivo capitalising further on the current low rate environment. This being the second consecutive fundraising advisory mandate with Optivo, Newbridge were delighted to support the process and help Optivo achieve the very best terms and seamless execution. For any queries, please contact Grant Vaughan - grant.vaughan@newbridge.co.uk, 07867 802 095.

Merger activity within the social housing sector has stepped up significantly over recent years and whilst many have been successful some have not. To be able to consider why mergers break down, we first need to understand why they are initiated in the first place. Whilst each merger will have its own individualisms, there are typically two reoccurring themes in the sector triggering the conversation, either: i. a Housing Association is financially stretched and would benefit from support; or ii. a Chief Executive is retiring. This is in stark contrast to the private sector where the rationale for a merger is far more objective; there is a price paid by the acquiror to the acquiree, meaning shareholders (including senior management) often are financially remunerated when the transaction takes place. As Housing Associations are charities without an equitable value, no such payment takes place and therefore, the whole process becomes more subjective. If we consider the two main themes separately, let’s start with the Housing Associations that would benefit from support. Whilst the sector has made great strides in its governance over recent years, from time to time, ambitious development plans have stretched some Housing Associations financially. As an organisation approaches, or even hits, its financial capacity, in order to continue to build and support customers the Housing Association would benefit from the financial backing of a larger more financially stable sector peer. This creates an interesting dynamic as the Board of the stretched Housing Association will face the likely prospect of being consumed by a larger peer, inevitably resulting in the reduction of decision-making powers. There will also be restrictions implemented which will limit autonomy of the Board. In addition there will be some cultural change. As a result of all of this, Board members may begin to question the new direction and job security becomes a concern for senior executives. These uncertainties can be major factors in why mergers fail to progress. If we believe that a support merger is fragile then a retirement driven merger is even more delicate. The housing sector has a reputation for retaining Chief Executives until retirement and, as a consequence, they serve long tenures. In some cases, the retirement prompts some to desire a new direction for the organization. In this situation you have all of the issues associated with a support merger plus arguably a less clear rationale for merging. The mantra that bigger is better is not always correct, organisations need to consider what any merger means for the various stakeholder groups including customers, colleagues, funders and local authorities. As an accountant I am always supportive of driving out cost synergies and putting in place more efficient operating models that spend the customers’ money more wisely. Organisations need to ensure the proposed efficiencies are deliverable and not consumed by lenders seeking fees for providing the required merger consents. Most importantly, the merging organisations need to ensure the services to the customers do not suffer as a result of the distraction caused by the merger. Stepping back from the underlying rational, we must also be mindful that the sector has an extensive reliance on the capital markets for funding, with more and more housing associations having listed debt, in their own name. The price of these freely tradable instruments reacts to merger announcements in our sector as they do in any other sector and there can be financial consequences for investors. We do therefore need to be mindful of when and how mergers are announced, appreciating the impact it has on our lenders, once made public. Insofar as it is possible factors that can derail a merger, after it has been announced, should be limited to unknown details resulting from the in depth due diligence process. In summary, I am a supporter of mergers within the sector when there is a clear rationale believing that consolidation can bring financial benefits, customer service improvements and allow Housing Associations to build more new homes. Indeed, I have worked on many mergers in both the private and housing sector and can reference some excellent success stories. That said, it is imperative that Boards and Executive teams fully understand the rationale for any potential merger, digging deeply into both the pros and cons prior to embarking on the journey. If you have any questions or would like to discuss mergers in the social housing sector in more detail please contact the author of this article Lee Gibson - lee.gibson@newbridge.co.uk, +44 7738 896501.