The Pi2 Consortium - a joint venture between Ballast Nedam and Royal Imtech - has achieved  financial close with respect to the Zaanstad Penitentiary Project, a project procured by the State of the Netherlands on the basis of a DBFMO Agreement.

Ballast Nedam and Royal Imtech were selected as a preferred bidder on 11 July 2013.

Under the DBFMO Agreement, Pi2 is responsible for the design, construction, financing and  maintenance of the new building and will also carry out a major part of the facility services for a 25  year period.

Ballast Nedam is the sole shareholder of Pi2. Ballast Nedam (65%) and Royal Imtech (35%) will participate together in the Design, Build, Maintain and Operate phase. The project has a total nominal size of approximately €300 million.

The financing for the project (in the amount of approximately € 195 million) is based on the Pebble- Commute structure developed by ING and NIBC.

The application of this structure is new and facilitates the direct financing of public infrastructure by institutional investors such as insurance companies and pension funds. In brief, this structure allows ING and NIBC to provide short term  funding for the project during the construction phase, with the long term funding provided by institutional investors.

Appetite for the PEBBLE-Commute structure was strong, with investors keen to participate in the financing of high quality European infrastructure assets. As one of the first transactions of its kind, the PEBBLE-Commute structure brought together financing sources from the Netherlands, Belgium, France and Germany, ultimately providing best value financing for key Dutch infrastructure.

Ballast Nedam's advisers were PwC and Allen & Overy.

Stibbe has acted as legal counsel to the banks and institutional investors in connection with all legal aspects of the transaction, including the intercreditor arrangements.

"This is a breakthrough in the PPP market. Institutional investors and banks have been looking for possibilities to jointly finance public infrastructure for quite a long time. Now that this transaction is a fact, I expect that further transactions, based on the same structure, will follow shortly".

Source: Stibbe & Ballast Nedam