Allianz Invests in London’s $6.4 Billion ‘Super Sewer’, Thames Tideway Tunnel

August 28, 2015

A consortium, consisting of pension funds and other long-term investors represented by Allianz, Amber Infrastructure Group, Dalmore Capital and DIF, will invest up to £1.275 billion ($1.9 billion) in London’s “super sewer.”

The consortium’s investment in the Thames Tideway Tunnel will be made via its new special purpose company, Bazalgette Tunnel Limited, trading as “Tideway.”

Tideway has received a license from the UK’s Water Services Regulation Authority (Ofwat) to own and finance the £4.2 billion sewer ($6.4 billion).

An Allianz representative said that Tideway will fund the project via debt above its initial equity investment of £1.275 billion.

The investor group includes a significant proportion of UK pension funds through which over 1.7 million UK pensioners will have an indirect investment in Tideway, according to a statement from Allianz Capital Partners.

The consortium’s backing for Tideway fulfills a key component of the UK Treasury’s National Infrastructure Plan, which is designed to finance the development of infrastructure with the support of highly experienced private investors, said Allianz.

An innovative procurement method, combined with the current low interest rate environment, has contributed to significant cost savings for the project, substantially reducing the contributions expected from the end consumer, the company said.

The project, which is scheduled to be completed in 2030, will help prevent the 39 million tons of untreated sewage that is currently discharged into the tidal River Thames in a typical year.

“We are convinced that this major project will modernize a pivotal aspect of London’s essential infrastructure and are‎ delighted that Allianz can help to upgrade London’s sewerage system,” Christian Fingerle, chief investment officer responsible for infrastructure investments at Allianz Capital Partners. “This investment will be a very important partnership between all stakeholders and Allianz. Together, we want to achieve a major improvement to London’s iconic river.”

The consortium’s investment vehicle takes its name from Sir Joseph Bazalgette, the pioneering Victorian engineer, who more than 150 years ago transformed the capital, constructing the interceptor sewers to keep sewage out of the River Thames. Still in excellent condition, these remain the backbone of the capital’s sewerage network, but now lack the capacity to cope with the city’s rapidly growing population, Allianz said.

Source: Allianz Capital Partners

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