Prison infrastructure – and public works more generally – is seeing a renaissance in long term financing solutions after a temporary decline in popularity following the GFC.
The Ravenhall Prison Public Private Partnership (PPP) has just completed a long term financing transaction, on which Allens advised The GEO Group.
Ahead of Informa’s Prisons 2019 Conference, Allens Partner David Donnelly, says, “From equity’s perspective, securing long term, fixed rate debt that takes you to the end of the concession life is a pretty smart move”.
“There is no refinancing risk and no need to hedge. This ultimately gives greater certainty to project investors and their government clients, in a way that the traditional mini-perm structure does not”.
The Ravenhall Prison project was designed and built and is being operated and maintained by The Geo Consortium through a PPP arrangement involving The Geo Group Australia, Capella Capital, Correct Care, Honeywell, John Holland and Forensicare, among others.
Allens has advised the Geo Consortium throughout the project lifecycle, from the initial bid for the development of the asset in 2013, through construction and commissioning, until the present steady state of operation with an accompanying long-term debt solution.
This work has seen Allens winning awards such as ‘Advisory Excellence’ and ‘Project of the Year’ at the Infrastructure Partnerships Australia Awards in 2014 and 2018 respectively.
“Now that we have a couple of positive recent examples, there is a precedent for investors on both sides – project owners and bond investors – and a bit more momentum to continue the trend of long term financing”, added David.
“The Ravenhall transaction marks yet another successful milestone. The project has been delivered on time and within budget and received a very good response from the market. It has provided a shining example of the government backing itself and the private sector effectively responding to the challenge. I hope it will encourage governments to be more ambitious in this space going forward”.
David Donnelly will lead a panel debate on the topic of “Financing and Delivering Prisons” at Informa’s Prisons 2019 Conference – to be held 9-10 July 2019 in Melbourne.