Bevan Brittan has provided legal advice to the London borough of Brent in a highly successful debut private placement that has raised £80m for the Council. The funds will be utilised by the Council to finance part of its capital investment programme aimed at regenerating the Borough.
Due to strong investor demand, the transaction size was oversubscribed allowing the Council to double its initial proposed offering of £40m to a sum of £80m, demonstrating a robust endorsement of the sector and the Council’s prudent financial management.
The Council achieved credit spreads over 60-80bps tighter than the margins offered by the Public Works Loan Board (PWLB), resulting in significant cost savings.
The favourable terms received provide a strong foundation for future financings from an alternative source of long-term liquidity for the Council.
Bevan Brittan together with EY Capital & Debt Advisory advised Brent on financing options outside the PWLB and negotiation of the transaction documentation on behalf of the Council.
Minesh Patel, Director Finance at Brent Council said: “We are very pleased with the outcome of our debut private placement. This issue evidences the private placement market to be a key player in alternative sources of finance to the PWLB. Brent has a very ambitious Capital Programme, which includes the delivery of over 1000 new council homes. So securing competitive rates allows us to ensure these will be genuinely affordable homes for our residents.”
David Moore, Partner at Bevan Brittan LLP, added: “Bevan Brittan is thrilled to have advised the Council on its first private placement financing and particularly that it has achieved preferential rates to the PWLB equivalent offering in such a changeable market. The result is a demonstration of the strong business case put together by the experienced Brent management team and the potential the Council presented for ongoing future investment. Brent and a handful of other councils over the last 6 months have helped to pave the way for others to follow by educating investors on the credit worthiness of local authorities and in doing so opened the door to valuable alternative sources of finance.”
Luke Reeve, a Partner in EY Capital & Debt Advisory added: “EY is delighted to have advised the London Borough of Brent on the successful issuance of its debut private placement financing, which looks to support the valuable capital investment in the borough. The deal was more than 3x oversubscribed – a testament to the Council’s high credit quality and strong management team.
Brent have successfully demonstrated that following the PWLB rate rise, it is possible for local authorities to secure cheaper borrowing from private markets and on terms that ensure long term operational flexibility for the Council. The outcome was particularly impressive given the turbulence in the wider markets due to the Coronavirus outbreak and shows that the private placement market is resilient in a storm.”