HISTORIC PRESS RELEASE : Andrew Smith announces sale of 51 percent of Partnerships UK to Private sector [February 2001]
The press release issued by HM Treasury on 27 February 2001.
The Treasury is seeking private investors for a 51 per cent stake in Partnerships UK, the wholly owned government company set up to develop and implement more efficient public private partnerships (PPPs) and to promote the development of Wider Markets projects, Chief Secretary Andrew Smith announced today.
By selling a 51 per cent stake, the Treasury plans to raise a minimum of £22.5 million of equity by private placement with qualifying institutions. Prior to completion of the Offer, it is expected that Partnerships UK will have a capital base of £45 million. Each potential qualifying investor will be invited to invest between £1 million and £5 million.
Speaking about the announcement to dispose of a majority shareholding to the private sector Andrew Smith said:
“The opening up of the market in this way is a significant development in the PPP sector in what is becoming an increasingly mature market place.
By turning Partnerships UK into a public private partnership the Government is creating a key market opening for private sector shareholders, keen to seize the opportunity to help the public sector deliver modern, high quality public services.
Partnerships between the public and private sectors are the cornerstone of the Government’s modernisation programme. With Partnerships UK already pioneering a business model in a strong private sector market they are well positioned to play a pivotal role in developing and expanding the PPP market and to bring private sector disciplines to bear on public sector procurement.
PPPs bring with them new challenges that require specialist skills and a high level of expertise. With their high calibre management team and skilled practitioners with significant public and private sector experience and their public sector mission, I expect Partnerships UK to remain at the cutting edge of project improvement and development for years to come.”
Derek Higgs, Non Executive Chairman of Partnerships UK said:
“This move marks a major stepping stone in Partnerships UK’s business plan. Having access to new capital will accelerate the fulfilment of PUK’s public sector mission in driving forward successful PPPs.
The initial response has shown that interest in investing in Partnerships UK is high and we look forward to working with our public and private shareholders to make the business a success.”
James Stewart, Chief Executive of Partnerships UK said:
“Partnerships UK is already fully operational and working on a wide range of PPP projects. The move to a PPP and the raising of capital will be the springboard to develop the business further.
We are confident that we can drive forward the Government’s ambitions to see effective public private partnerships. Partnerships UK will strive to be at the forefront of the development and implementation of better, faster and stronger PPP transactions, helping to deliver value for money public services and efficient utilisation of public sector assets.”
The Private Placement offer will close on 27 March 2001. The basis of allocation under the offer is expected to be announced at the end of March. Following the completion of the Offer, Partnerships UK will be 51 per cent owned by the private sector and 49 per cent owned by the public sector.
N M Rothschild & Sons Limited is acting as Placement Agent for and financial adviser to the Treasury in connection with the offer for sale by the Treasury to certain qualifying institutions. Partnerships UK’s financial targets will be to achieve a rate of return of its investors which is commensurate with the risks of its activities.
Following completion of the Offer, Partnerships UK will become a public private partnership : a joint venture with the public sector owning a minority interest and the private sector owning a majority. The governance structure is designed to balance private sector disciplines with Partnerships UK’s public sector mission. A majority of board members will come from the private sector and the public sector will be represented by two non-executive directors appointed by the Treasury. The wider public interest will be represented through an Advisory Council made up of representatives from Government departments, Devolved Administrations, local authorities and other public bodies from amongst Partnerships UK’s clients.
As the successor to the Treasury Taskforce, Partnerships UK will aim to make PPPs a success, working in partnership with public bodies. Partnerships UK has been set up to help the public sector deliver:
- fast and efficient development and procurement of PPPs
- strong PPPs that build stable relationships with the private sector;
- savings in development costs;
- better value for money.
Partnerships UK plc has entered into a Framework Agreement with the Treasury for up to five years under which Partnerships UK will continue the work of the Treasury Taskforce, providing general support to the Treasury, the Office of Government Commerce and other parts of the public sector.
