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Private Finance Initiative (PFI) |
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The Private Finance Initiative was launched in the UK in 1992, gaining momentum from 1995. Its purpose was to transfer risks from the public to the private sector, where the latter could manage these risks better. In so doing, it provided, under the right circumstances, better value for money to the public sector and forced it to consider the costs of maintaining infrastructure throughout its life. A side benefit was that the private sector became involved in funding infrastructure projects such as schools, hospitals and roads, which were previously procured and funded by local or central government.
Up to April 2004, PFI projects with a capital value of approximately £40 billion have been signed with the equity component of approximately £4 billion. It is from this source of over 600 PFI projects that the Group will seek its Secondary PFI Investments. At present the market for Secondary PFI is growing by £500 million (equity value) per annum.
In addition, PFI projects with a capital value of approximately £9 billion (equity value approximately £900 million) are currently in procurement or planning. This represents an opportunity for the Group to make Primary PFI Investments which together with the existing PFI market demonstrates the scale of the opportunity afforded to the Group.
PFI Guidelines (PDF)
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