PFI - UAE gets keen on PFI

* username: rupertbu

Citigroup (C.N) is believed to have won an advisory mandate to arrange finance to fund the building of the US$1bn-1.5bn New York University (NYU) campus in Abu Dhabi. The proposed scheme will be the latest major construction project financed in the emirate via a UK style private finance initiative (PFI) procurement route.

STOCKS

Two construction schemes obtained PFI finance last year, the US$400m Paris-Sorbonne university campus and the US$1bn Zayed university campus. The Yahsat space satellite was financed on a PFI basis in 2008. Mubadala acts as the client for these schemes. However a plan to fund the US$2bn plus Tawam hospital via the PFI route has recently been dropped.

Unlike the three schemes which have already been financed with bank debt, Mubadala is looking at options for debt funding NYU via a bond issue to diversify its funding sources.

PFI involves a special purpose vehicle (SPV) being granted a long term concession to finance, build and then operate an asset. In return, the SPV receives annual payments for making the asset available for use.