EY advises University of Bristol financing of real estate debt
Big Four consulting firm EY has been drafted in to advise the University of Bristol’s bid to borrow around £525 million to finance numerous institutional developments. The debt will be incorporated into the university’s wider real estate development plan, which includes a new library, redevelopments at Tyndall Pace and a new campus at Temple Quarter. £200 million international investors Pricoa Capital Group, with terms of around 2.6%.
The University of Bristol is embarking on a new real estate strategy to build a new library, as well as development at its primary location of Tyndall Pace and a new campus at Temple Quarter. To pay for the new development the university has entered into a new, three parts, financing plan by the raising of £525 million. Around £200 million of the debt will be raised through the private placement of unsecured 30, 35 and 40 year notes, placed bilaterally at a coupon range of 2.58-2.60%, in a deal with Pricoa Capital, an arm of US group Prudential Financial. An additional trench of credit will be raised through the amendment and increase of a revolving credit facility – which raises around £250 million of other long-term existing bilateral loans.
The aim of the strategy is to better prepare the university for future demand across the region, and sees Bristol become the latest of a number of higher education institutions to move into financial markets in search of alternative revenue following cuts in government funding. The UK HE sector has continued to ramp up its collective debt in the face of growing global competition, particularly from universities across mainland Europe offering courses in English for considerably lower fees.
EY was the principal advisor to the university regarding the fund-raising programme for the real estate strategy. The firm was brought on board to provide insight into debt issuance, with the university managing the process of arranging the £200 million debt itself.
Commenting on the successful transaction and services offered by the firm, Luke Reeve, Partner in EY’s Capital & Debt Advisory team, said that the firm is “delighted” to be appointed to work with the University of Bristol on this complex financing process. He adds, “The successful execution of the parallel financings ensures that the funding is now in place to grow the estate and maintain its position as a world renowned university. It has been our pleasure to work with the university’s team and the Board of Trustees. The competitive terms achieved, alongside market leading pricing, is testament to the strength and quality of the university’s covenant. The amendment of the existing debt facilities also reflected the depth of the relationship and support from existing lenders.”
Robert Kerse, Chief Financial Officer at the University of Bristol, said about EY’s services, “The quality of advice and level of service received from the EY Capital & Debt Advisory Team was first class. The team provided robust challenge and well researched and reasoned analysis and advice. The work that the EY team undertook with the university’s Finance Committee and Board was particularly valuable in ensuring that informed and robust decisions were made. The financing terms that EY helped the university to achieve have delivered significant long term value to the university.”
