University of Surrey – Private Placement

Our work with the University of Surrey began with an appraisal of its debt portfolio and funding options, identifying various potential benefits for the University which could be achieved by restructuring its debt and replacing term-loan facilities with a longer-dated private placement.

We helped the University in defining its preferred strategy and an execution plan, before then supporting as lead financial advisor throughout the transaction process. The main workstreams involved were the PP issue itself (we assisted with the appointment of Lloyds as arranger), managing the various loan facility repayments and the unwind of interest rate hedging as part of the overall project.

The refinancing was funded by a £110m private placement with Pricoa (an investor in the University’s existing PP) and Northwestern Mutual in April 2021. The proceeds were mostly used to repay outstanding loans and hedge breakage costs, with the remaining funds invested in strategic projects.

The refinancing has delivered numerous benefits for the University:

• Lowered its annual debt service costs
• Achieved a significant cash release over the next 10 years through these savings and the deferral of capital repayments
• Reduced its weighted average cost of borrowing
• Simplified its debt portfolio – by replacing two banks, six separate loan facilities and six interest rate swaps with a single new PP investor.
• Retained its preferred financial covenant position.

Surrey’s April 2021 issue was one of the first by a UK university following the pandemic and its success demonstrated the enduring appeal of quality higher education credits in the capital markets.

Phil Grainge, Chief Financial Officer, said: ” The QMPF team were fantastic advisors throughout the debt restructuring process, providing clear and timely analysis and guidance. They demonstrated great flexibility as we navigated the issues that arose, particularly given all our interactions had to be virtual due to the pandemic.”