Link Group borrows GBP45m in private placement deal with M&G Investments
Edinburgh-based housing association Link Group and M&G Investments, the international investment manager, have struck a deal that provides the Link Group with GBP45m of long-term institutional financing.
This is the first bilateral investment in a Scottish housing association by a long-term institutional investor.
The 31 year fixed rate financing enables Link Group to refinance some of its existing bank debt and meet its development ambitions over the coming years.
The Link group of social enterprises reaches around 10,000 people in 26 of Scotland’s 32 local authority areas, mainly in the Scottish central belt.
Prior to this landmark deal, Scottish housing associations relied exclusively on banks and The Housing Finance Corporation to meet their funding requirements. In recent years, as the general long-term financing landscape has changed, non-bank lenders such as M&G are providing an increasing amount of finance over the long-term.
Craig Sanderson, chief executive, Link Group Ltd, says: “Link continues to deliver over 200 new homes each year, despite the challenging economic climate. This new funding not only allows us to supplement this substantial programme but also demonstrates a key institutional investor’s support which will enable Link to accommodate many more families in housing need.”
Mark Davie, head of social housing, M&G Investments, says: “This is another high quality private placement that delivers low-risk cash flows to our clients over the long-term. M&G has invested in excess of GBP4bn in UK social housing through property transactions, public bonds and private placements. Much of that investment has come since the start of the financial crisis and we’re keen to do more.”
Clive Barnett, managing director housing finance at RBS, says: "We are delighted to be involved in arranging the first private placement funding for a housing association in Scotland. This arrangement provides GBP45m of finance via capital market funding to support this essential sector and could deliver a significant number of new affordable homes across Scotland. Link is a long-standing RBS customer and we're very pleased to be able to arrange this level of funding, which offers long term security, facilitates growth and complements the continuing loan funding provided to Link by RBS."
Link engaged its Treasury advisors Murja Limited to advise on its long term funding options and the Royal Bank of Scotland private placement team was appointed to source investors.
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