We have £23.8 billion to invest in private sector projects or companies in the UK. We offer corporate and project finance and invest across the capital structure.
Our minimum ticket size is £25 million for private investments. Our ambition to achieve a step change in our commitments means we will be selective in the £25-50 million range, prioritising those which will deliver the highest impact against our mission.
Each of our products forms a key part of our offering and can enable us to:
- crowd in private sector investment
- reduce barriers to investment
- aid the scaling of proven technologies
- increase market capacity
- address liquidity issues
We will consider offering these products on a case-by-case basis, supporting proposals that fall within the scope of our mandate and investment principles. If you have a project you’d like to discuss with us, get in touch.
Equity
We offer equity investment into qualifying projects or companies, including ordinary equity, preferred equity and convertible loan notes. We are a later-stage funder, with our focus being on higher technology readiness levels (TRLs 7-9).
Direct equity: Investing directly remains our preference, and increasingly we will look to be the lead investor on transactions, reflecting the scarcity of other investors prepared to do this. We do not take controlling positions in companies, but we will use board directors and observer positions to protect and maximise our investment, where this is justified by the size of our shareholding.
Outsourcing to third party fund managers: We will explore developing mandates for private sector fund managers and providing cornerstone investment where we can identify viable opportunities to utilise the specialist expertise of fund managers, or to aggregate and increase the efficiency of our capital deployment. This will be where there are market issues in sectors which require individual investments which are below our minimum ticket size (£25 million), or if we see a significant number of opportunities at the lower end of our ticket size range. Our preference is committing to a fund at first close and acting as a cornerstone investor where we have developed a fund mandate.
On an exceptional basis we may consider cornerstone investments in fund mandates developed externally, but only where these are aligned with our priorities, investment principles and represent value for money.
Debt
We offer debt across the capital structure, and can work to develop tailored solutions for each transaction. Our debt offering can be provided on a fixed or floating rate basis and includes senior debt, mezzanine debt and bridge financing.
Mezzanine debt in particular can be used to help crowd-in debt capacity by reducing the risk of a project from the perspective of senior funders, potentially also raising the project's overall debt capacity. This can be achieved by, for example, providing funded or contingent mezzanine to cover construction cost overruns, respond to temporary revenue shortfalls, or to wrap and thus mitigate specific technical or commercial risks.
Guarantees
All of our guarantees are backed by the Sovereign Infrastructure Guarantee, an agreement between the NWF and HM Treasury that will allow us to issue sovereign-equivalent guarantees to qualifying projects. This sovereign equivalence has been confirmed by Moody’s in their sector comment.
Our products include:
- Financial guarantees: providing credit substitution for an underlying debt instrument. This includes inflation-linked guarantees, likely to be used in regulated sectors where the revenues are also inflation-linked.
- Credit enhancement guarantees: unfunded guarantees designed to enhance the credit quality or credit rating of the wider project debt
- First loss guarantees: guarantees for a capped amount of potential losses on a portfolio of smaller debt obligations
- Performance guarantees: protecting a party against any losses incurred in the event contractual obligations are not met. This could be from supplier delays or from a failure to complete construction.
We can consider alternative forms of guarantee on a case-by-case basis, beyond the core offering.
Guarantee documentation
- Sovereign Infrastructure Guarantee (SIG) updated September 2023
- Overview of SIG structure by Hogan Lovells
- Deed of guarantee in respect of guaranteed bonds (template)
- Security assignment in respect of guaranteed bonds (template)
- Guarantee and reimbursement agreement (template)
Pricing and terms
We must intend to make a positive financial return on each transaction. We price to reflect the risks we are taking, often investing on terms in line with other investors. This ensures a fair balance of risk and reward with the private sector and builds confidence in the deal to crowd in other co-investors.
We will explore how we can utilise concessional terms to help unlock transactions and drive growth. We have the ability to offer concessional terms, for example on price and tenor, in line with the UK’s subsidy control rules. However, if a project is not bankable, concessional finance is unlikely to change this. Concessional terms must still intend to achieve a positive financial return.
Developing our capabilities
Whilst many of our transactions are necessarily bespoke, we are also exploring programmatic interventions to efficiently address market weaknesses and support sectors. These could include:
Replicable products which we can market across a sector
Structured investments with financial institutions which unlock a range of future transactions
Pre-established products/terms we will offer to particular parts of a sector
Co-investment opportunities to unlock proprietary pipeline held by funds without the complication and expense of becoming one of many limited partners in a discretionary fund.
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