Hampshire reservoir secures £50m from PIC

Portsmouth Water has secured £50 million in debt investment from Pension Insurance Corporation to fund the new Havant Thicket Reservoir.

The reservoir, which is the first to be constructed in the UK in more than 30 years, will help tackle water shortage challenges which sometimes hit the South East while conserving chalk streams.

It will make use of natural springs in the area, which supply a sustainable water supply throughout the year and are thought to be among the largest individual spring water sources in Europe. In winter and during high rainfall, surplus water flows from these springs into the sea, making them a suitable supply for the reservoir.

Following six years of design, construction and commissioning, the reservoir will be able to store 8.7 billion litres of water, retained by an earth embankment dam, which will then be able to supply up to 21 million litres of water per day to Southern Water in periods of drought.

This will also reduce abstraction (the removal of water) from the rivers Itchen and Test, and protect biodiversity in these environments.

The debt, which matures in 2037 matching pensioner payments, brings stable and predictable CPI-linked cash-flows and is insured by Assured Guaranty.

Centrus acted as advisers on the transaction, with Linklaters representing PIC.

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Thomas Foucoin, Senior Debt Origination Manager at Pension Insurance Corporation, said: “We are very pleased to have completed our first investment with Portsmouth Water to finance the UK’s first new reservoir for over thirty years. This is a major infrastructure project which will play a critical role in ensuring adequate water supply to local communities across the South East of England, and aligns well with PIC’s own values and purpose.

“PIC has provided over £5 billion of financing to greenfield and brownfield infrastructure projects, as well as corporate borrowers, in the last five years. Our team has a track record of tailoring financing solutions which match the needs of large infrastructure projects, including long tenors, deferred drawdowns, and lending in multiple currencies.”

Bob Taylor, Chief Executive Officer for Portsmouth Water, said: “We are delighted to have secured the £325 million investment required to construct Havant Thicket Reservoir. This will be the first large scale water storage reservoir to be built in the UK since the 1990s.

“It will play a key role in protecting internationally important chalk rivers – the River Test and the River Itchen, by securing a new, sustainable source of water for the region. This is an exciting time for the project. We have recently taken a major step forward in awarding the main reservoir works contract and, with all capital and investment now secured, look forward to work progressing on site.”

Read more - Portsmouth Water begins work on new reservoir for the South East