Funding boost for Strategy delivery
(30 August 2018)
Durham University has successfully secured £225 million of borrowing through a private placement.
The funds will be used to support the delivery of the University Strategy, 2017-2027, which aims to ensure Durham University can extend its mission to contribute to society by delivering world-class research and education and an unmatched wider student experience.
The Strategy includes an extensive Estate Masterplan, with proposals to develop new buildings while delivering significant refurbishment to existing University buildings.
The funds will be provided by one UK and five North American institutional investors.
The transaction is the University’s first capital markets issue and was heavily over-subscribed by both UK and North American investors.
Show of confidence
Professor Stuart Corbridge, Vice-Chancellor of Durham University, said: “I warmly welcome the confidence in Durham University that investors have shown.
“The University is performing extremely well and will now further enhance its position as the number one UK university combining excellence in research, education and the wider student experience.
“The private placement will also help the University perform even better for Durham City and North East England.”
A private placement is a sale of promissory notes directly to a private investor.
Stephen Valvona, leading the deal for Lloyds Bank Commercial Banking, said: “As a leading bank for private placements we were delighted to support Durham University as they implement their strategy.
“This transaction reflects the strong interest and confidence from institutional investors in Durham University.”
Tony Fordham, Head of Private Placements, Santander Corporate Investment Banking, said: “We were pleased to see that Durham University was able to achieve a sizeable transaction with long duration at an attractive price.
“Strong investor demand demonstrated not only continuing appetite for the asset class, but broad-based support for the Durham University credit story and its strategic plans going forward.”
Pension Insurance Corporation has invested £145 million of the £225 million.
The funding is very long-dated, with £70 million maturing in 2058 and £75 million maturing in 2067.
Elizabeth Cain, Senior Debt Origination Manager at Pension Insurance Corporation, said: “We are delighted to have been able to work with Durham on this transaction, helping to fund the University’s Estate Masterplan.
“The private nature of the transaction means we were able to develop a maturity profile which works for both institutions.
“This is our single largest investment in the university sector and its very long-term maturity date reflects the strength of the University, a high-quality institution with an outstanding reputation, as well as the long-term nature of our business.”
The funding announcement builds on continuing success for the University, which is ranked in the top five universities in the UK and top 100 universities globally, and Gold Teaching Excellence and Student Outcomes Framework (TEF) education provider.
Examples of how the University is developing its estate under its Estate Masterplan include:
- The creation of a £40m Teaching and Learning Centre, with state-of-the-art teaching and learning facilities;
- Investing £31m in an integrated Maiden Castle Sports and Wellbeing Park;
- Investing in Colleges, including developing two new College facilities as part of the £85m Mount Oswald project; and
- Constructing a £40m new home for its Mathematical Sciences and Computer Science departments.