by Edward Simpkins
Bankers Trust and Nationsbank are pulling back from early bidding for PFI schemes, citing high cost and poor returns on their investment.
Nationsbank worked on a bid for the DSS PRIME project which was eventually won by a Goldman Sachs-led consortium. David Webster at Nationsbank said: “One of the reasons PRIME has left such a bad taste in our mouths is that the government said it would go from three bidders to one and then it didn’t. It cost us a shed load of money.
“It is easier to make money advising and lending money to bidding groups rather than being a principal.”
Alistair Dixon, vice-president at Bankers Trust, is equally disillusioned: “We’ve dramatically scaled back our act in PFI. It’s a very expensive business to go for.” He said Bankers Trust would rather get involved at a later stage when a consortium has already won a contract.
“We will be pleased to provide the finance when the deal is done, but most parties want to have a bank on board at the start for credibility. We won’t be doing that anymore.”
Dixon is currently working on securitising the income from the recent purchase of 1,500 pubs from Bass.
The pubs market is ideal for this, he said, because it is easy to separate the operational business from the property angle: “It’s an option that we’re pursuing because of the nature of the leases we’ve got.”
Meanwhile, Robin Priest, head of securitisation and leader of PFI projects at Nationsbank, has left to join Industrial Bank of Japan where he will have a marketing role in its securitisation team.
