European healthcare partnership points the way ahead


    With an ageing population demanding increasingly sophisticated healthcare provision, governments are looking at innovative means of delivering the highest quality infrastructure in an efficient and cost-effective manner.

    When Stockholm City Council in Sweden decided to develop a modern, environmentally sound university hospital, it opted to undertake a ground breaking public private partnership (PPP).

    The resulting SEK14,594 million (£1,336 million) New Karolinska Solna Hospital project is Europe’s largest PPP hospital procurement to date, Sweden’s first in the healthcare space and the Project Finance team’s at Lloyds Bank first MLA role on the continent. 



    Diagnosis change

    Karolinska is located on an existing hospital site in the Solna municipality of Stockholm. Rather than upgrade the current site, the client was looking to create an environmentally advanced, purpose-built development capable of providing the highest level of patient care as well as boosting medical research and education in the country.

    It will be a university hospital with a strong emphasis on specialised healthcare, as well as being a referral hospital for seriously ill patients throughout Sweden.

    The development will house over 700 individual patient rooms, a research laboratory, hotel and parking facilities.

    To ensure the project is delivered to a set timescale and within budget, the client opted to develop a PPP model to meet the design, construction, financing and ongoing operational requirements of the Karolinska hospital.

    This approach is new to Sweden’s healthcare sector and is Europe's largest single public private partnership (PPP) hospital scheme by value.

    A healthy partnership

    The groundbreaking nature of the New Karolinska Solna Hospital made it essential that the client partnered with the right organisations.

    After a competitive tender, a joint venture between construction firm Skanska and UK investment fund Innisfree was selected due to its expertise and strong track record in public private partnership infrastructure initiatives, particularly in the mature UK market.

    Stephen Todd, Investment Director at Innisfree, said: “Given the scale, complexity and prestigious nature of the New Karolinska Solna Hospital, Stockholm City Council needed to be entirely comfortable that the partnership they selected could deliver.

    “In Skanska they’ve partnered with one of the world’s largest construction companies and in Innisfree they have a leading infrastructure investment group with a platform of 55 PPP infrastructure projects with a capital value of over £13 billion.”


    Banking on delivery

    The Project Finance team at Lloyds Bank has a strong track record of working closely with Skanska to complete successful transactions such as the Surrey Street Lighting PFI and the Essex Building Schools for the Future project.

    We were selected to be one of the lead international banks on the transaction, undertaking a documentation role for both the debt and associated hedging alongside a local Swedish bank. Other funders include the EIB, Nordic Investment Bank, Svenska Handelsbanken, Skandinaviska Enskilda Banken, BBVA, Credit Agricole, DNB NOR, Nordea, Mizuho, Natixis
    and KfW.

    Financial close was reached on 30 June 2010 and the transaction represented Project Finance’s first MLA role in Europe.

    John Dingle, Structured Finance – Skanska Financial Services AB, said: “Karolinska required a large and diverse funding group. Skanska and Innisfree were greatly assisted by the pragmatic approach of the banks. In a key documentation bank role Lloyds Bank was the cornerstone to this approach.

    “The Project Finance team worked effectively and professionally with the other lead arrangers to achieve financial close on this landmark deal in record time.”



    Moving forward

    Construction commenced in summer 2010 and the hospital will be ready to receive its first patients in December 2015.

    Iain MacDonald, Head of Infrastructure Concessions, Project Finance, at Lloyds Bank, said: “Stockholm City Council wanted a long-term solution to ensure the hospital would be built to the highest specifications and that these standards will be maintained for decades to

    “From our experience, the PPP model adopted by the client is exactly the right one and ensures that the funding, construction and operational requirements will be handled by a partnership with the optimum blend of experience and expertise.
    “We’re immensely proud to be involved in a groundbreaking project, which will result in a world class medical facility that will make a significant contribution to health provision and medical research in Sweden.

    “The transaction demonstrates our growing capabilities in the Project Finance industry both in the UK and abroad.”


5/31/2020 8:03:39 PM