The Royal Liverpool hospital has secured the funding for construction of its new hospital and the demolition of the existing facilities.

The £429mn financing is being provided by a mixture of government bodies, development finance institutions (DFIs), banks and institutional investors. Lloyds are the sole commercial bank stepping up, with the remainder of private investment coming from institutional investors Legal and General and Scottish Widow Investment Group.

In addition, the EIB will provide £90.5mn together with £118mn funding from the hospital’s Trust and £94mn from the Department of Health, meaning that almost three quarters of the project will be publicly-funded.

Helen Jackson, director of strategy and redevelopment for the Royal Liverpool and Broadgreen University Hospitals NHS Trust, says: “We have gained significant backing from the EIB and have incorporated the use of institutional pension funds, with the involvement of Legal and General Investment Management. The deal we have achieved has further reduced the annual repayment which will now be over £10mn less than the initial projections and will mean our annual repayments will be around just 5% of our income. This is one of the lowest cost public private deals ever.”

Victoria Whitehead, director, infrastructure and energy finance, of Lloyds, tells GTR that with the advent of institutional investors, pricing has been more competitive for hospital and other kinds of social infrastructure deals.

As with this deal, competitive pricing can be beneficial to the public sector in its efforts to keep costs down.

The firm charged with construction of the hospital is Carillion of the UK, which will invest around £15.5mn of equity in the project and expects to generate £200m of revenue over the 30-year life of the concession contract.

Construction will begin early in 2014 and is scheduled to be completed by 2017. The new hospital will be the largest all single-bed hospital in the country with 646 beds, including a 40-bed critical care unit, 18 operating theatres and one of the largest emergency departments in the north-west of England.

Carillion CEO, Richard Howson, says: “We are delighted to have achieved financial close on this exciting new hospital, which will be our 16th PPP hospital in the UK.”