Pension Insurance Corporation plc (“PIC”), a specialist insurer of defined benefit pension funds, has invested £65 million in debt issued by Pobl, a housing association based in Newport, Wales. The funds, the majority of which are deferred until 2021, will be used to support Pobl’s affordable housing development programme over the next two years as part of their aim to create 10,000 new homes over the next 10 years, as well as to refinance existing long-term debt.
The deferral helps Pobl lock in certainty of funding at a known rate. This is the second funding agreement between PIC and POBL, following a £35 million investment in 2013. To date, PIC has invested over £2 billion in the UK’s social housing sector.
Pobl is the largest housing association in Wales with over 17,000 homes under management located in and around south Wales. It employs over 2000 people across its three operational areas, Homes and Communities, Commercial, and Care and Support.
Key points of the transaction:
- £65 million funding split into two tranches
- £15 million spot funding maturing in 2041
- £50 million deferred funding, drawn down in 2021, maturing in 2059
- Maturity profile has been tailored to match PIC’s pension liabilities in years where it is difficult to source cashflows in the public bond markets
- Pobl’s planned housing will be up to 40% more energy efficient than the Welsh average
- The debt is secured on social housing assets
The sector continues to be important for PIC to invest in. PIC’s experienced, specialist in-house team has a strong track-record of working with housing associations on bespoke funding transactions.
Wayne Fox, Director of Corporate Finance at Pobl, said: “We are delighted to have secured this funding which will help us achieve our ambition of creating 10,000 new homes for Wales over the next ten years. PIC is a valued partner following our initial transaction in 2013 and having the opportunity to work again with a team that has such a strong understanding of the social housing sector makes for an efficient and successful process. We valued PIC’s flexibility, including the ability to defer drawdown.”
Eugenia Korobova, Debt Origination Manager at PIC, said: “It has been a pleasure to work with Pobl. The management has a clear strategy and rationale to make their plans achievable and we are happy to continue supporting them to help deliver more affordable housing in south Wales. In addition, we have been impressed by Pobl’s focus on the need to address ESG-related risks, and their plan to have very energy efficient homes. This investment complements our portfolio providing low risk, long-term, secure cashflows that match our pension liabilities for decades into the future.”