Out of the Ashes


Ireland’s government has put PPPs at the heart of its plans for economic recovery. The latest Financing Irish Infrastructure conference suggests it is a model for success, reports James Kenny


Towards the end of 2014, Ireland’s signs of recovery did enough to label the country as “The Celtic Phoenix”, rising from the ashes of the Tiger’s bubble years.


As spending and growth appeared to resume and the crippled construction sector began to show signs of movement, infrastructure and PPPs also started to receive renewed interest from abroad.


November was a particularly significant month for the industry and coincided withPartnerships Bulletin’s Financing Irish Infrastructure conference, sponsored by Arthur Cox and KPMG. In the days leading up to and then after the conference, there was a flurry of activity. This included the opening of a new highway PPP, the announcement of a new social housing programme and the final bids going in for the landmark Grangegorman University project. All in all, it suggests that the growing buzz about Ireland’s prospects for 2015 is well justified.


Brian Murphy, chief executive of the National Development Finance Agency (NDFA), pinpointed this buoyant mood at the conference, as he talked of a strong rebound in the number of international groups seeking to invest in Irish infrastructure projects.


“There has been a major transformation in appetite for Irish assets and Ireland has a healthy pipeline of quality infrastructure projects to meet this appetite,” he said. “Investors – both domestic and international – are now actively targeting Ireland for major financing, construction and supply chain opportunities.”


Meanwhile, Robert Watt, secretary general for the Department of Public Expenditure and Reform, welcomed the N7 Newlands Cross flyover PPP, which had just been opened that morning. But he went further, looking to the future opportunities that the country holds. Referring to the upcoming social housing PPP programme, he explained it would be a “key part of the government’s plan of new projects”.


Turning point

A few days after the conference, the government provided greater detail on these plans with the launch of the Social Housing Strategy 2020: Support, Supply and Reform. This new programme will see 110,000 homes built in Ireland over the next six years, with 35,000 being social housing units, at a cost of €3.8bn. Within this there is a PPP element that will see the development of up to 1,500 housing units.

Movement is expected on the PPP plans by the end of 2017. According to many at the conference, the industry is now seeing the fruits of the hard labour that the Irish government – and many working with it – have been undertaking in the period following the financial disaster of 2009.

Jim Arigho, senior manager for corporate banking at Allied Irish Banks, explained: “For me the real turning point for the country was the European Investment Bank support given in 2012 for the funding of the construction and operation of six onshore wind farms, in Counties Tipperary, Clare and Kilkenny.”

Others praised the introduction and active strategy of the NDFA of cutting up to 50% in bid costs and shortening bid processes. Many saw this effort as the real catalyst for the market to begin gaining traction.



The developments have revitalised interest from foreign investors and institutional interest from abroad. But the challenge now facing the government is to keep this momentum going and to build on it. Garrett Monaghan, partner at the event’s co-sponsors, Arthur Cox, said: “The main thing for us in Ireland as well as those watching is we just want to see what’s coming next, the government has to commit to a definite clear pipeline.”

Julia Prescott, partner at investor Meridiam, added: “What we are looking for is commitment from the government. Ireland is standing out from the pack at the moment.”

So what of the pipeline? So far the announcement of the social housing PPP stands as the first of what is expected to be a tantalising opportunity. Firm details are yet to be revealed but it is expected that there will be further road projects announced over the coming months, as well as a further schools bundle (five have already hit the market over the past few years) and possible health projects.

“We want to close the gaps and bottlenecks in the country’s roads and continuing education, building schools and working on third level is also a priority,” said Watt.

When it comes to higher education, plans are already advancing. In October, two universities also applied to the European Investment Bank (EIB) to finance the construction of new campus facilities.

A €70m package is under appraisal by the EIB for Trinity College Dublin as part of a €148m project to construct new buildings for teaching, research and student accommodation facilities in the capital. Meanwhile, an €80m package is also under appraisal for the National University of Ireland Maynooth in County Kildare.

Seventh heaven

All agreed that confidence is a key issue for the country looking into 2015 – not only internally to close projects, but also having the confidence from the international market that Ireland can develop new projects.

Alongside the need for greater clarity on a new dedicated pipeline, speakers at the conference also urged the government to focus on the financial close of deals as soon as possible, arguing this would be key to future success. Seven deals are currently in the pipeline and many at the event had hoped all these could be put to bed before the end of 2014 to show what Ireland is capable of.

Panellists agreed that the closing of these deals would send a real message to international investors looking at a market where there has never been more than four deals signed in a year. Although that did not come to pass in 2014, there is now no lack of cash available to the Irish market in 2015.

Robert Costello, a director at the event’s co-sponsors KPMG Ireland, suggested the Irish infrastructure market is not yet fully invested, adding that it is liquid and ripe for investment.

Institutional investors also voiced the view that 2015 could be a very successful year for the country.

Deborah Zurkow, head of infrastructure debt at Allianz Global Investors, said her firm is very much open to invest in Ireland. “We’ve financed in eight countries and we’re looking to do a ninth,” she said. 

Despite the positivity, however, economic challenges do remain in the country and cannot be ignored. High debt levels serve as a reminder of the severity of the crisis, and the economy needs to continue growing at a significant pace for several years for these levels to recover. Exports, also, have not grown as strongly as expected, while domestic consumer spending has been curtailed by tax increases and spending cuts under the terms of the bailout from the European Union.

Since its bailout, though, Ireland has met every major fiscal target and consequently been held up as an austerity success story.

If the country can deliver on a new pipeline as well as continue its steady recovery, then the phoenix will rise.