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Lay-by on HE section of A13 Oct 2017

Departing shareholders in Connect Plus (M25) Ltd operators of the M25 PFI scheme, obtained a 31% pa return on their investment over an 8 year period.

However Highways England cannot get this super profitable contractor to adequately clean their contract area.

This includes the A13 /A1089 link from just inside the M25 out to Tilbury.  The whole this was declared a litter-black spot.

Extract from National Audit Office report on PFI Jan 2018   Page 41

Case study: Equity sale of M25 project equity

In 2009 Highways England signed a 30-year private finance contract for widening two sections of the M25 motorway, and maintaining the entire 125 mile length of the road, including the Dartford Crossing. The project had a total capital investment value of around £1 billion.

The winning bidder was Connect Plus (M25) – it had four shareholders: Balfour Beatty and Skanska both had a 40% stake and Atkins and Egis both had a 10% stake.

At the start of the project the four shareholders invested a nominal amount for the share capital of the company and during construction phase provided shareholder loans which amounted to £200 million in total. The rest of the initial investment was provided in the form of bank loans.

Between 2009-10 and 2015-16 the shareholder loans had paid out total interest of £113 million and dividends (which started in 2013-14) of £44 million.

In 2016-17 two of the original investors, Skanska and Atkins, sold their investment amounting to 50% of the project, for £330 million.

Taking into account the timings of the cash flows we estimate an annual rate of return of around thirty-one per cent (including interest, dividends and sale proceeds) over the eight-year period from 2009-10 to 2016-17, on the investment of £100 million.

Highways England is forecast to pay the Connect Plus around £350 million a year on average from 2017-18 until 2039-40 (£8 billion in total). This will pay for ongoing operational and maintenance work, provide a return to shareholders and also repay the bank loans which currently amount to around £1 billion.


1 Highways England are due to pay £8 billion (in nominal terms) cash between 2017-18 and 2039-40 according to the HM Treasury PFI database. This amounts to an average of £350 million per year over the same period. The cash figure for 2016-17 is £265 million.

Source: National Audit Of ce analysis; HM Treasury PFI database; Connect Plus (M25) financial accounts

Peter Silverman
29th January 2018


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