IFM Investors makes £60m private debt investment in A2Dominion
IFM Investors, a global provider of investment services to institutional investors, has entered an agreement with A2Dominion, a regulated housing association focused on developments in London and southern England, to provide £60m in debt financing.
The privately-financed investment, issued as a nine-year floating-rate note (FRN) due 2027, is IFM Investors’ first in the social and affordable housing sector and the second FRN to be transacted in the UK housing sector. The investment was made by the firm’s infrastructure debt team on behalf of two insurance clients from the UK and US, who have global infrastructure debt investment mandates with IFM Investors.
As a residential property group with a social purpose, A2Dominion owns and manages 37,000 properties, including social, affordable and private homes. It will use the funding to support its activities including the development of mixed use housing that adds to its social and affordable housing portfolio. As a result of the successful issue of the £60m FRNs to IFM Investors, A2Dominion’s arranged loan facilities now exceed £2bn.
“In our view, social housing has proved a resilient sector, underpinned by effective regulation,” said John Carey, IFM Investors Investment Director. “We have been looking at opportunities in the sector on behalf of our clients, who are looking for stable, cash-generative assets that they can invest in and hold. As a leader in social and affordable housing, governed by an experienced team of housing and construction experts, A2Dominion presented an attractive investment for our clients, giving them access to floating-rate returns, appealing given the position in the interest rates cycle.”
“A2Dominion plays an important role in UK housing, given its sustainable model of funding social and affordable housing through a combination of mixed use and private developments. Its social purpose aligns with our long-term, responsible investing principles, and those of our clients.”
IFM Investors was established more than 20 years ago by a group of not-for-profit pension funds that sought to create an investor-owned institutional funds manager. IFM Investors now represents more than 15 million pension fund members globally. It is one of the world’s largest infrastructure managers with US$41 billion1 globally in infrastructure equity and debt assets.
Dean Tufts, Executive Director of Finance and Strategy at A2Dominion, commented: “This landmark FRN transaction with IFM Investors underlines our strategy of diversifying our institutional investor relationships to support A2Dominion’s growth plans. The unsecured notes replicate the terms of our EMTN programme. We have now issued more than £600m of unsecured borrowing that can be deployed flexibly across the Group. We were particularly attracted to IFM Investors’ willingness to receive floating rates in order to balance our interest rate risk management strategy.”
IFM Investors was advised on this transaction by Allen & Overy LLP. A2Dominion was advised by Centrus Advisors (Financial Advisor) and Devonshires (Legal Advisor).
A2Dominion is a residential property group with 37,000 homes across London and southern England, and thousands more in the development pipeline. The Group provides affordable, private and social rented homes, student, NHS and temporary accommodation, as well as supported housing and homes for older people. It also offers high-quality sustainable homes for sale and shared ownership, available through its FABRICA by A2Dominion brand. Whilst the Group takes a commercial approach to housebuilding, all of its profits are used for a social purpose, with millions of pounds reinvested into delivering more new homes and better services for customers. A2Dominion is part of the g15, a group of the largest housing providers in London. Visit www.a2dominion.co.uk.
1 As at 31 March 2018