£1.7 billion raised by new asset class
In December 2017, on behalf of the Department for Education (DfE), UK Government Investments (UKGI) successfully completed the first sale of part of the pre-2012 (Plan One) English student loan book. As well as ensuring value for money to the taxpayer, the transaction – which raised £1.7bn – sought to ensure the position of all borrowers would not change as a result of the sale.
Structured as a multi-tranche securitisation backed by loans with income contingent repayments, this was a world first and launched an entirely new asset class in the capital markets. The capital structure included 3 rated bonds and 1 unrated, with unique and innovative characteristics tailored to the long-term nature of the underlying loans, each designed to appeal to specific pools of capital and attracted significant demand.
This was the first in a programme of sales anticipated to raise approximately £12bn of proceeds, which UKGI is leading on behalf of DfE. UKGI’s model of combining public and private sector expertise has produced a multi-disciplinary transaction team uniquely placed to deliver this complex and innovative project.