A fund to buy stakes in problem PFI projects was set up by fund managers Innisfree and M&G last week. It is hoped that contractors will sell it stakes in projects that have run into difficulties.
Innisfree and M&G are committing £100m to the fund, and aim to raise another £200m for further purchases.

The fund managers say the move is intended to meet concerns that contractors are running short of money for equity funding.

The two firms say the deal should attract cash from institutional investors, banks and pension funds because of the guaranteed earnings of PFI projects.

They claim that the creation of the fund is proof that the PFI market is maturing as more projects’ construction phases are completed and the financial risks associated with the early stages of PFI deals are reduced.

Until now, institutional investors have been forced to invest in projects from the start and carry the risk of construction running over budget.