Abu Dhabi sovereign fund takes stake in Fizzy with direct £200m injection

The landmark capital commitment has been made directly into Fizzy, the commercial subsidiary of registered provider Thames Valley Housing Association, by Silver Arrow, an investment entity ultimately owned by the Abu Dhabi Investment Authority, which manages the financial surplus from the emirate’s oil reserves.

Silver Arrow will have a ‘significant shareholding’ in Fizzy Group and will be subscribing additional capital into the company. The level of equity in the deal has not been disclosed at this point.

Thames Valley becomes a ‘joint venture partner’ and will be responsible for the acquisition and development of new homes, with full ownership of the Fizzy management company.

Silver Arrow will be involved in the wider decisions relating to new opportunities, along with the wider portfolio strategy.

The investors will also have representatives on the Fizzy board, who will join MD Harry Downes and other board members.

Profits will be split between the stakeholders. Fizzy will invest its profit into the housing association group ‘to meet its social purpose’.

Fizzy currently has 246 apartments across four different locations, with aspirations to expand to around 1,000 properties over the next five years.

The company will continue to purchase new buildings from developers, as well as undertaking the development of its own apartment buildings. 

The PRS company was launched in February 2012 with seed capital of £30m provided by TVHA. It describes itself as the first company in the UK designed specifically to service the needs of young professionals seeking accommodation in the private rented sector.

In January 2013, Fizzy secured a further £40m of debt funding from Macquarie Capital, which has since assisted Fizzy to identify an institutional partner. That initial loan was secured on assets and included an interest rate guarantee.

John Garrity, chair of Thames Valley HA, which owns and manages 14,500 homes, said: ‘As the PRS market is growing quickly with new players emerging all the time, it was a specific objective of ours for Fizzy to have access to a larger capital source within the first two years of operation

‘To have achieved this is rewarding as it means that that profits generated from this venture are invested back into the association to meet our social purpose.

‘We now look forward to Fizzy proceeding rapidly towards its goal of building a large portfolio of quality private rental accommodation.’

Geeta Nanda, chief executive of TVHA, said they are ‘delighted to know that the Fizzy concept is as attractive to institutional investors as it was to us when we made our initial investment’.

TVHA had £1.1bn of debt at 31 March 2013, and a gearing ratio of 56 per cent.  

The latest deal follows a £40m loan from Legal and General to TVHA through a 25-year bilateral loan secured against key worker accommodation held in its parent entity.

Other recent deals for TVHA include its jv with Galliford Try, Opal Land, being announced preferred bidder on a £41m scheme in London, along with financial close on the Woking PFI.