On Monday, 29 September 2014, Alexander Dobrindt Federal Minister of Transport, and his colleagues from Schleswig-Holstein, Reinhard Meyer, and Hamburg, Frank Horch, officially launched the expansion of the A7 motorway to six or eight lanes. Investments are estimated to total 1.6 billion euro.
Public-Private-Partnership responsible for expansion and operation for 30 years
KfW IPEX-Bank is financing the extension of the A7 motorway in Germany together with institutional investors. The consortium of bidders comprising the construction firms HOCHTIEF and Kemna as well as the financial investor DIF won the public tender for the extension works in the section linking Hamburg Northwest and Bordersholm in the state of Schleswig-Holstein. The project is a PPP (Public-Private-Partnership) with a tenor of approx. 30 years. It marks the first time that a PPP project in Germany is being financed by a project bond. The project company will place a bond on the capital market, and investors will be able to buy the tranches successively over the construction period.
New lanes for 65 kilometres
The planned construction measures include widening a 65-km-long stretch of the A7 motorway to six, in some sections eight lanes. The aim of the measures is to reduce traffic jams, which will in turn reduce the risk of accidents occurring on this particular stretch. The investor is HOCHTIEF AG, a long-standing client of KfW IPEX-Bank. Based in Essen, HOCHTIEF is Germany’s largest construction firm and, given its staffcount of about 81,000 it is also one of the industry’s biggest internationally. Apart from HOCHTIEF, the mid-sized company Kemna, which is headquartered in Pinneberg – in close proximity to the works – is also participating in the complex project.
Financing PPP projects has been part of KfW IPEX-Bank’s core business for many years. PPP is a flexible procurement alternative that helps modernise community services while also enabling the public authorities to focus on their priority tasks. In this way infrastructure can be renewed and extended and, at the same time, pressure on public budgets can be relieved.