What is co-investment and why does it matter to local authorities?

A co-investment vehicle is a structure in which a local authority invests alongside one or more partners (e.g., developers, utilities, investors) to deliver projects – sharing capital, risks, governance, and returns via a joint venture company (JVCo), limited liability partnership (LLP), or limited partnership (LP) fund.

Co-investment transforms a local authority from a traditional client paying for a service into an active equity partner. This shift allows the council to pursue specific return expectations and generate new revenue streams, while exerting direct strategic control through defined governance rights. However, this model directly exposes the council to commercial risk and requires navigating complex hurdles, including confirming statutory capacity, assessing strict subsidy control rules, and managing financial regulatory compliance.

What is a PPP and why does it matter to local authorities?

A public–private partnership (PPP) is a long-term contract where a local authority commissions a private partner to deliver a public asset or service, with the private partner taking on defined risks (often design/build/finance/operate) and being paid over time based on performance and service outcomes rather than just construction.

PPPs enable local authorities to deliver large-scale, complex infrastructure, such as Net Zero energy networks or waste facilities, without bearing the full burden of upfront capital expenditure. By entering into long-term, performance-based contracts, councils can effectively transfer design, construction, and operational risks to the private sector. The authority shifts from being a traditional builder to a purchaser of services, paying a ‘unitary charge’ only when the private partner meets strict, pre-agreed performance standards.

What is securitisation and why does it matter to local authorities?

Securitisation is a financing tool that allows a local authority to bundle together a portfolio of income-generating assets (e.g. retrofit loans or solar leases) and sell the rights to that future income to private investors. This converts long-term future repayments into a lump sum of upfront capital today.

Securitisation allows local authorities to pool illiquid, cash-generating assets; such as community retrofit loans, energy-efficiency receivables, or housing rents, and convert them into tradable securities sold to capital market investors. By doing this, local authorities can unlock immediate, upfront liquidity from future revenue streams, freeing up vital balance sheet capacity to fund new Net Zero infrastructure without taking on traditional debt.

What is subordination and why does it matter to local authorities?

Subordination is a legal and financial mechanism that changes the order of repayment priority among creditors. It establishes that one creditor (the ‘junior’ or ‘subordinated’ creditor) agrees to be paid only after another creditor (the ‘senior’ creditor) has been paid in full.

Subordination allows local authorities to structure capital stacks that blend different types of funding. By using junior or subordinated capital to absorb first losses, local authorities can ‘crowd-in’ senior creditors on more attractive payment terms, making complex projects more viable.

What is syndication and why does it matter to local authorities?

A syndicated loan is a financing arrangement where a single loan facility is provided to a borrower by a group of lenders (the ‘syndicate’). While there are multiple lenders, there is only one loan agreement, and the borrower interacts primarily through a single agent bank.

Syndication allows local authorities to raise larger amounts of capital than a single bilateral lender might provide, particularly if operating through an arms-length company, diversifying their funding sources while maintaining a streamlined administrative process. It is governed by standardised documentation that is well-understood by institutional investors.