GLASGOW City Council has raised more than £200 million against some of its most famous buildings to help it fund its recently settled equal pay claim.
Pensions giant Phoenix Group, in collaboration with Edinburgh-based abrdn, has secured the £210 million investment in a property portfolio that includes Kelvingrove Art Gallery, the City Chambers and two educational campuses across the area.
The deal will allow the council to close its remaining equal pay liability, with Phoenix noting that around 19,000 individuals will be positively affected by the settlement of the claim.
The pensions giant has supplied the investment to City Property Glasgow, a wholly owned subsidiary of the council.
City Property Glasgow has effectively borrowed the funds in the form of a long-term fixed-rate fully amortising bond which will help the council resolve the equal pay matter while protecting assets which will "continue to be used for the greater public good".
A spokesman for the Phoenix investment team said: “Phoenix’s investment will be used for the sale and leaseback arrangement between Glasgow City Council and City Property Glasgow.”
Phoenix noted that the investment provides an “excellent match” for its long-term annuity liabilities.
Manuel Dusina, head of infrastructure at Phoenix Group, said: “This funding will help provide significant investment in Glasgow and aligns with our commitment to invest in assets across the UK to help have a positive social impact.”
Andrew Dennis, head of private placement research at abrdn, added: “This transaction is highly innovative and cost-efficient, allowing Glasgow City Council to settle historic liabilities, whilst also providing a highly rated asset for our client. It demonstrates how good financial structuring can deliver socially impactful assets for clients.”
Glasgow City Council announced in November that the amount it would have to pay to settle a long-running equal pay dispute had increased to £770 million.
The council initially paid £505m to 13,000 people in 2019 to end a legal challenge over a pay grade system which saw some male workers paid more than women in equivalent roles. However, that only covered the period up to 2018.
The outstanding claims, which will be funded via the Phoenix deal, cover the “gap period” between the first agreement in 2018 and the implementation of the new pay and grading system.
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