Social Infrastructure · Prisons

What pays for a prison, and what eats the margin

A prison PPP is the opposite of a toll asset: there is no demand risk, the state pays a contracted, inflation-linked unitary charge for every place, whether or not the cell is full. The catch is performance: when a cell is unavailable or a service standard is missed, the contract docks the payment with weighted deductions. Because the operator's cost base (custodial staffing, FM) is sticky, those deductions fall almost entirely through to EBITDA. The case turns on the size of the estate, the unitary charge, and how reliably it is delivered.

1,200
£48k
98%
LIVE
Available cell earns its share of the unitary charge Unavailable cell triggers a payment deduction Custodial services staffing & FM payment Unitary charge paid at the gatehouse
Flows, annualised from current assumptionsper year
Revenue p.a.
£0
£0 / hr
EBITDA p.a.
£0
0% margin
Net revenue / place
£0
after deductions
Prison places
0
98% available
Stocks: what the flows accumulate intolive
Deductions · session
£0
payments docked for failures
EBITDA banked · session
£0
accumulating in real time
Implied enterprise value
£0
at 16× EBITDA
Where revenue comes from Total £0 p.a.
Availability
Services
Why investors like prison PPPs: the unitary charge is a long-dated, government-backed, inflation-linked annuity with no demand or volume risk (the gold standard of contracted cash flow), which supports very high leverage and low equity returns. The flip side is operational rather than commercial risk: availability and performance deductions. With a fixed cost base, a few points of lost availability flow almost entirely to EBITDA, so disciplined delivery, not traffic, is what protects the return.
Revenue streams£0 p.a.
Operating costs£0 p.a.
Investment case: should you buy it?DCF returns

Year-1 financials flow live from the simulation above: revenue £0 and EBITDA £0 p.a. As you set your deal terms below, the unlevered IRR (asset return) and levered IRR (return to equity, after debt) recompute instantly.

Operating

%
%
%
%
%
%

Valuation & hold

×
×
y

Financing

×
%
%
Unlevered IRR
—
asset / project return
Levered IRR
—
return to equity
Equity multiple
—
MOIC over hold
Equity gain
—
exit equity − invested
Equity cash-flow profile£m · ■ invested   ■ returned
Projection, £m per year

Illustrative model. Represents an availability-based prison PPP/PFI concession. Gross revenue = places × unitary charge, split into an availability (accommodation) payment and a custodial-services payment; net revenue deducts weighted availability/performance deductions of roughly 1.4× the pro-rata value of unavailable capacity. Operating costs (custodial staffing, facilities management, healthcare & programmes, insurance, lifecycle & SPV costs) are dominated by per-place staffing and are largely fixed against availability, so deductions fall almost entirely through to EBITDA. EBITDA = net revenue − operating costs; excludes upfront construction capex and senior debt service. The investment case is a simplified DCF. For illustration only, not investment advice, and not any specific asset.