Cambridge’s Colleges Band Together to Borrow $245 Million

A group of 18 colleges at the University of Cambridge have banded together to borrow about 150 million pounds ($245 million) in a debt private placement, the first time U.K. higher education institutions have used that form of financing.

The money is being raised by two newly created companies and will be loaned to the colleges in sums ranging from about 3 million pounds to 18 million pounds, according to an e-mailed statement from Rothschild, the investment bank that advised the colleges. The funds, from institutional investors, will be used for construction and maintenance of buildings and “the long-term benefit” of students and staff.

As the U.K. government cuts funding for universities, Cambridge’s colleges are becoming increasingly entrepreneurial about making money. In 2012, Trinity Hall announced it was co-founding a bank with funds from its endowment. Cambridge’s age and stability makes the debt attractive to investors, said Francis Burkitt, a managing director at Rothschild.

“These colleges are very, very long-term institutions and if you’re going to lend long term, these are natural institutions to loan to,” he said. “These haven’t defaulted in 800 years.”

The University of Cambridge, founded in 1209, is made up of 31 colleges, which own their campuses and manage their own finances. Among the borrowers are some of Cambridge’s oldest colleges, such Gonville & Caius, founded in 1348, and Corpus Christi, founded in 1352.

Low Rates

The borrowing arrangement made sense because interest rates are historically low and it was an opportunity to lock in a rate for 30 to 40 years, said Jonathan Spence, the senior bursar of Queens’ College.

The loans have an average rate of 4.42 percent and an average maturity of about 33 years, according to the release.

The colleges’ loans will be separate and no school will be responsible for the debt of the others. The colleges needed to join together to attract investors, Spence said.

“The size of any individual loan is just not going to interest any institutional investor,” he said.

Queens’ College is borrowing 8 million pounds, which it will use to renovate one dormitory and to build another. The facilities will be used for students and the conference business the college runs in the summer, Spence said.

The construction work, which should be done by 2015, would normally take 12 to 15 years if paid for out of the college’s normal cash flow, he said.

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To contact the editor responsible for this story: Lisa Wolfson at

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