The European Investment Bank (EIB) is to lend £700m (€890m) for the £4.2bn Thames Tideway Tunnel (TTT).
The loan is the largest to be granted for a water-related investment.
Last year, Dalmore Capital, an asset manager partnered with the UK’s Pensions Infrastructure Platform (PIP), was part of the Bazalgette Consortium (now Tideway) initially financing the upgrade of London’s ageing sewer network.
The loan has been granted by the EIB on the 25km project, the largest infrastructure scheme ever undertaken by the UK water industry, with a 35-year term.
Mark Corben, Tideway CFO, said: “The EIB’s backing for Tideway is an important vote of confidence in us as a company, as we move into the construction phase.”
The loan covers a significant proportion of the financing needed, using an index-linked structure to lock-in financing costs.
The facility matches Tideway’s funding requirements and debt service.
Jonathan Taylor, EIB vice-president, said the new loan was the “most significant support for UK infrastructure since Crossrail”.
TTT will address the 39m tonnes of sewage discharged into the river in a typical year, via the UK capital’s Victorian sewerage network.
In 2014, this figure was 62m tonnes.