Queenstown cable car project wins USD $150 million backing

Southern Infrastructure has agreed terms in principle on a USD $150 million debt facility with Private Capital Group for the Queenstown Cable Car project, marking a step towards construction of the transport scheme.

The proposed facility would be provided through Private Capital Group's infrastructure lending platform and funded by international investors participating in New Zealand's Active Investor Plus visa programme. The arrangement would bring offshore capital into a domestic infrastructure project as Southern Infrastructure continues work on the wider funding package.

The agreement comes as Queenstown faces mounting pressure on its transport network, particularly on the route between the airport and the town centre. The cable car project is intended to form part of a broader public transport response by creating a passenger link separate from the existing road corridor.

Ross Copland, Chief Executive Officer of Southern Infrastructure, linked the financing step to the district's traffic constraints.

“The narrow road from Queenstown airport to the town centre exceeded 10m vehicle trips for the first time last year and traffic continues to grow exponentially. Twenty-four transport studies by our leading transport experts over the past two decades have reached a resounding consensus: a gondola transit system will be essential when our roads reach capacity. This agreement with PCG brings us a step closer to delivering this critical infrastructure by the end of this decade,” said Ross Copland, Chief Executive Officer of Southern Infrastructure.

Funding structure

The term sheet for the facility is non-binding and remains subject to due diligence, credit approval, and full documentation. Even so, it marks progress for a project that has been seeking a workable financing model alongside planning, land discussions, and design work.

Southern Infrastructure is also working with National Infrastructure Funding and Financing on a structure under the Infrastructure Funding and Financing Act. That mechanism would use a levy based on land value uplift so those judged to benefit from the scheme would contribute to its cost.

The developer has also submitted a market-led proposal to National Infrastructure Funding and Financing, which it believes could help simplify the approvals required across central government for a transport investment of this scale.

Copland said the company sees the cable car's finances resting on several sources rather than on local council borrowing alone.

“Together, private debt, a beneficiary-pays levy, and the project's own farebox revenue underpin a capital structure that delivers a mass rapid transit spine for Queenstown without relying on QLDC's already over-stretched balance sheet,” said Copland.

Investor role

Private Capital Group has worked on structuring the debt facility and assembling investor interest. The proposal, it said, shows how private and offshore capital can be directed into infrastructure in New Zealand.

Paul Carman, Founder and Managing Partner of Private Capital Group, said the investment addresses a long-running economic and transport issue in the resort town.

“Delivering the Queenstown Cable Car creates certainty, empowering local, regional, and national businesses to build and execute sustainable, long-term plans in the region. This transaction will support an environment of economic growth and development, together with long-term job creation. The case for a mass rapid transit solution in Queenstown is clear, and this capital investment ensures the problems associated with congestion can be addressed,” said Paul Carman, Founder and Managing Partner of Private Capital Group.

Carman said the project fits the profile sought by the firm's investors.

“PCG has the capacity to invest in city-shaping projects. Queenstown is a key region for economic growth, with enormous future potential. This project provides a demonstrable and deliverable piece of key infrastructure to help facilitate and underwrite this. Putting capital to work with Southern Infrastructure is exactly the kind of investment our investors are looking for - projects that change the shape and trajectory of a region and benefit its residents, businesses, considerable visitor base, and economy,” said Carman.

He added that the investor base includes both domestic and international backers deploying money into New Zealand assets through the group's funds.

“Our funds include a combination of domestic and international investors, whose combined capital is applied through PCG's funds directly into New Zealand assets. QCC is a prime example of a project that will be used every day by New Zealanders, their businesses, and visitors alike,” said Carman.

Project progress

Beyond financing, the project remains in the detailed design and consenting stage. Preparation of the substantive consent application is well advanced, while talks with landowners along the route continue.

Detailed design work is progressing with ropeway manufacturers Doppelmayr and Leitner. A parking building planned for Queenstown town centre is also being designed and priced by Naylor Love as part of the wider programme.

The proposed cable car would sit alongside other transport measures, including more frequent buses, travel demand management, improved walking and cycling links, park-and-ride sites, and selected road upgrades. Southern Infrastructure argues that mix would give residents and visitors more alternatives to private car use in a district where congestion has become a central infrastructure problem.

“Queenstown has spent a decade planning this. PCG has done in a matter of months what has eluded this district for years - put real money on the table for a project that adds transport capacity off the road network. We are grateful for their confidence and commitment,” said Copland.