Eighteen universities are planning to give the go-ahead later this month to a bond scheme which could raise Pounds 100 million for capital development and further expansion.

The scheme is being coordinated by the Committee of Vice Chancellors and Principals and has the backing of the Higher Education Funding Council for England.

European Capital has developed the blueprint for the vehicle company and will be charged with marketing the 25-year bond scheme to long-term investors, mainly insurance and pension companies.

The main concern of universities is the interest rate which, if set too high, would outweigh the benefits of long-term borrowing. Another concern is the cost of setting up the scheme, which could run into hundreds for thousands of pounds. Various options of raising this money are being considered, including a loan from HEFCE.

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John Avery, head of estate management at HEFCE, said the loan option was not top of the agenda because of the political difficulty of "focusing money around such a small number of institutions".

The CVCP is not disclosing the identity of the 18 universities, but acknowledged that the likely consortium will include both old and new universities. There may be "some overlap" with the 12 institutions affected by the recent tax legislation changes designed to curb the abuse of Qualifying Indexed Securities.

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Maurice Hoschild, director of European Capital, said that once the universities formally sign up to the scheme "there will be a lot of marketing work to do". But he said that higher education was a promising sector for investors.

"It is not a luxury good and demand for it can be expected to be relatively stable. There are institutions which are hundreds of years old, and even the former polytechnics have roots in older institutions," he said.

He added that as tax-driven schemes like QIS are phased out, the "straight financing" of the bond scheme would become more attractive to universities. But he did warn that there were "one or two" institutions across the sector which would not be able to take advantage of this method of raising finance because of a perceived lack of credit-worthiness.