Transaction Advice Corporate Finance

Transcription

1 Transaction Advice Corporate Finance

2 Introduction Transaction Advice Transaction Advice Our Corporate Finance Services Arup s Transaction Advice team integrates financial, technical and commercial expertise, allowing clients to fully evaluate deal opportunities. We act as an independent and impartial adviser to clients, stakeholders and governments across a diverse range of sectors including, power and utilities, oil and gas, transport, social infrastructure and the built environment. Our services span the entire project cycle from feasibility through to financing and performance enhancement and cover three main areas Strategy and Economics, Corporate Finance and Due Diligence. Over the last three years, we have advised on over US $60 billion of closed transactions worldwide across our market sectors. Due Diligence Corporate Finance Strategy & Economics Arup provides a range of financial advisory services on Project Finance, Public Private Partnership (PPP) and Merger and Acquisition (M&A) infrastructure transactions across the world. Our insight into the technical and operating issues within transactions enables our financial advice to focus on the real deal drivers. Our offering includes: Financial advisory Providing lead financial advice to public and private sector clients on infrastructure transactions. Financial modelling Developing financial and funding models across a spectrum of sectors and deal types. Preparing financial business cases Assessing project viability and developing the investment case. Commercial structuring Advising clients on key commercial issues and development of payment mechanisms. Fundraising Assisting clients in raising finance and managing funding competitions and funder relationships. Bid evaluation and support Providing financial support to governments and developers during competitive bids and negotiations, on PPP and other transactions. Arup is authorised and regulated by the UK s Financial Conduct Authority to provide corporate finance advice and is registered with the US Securities and Exchange Commission and the Municipal Securities Rulemaking Board as a Municipal Advisor. 2 3

3 Case Study Presidio Parkway PPP Lead Financial Advisor As lead advisor to the San Francisco County Transportation Authority (SFCTA), Arup provided commercial and financial advice to deliver this pathfinder PPP project. The project reached financial close in June 2012 and utilised Transportation Infrastructure Finance and Innovation Act (TIFIA) funding from central Government as well as private financing. The PPP project includes the construction of a 1.6 mile, six-lane road and a southbound auxiliary lane replacing the existing Doyle Drive on Route 101, which serves as the southern access route to the Golden Gate Bridge, along the northern edge of San Francisco. Our combined UK and US Corporate Finance team led the financial work, initially developing a robust business case for the $1bn infrastructure project. The project represents many firsts in California in its planning, funding strategy, financing and procurement method, in addition to the way it is being constructed, operated and maintained. Arup developed the payment mechanism for the project s availability payments, including defining the range of criteria for deductions and calibrating the scale of deductions. The TIFIA loan was instrumental in financing the project because it is a low cost capital source that can be structured over the term of the P3 contract. The combination of the designbuild fixed-price contract, long-term operations and maintenance contract, and the optimised financial structure resulted in an availability payment approximately 40% lower than the affordability ceiling that was approved by the California Transportation Commission (CTC) for the Project. An independent report by Stanford University characterised the methods and assumptions used for the value for money analysis on Presidio Parkway as consistent, rigorous and transparent and urged governments in the US considering P3 project delivery to follow similar processes. Arup s responsiveness to problems or issues that occurred during the project was instantaneous, often anticipating problems before they became apparent and solving them before we knew. Overall, they were absolutely outstanding; among the best in the country. Leroy Saage, deputy director of Capital Projects at San Francisco Country Transportation Authority 4 5

4 Case Study Case Study Gas Storage Facility, Southern Europe Equity Financial Advisor We have developed the financial model for two major international equity funds that are looking to purchase equity in gas storage assets on a project finance transaction. The financial model reflects the regulatory mechanism and Regulated Asset Base (RAB) build-up for the assets, reflecting several different financing structures to allow a detailed optimisation of the project. The financing structures include a traditional project financing bank debt approach and a capital markets solution, as well as a combination of both. Decentralised Energy, London Lead Financial Advisor The model reflects the financial statements on the project level and the returns and financial statements for the equity investors at the holding company level, including calculations on exit strategies and terminal value. Our work has allowed the client to assess the continued viability of the project and allowed renegotiation of terms. Arup are lead financial adviser to the Greater London Authority (GLA) to deliver decentralised energy projects across London. We have been providing London boroughs, the GLA and other project sponsors with commercial and financial expertise to develop and bring projects to market. Examples of projects we have delivered so far include: For a point-to-point heat interconnector developing a financial model identifying critical financial covenants and return rates to support the GLA in the fund raising process. Developing a business model for the Lee Valley Network project with its main purpose to forecast the financial performance integrating different pocket heat schemes, a range of different pricing structures and diverse ownership models. Developing the business model to support the GLA in its application for a junior electricity supply licence (Licence Lite). The licence allows the GLA to trade electricity, essentially to purchase the generated electricity from its combined heat and power (CHP) schemes and then to sell on to retail customers. 6 7

5 Selected Projects Selected Projects Further Project Examples Government Pipeline and Storage System (GPSS), MoD, UK Financial advisory, commercial structuring, Arup is currently providing business planning, and commercial/pricing advice on the potential sale of the multi-fuel transmission assets owned by the UK Government. This is an important aspect of the draft Energy Bill and a potential sale would mark one of the largest privatisation deals in the UK since the early 1990 s. Lekki Epe International Airport, Nigeria Financial modelling, financial business case, bid evaluation Arup is advising the Lagos State Government on a greenfield airport PPP in Lagos. We undertook a detailed financial feasibility study to identify the potential scale of the investment opportunity and its potential value and returns through analysis of the business plan. Phase 2 includes on-going support in the tender process. Ofgem OFTO Availability Incentive Mechanism, UK Commercial structuring, Arup is providing payment mechanism advice to Ofgem on the different incentive/tariff mechanisms for network operators for the OFTO Enduring Regime tenders. We are leading the commercial and qualitative advice on tariff options, in addition to financial modelling of the different schemes. BWSC, UK Financial advisory, fundraising, Arup are providing financial advice on the fundraising for a 20MW facility in the UK, which involves the production of an information memorandum and running a funding competition. In addition we developed the financial model for the biomass developer to allow further project appraisals in the UK market to be undertaken. 8 9

6 Selected Projects RTÉNL Tariff Model, Ireland Financial advisory, regulatory and Arup has developed the proposed regulatory structure and tariff model to assist RTÉNL, a telecoms operator, in negotiations with the regulator and to assess the long-term impact to the network operator over a range of tariff structures. In addition, Arup is providing financial advice to assist in optimising the business going forward. Sri Lanka Roads PPP, Sri Lanka Financial business case, Appointed by the World Bank to undertake a financial feasibility for a road project in Sri Lanka. We produced a financial model for the pilot project which allowed us to provide a financial review of proposed schemes and provided an indication of potential Government contributions required for the project. Kenyan Electricity Generating Company Ltd (KenGen), Kenya Financial advisory, Arup advised KenGen on a proposed energy from waste facility in Nairobi. This included the development of a financial model and detailed financial analysis to determine the required structure and level of funding support required. In addition, a Financing Information Memorandum was produced to be issued to Development Financing Institutions. Port Operator, UK Financial business case, commercial structuring Arup advised a ports operator to analyse the impact of biomass co-firing on a conventional power plant business, which underpinned a significant investment at the port. We evaluated electricity risk, the biomass supply strategy and fuel price forecasts to provide comfort on the business case during negotiations

7 For further information on Arup s Corporate Finance services, please contact: Steven Lloyd Global Leader t +44 (0) m +44 (0) e [email protected] James Tunney Corporate Finance, UK t +44 (0) m +44 (0) e [email protected] Alwyn Naidoo Corporate Finance, South Africa t e [email protected] Craig Forrest Energy and Utilities t +44 (0) m +44 (0) e [email protected] Crawford Burden Transport t +44 (0) m +44 (0) e [email protected] Edward Reed Social Infrastructure t +44 (0) m +44 (0) e [email protected]