Category: Infrastructure and Project Finance

Infrastructure Fund Manager of the Year 2015 – Germany
FinanceInfrastructure and Project Finance

Infrastructure Fund Manager of the Year 2015 – Germany

Perhaps the most distinguishable characteristic of our firm is that it is 100% management owned, which allows us to make quick decisions, be highly communicative and, as a result, achieve the best results for our clients. Deutsche Finance’s fund of funds offer investors diversified access to institutional private equity real estate and infrastructure strategies which deliver long time superior investment performance, broad diversification, excellent manager allocation and ongoing risk management capabilities.

Furthermore, every target investment of ours is handpicked, with a thorough due diligence process and serious negotiations that are fully aligned with the investment manager. We have access to the bestin- class managers in the private equity real estate and infrastructure business, and they all are the best positioned, well focused specialists for certain markets and sectors. Over the years, they have maintained a consistent track record of success for a long term. As a result, they all help us to capitalise on the extraordinary opportunities in the global private equity real estate and infrastructure landscape. Additionally, we are the only fund of funds which constantly produces new fund of funds products for private individuals and institutional clients for a decade now.

As for my expertise, like many of my colleagues I gained a lot of experience working for institutional investors before joining Deutsche Finance Group. For E.ON, the power utility group, I built up a large alternative private markets portfolio for their pension liabilities. This portfolio, with assets of 2,5 bln. EUR and more than 50 private equity real estate and infrastructure strategies, provided the blueprint of the strategies we execute today. From 2008 to 2009, I advised Deutsche Finance with my Partner Sven Neubauer when working for Valartis, a Swiss Asset Management Boutique. Subsequently, we became Partners of Deutsche Finance in 2009. Today we have a personal track record of more than 4 bln. USD in more than 200 individual real asset strategies worldwide, including infrastructure and more than 50 people are working for the success of Deutsche Finance real estate and infrastructure fund of funds. 

In our industry, most investors think that infrastructure investments are safe and have a regular cash flow component. This is not necessarily true. In actual fact, infrastructure investments are typically highly dependent on factors such as political issues, subsidies and even weather conditions. As real estate investments, the cash flow is only safe when stabilised, and we think of it in the same vein as when there is no wind you get no turnover of a windfarm. For this reason, we provide diversified infrastructure investments the same way as real estate. A focus on more rental based infrastructure investments can also make sense like having a parking lot, schools, hospitals etc. 

In my opinion, big scale infrastructure projects are overpriced right now, especially in mature markets. From our experience, risk is not always priced right, and a broader mix of investment opportunities can help to manage these risks and to invest big amounts too. Managing risk is sometimes not counted and most investors only focus on a stable cash flow. A fund of funds can deliver really stable cash flow from more than one source and optimise the risk by diversifying on several types of infrastructure assets. This makes even more sense when an institutional
investor is not able by size to execute his own diversification.

With our strategy, we can choose the type of investments every day, and we are highly independent of market moves. Moreover, we do not have to have highly focussed personnel which only cover one type of infrastructure, and instead we can really move quickly to new opportunities in the market.

What really benefits our clients is that any of them can individually define the type and amount of risk it want to carry. As all of our products are fund of funds portfolios of institutional strategies, we can combine target investments as agreed. The type of infrastructure, the regions and currencies, the number of investments are all part of the combined risk in the portfolio and as a result is probably much less than in any other infrastructure investment.

Looking towards the future, we are very confident that our firm will continue to grow in 2016 and beyond. This year, we will establish at least three new funds and hope to convince new institutions of our diversified investment strategy.

Company: Deutsche Finance Group
Name: Symon Hardy GODL
Email: [email protected]
Web Address: www.deutsche-finance.de
Address: Ridlerstrasse 33, 80339 München, Germany
Telephone: +49891707880112

CEO of the Month Ermanno Santilli
FinanceInfrastructure and Project Finance

CEO of the Month Ermanno Santilli

First of all, could you give us an overview of your company?
The technology behind our company and the product MagneGas2® was actually founded by my father Dr. Santilli, and throughout the years we have evolved into a fully independent publicly traded company with over 8000 shareholders. Last year, the increase in our stock performance was close to 140% and our shareholder base and institutional shareholder base grew by approximately 30%. We are unique in the fact that we are the only green technology (or greentech) company that is based on a process called Submerged Plasma Arc Flow technology.

Please tell us more about this technology. How would you describe it to someone outside of your industry?
This submerged plasma arc flow technology is just a fancy way of saying that we take a liquid and we shoot an electric arc through it. Basically, we zap it with electricity and when you do that a gas is created that bubbles to the surface. Once this is done, we filter it, compress it and then fill our cylinders with it. We have independently verified our gases, and have found that our gases are hotter, safer and cut much faster than any other cutting fuel product out there. Because of this, our gas is currently being used by NASA subcontractors on the Space Center project, the Fire Department of New York City, both the US Army and Navy, and several of the top utilities in the US as well as thousands of customers throughout Florida and the rest of the country. 

Across our company, we have three lines of business: industrial gas, agricultural and energy. Believe it or not, for industrial gas we actually use soybean oil. With our process, the liquid you put in dictates the type of gas that comes out. What we found to be the best application for the replacement of acetylene is soybean oil, but that may change over time. Many customers rave about the faster cutting speed of our product MagneGas2, and just about everyone who tries it switches over. The customer response is so great that we are ramping up our production to accommodate this ever-increasing demand.

But that’s just one of our operating modes, another involves taking waste manures such as hog manure, raw sewage or anything that has biological activity and processing this waste. For this process, we flow it through instead of zapping it and the heat and the electric arc kills any bacteria. This process renders it completely inert, yet it is still full of the nutrients that nature puts into manures. What this means is that farmers can take what are, in essence, one of the most abundant wastes in the world and reuse these liquids in the form of sterilized water and soil supplements.

We continue to test this sterilization application at several large farms and have many discussions underway with the US Department of Agriculture and others in terms of collaborations. As you can imagine, the agricultural business is a very stable business and doesn’t adopt new technologies very quickly.

Our third opportunity, energy, uses a very specific type of gas and the reason why our gas is so much more effective is that it has a very high flame temperature. The City College of New York in the US tested our gas and found that it has a 10,500 degree Fahrenheit flame temperature, significantly higher than any other industrial gas. Typically speaking, when you burn something, the higher the flame temperature, the better the efficiency and lower emissions. When you burn something using the product MagneGas2 at such a high temperature you get more complete combustion. Along with our partners in Australia, we found that if you take certain fuels and mix it with our gas you can burn it in a way that is both cleaner and more efficient.

This brings us to another one of our innovations, co-combustion, which is we believe is a real game-changer. Coal fired electric generating plants continue to provide approximately 45% of the world’s power, so it’s not going away anytime soon. In certain countries, however, coal has a bad name and many coal plants are being forced to close due to their polluting emissions, and/or expensive CO2 taxes. When you burn a lump of coal, it’s burning at best at a 35% efficiency, which wastes energy and creates a lot of particulate matter in the smoke emitted. That smoke contains pollutants that many believe are heavy contributors to climate change.

Our work has shown that if you inject the product MagneGas2 into a specially designed chamber and have an ignition point, you have a secondary combustion event that allows you to burn the smoke again at a much higher efficiency. Using MagneGas2 in this coal-burning process, we can add another 30% efficiency at a minimum, while at the same time achieving a substantial reduction in emissions of CO2 and other greenhouse gases. We firmly believe that this is going to have a significant impact on the coal-burning industry as a whole and on our global environment as well.

The advantages of this technology goes beyond increased energy efficiency. “Scrubbers”, which are the current technology used to reduce coal emissions, are highly expensive, costing up to $700 million dollars each. The average coal-fired power plant needs about four of them. So there is certainly a CAPEX and OPEX opportunity alongside being more efficient. In our industry, people fight tooth and nail to try and improve the efficiency of coal and spend billions of dollars on being more efficient. We can turn the game on its head because we don’t treat the smoke as a waste stream but as a new energy source as a result of using our fuel.

We’ve been working on this project for about two years with one of the largest power companies in the United States, who has apready spent over $5 billion on carbon capture. Depending on the setup and configuration, we’re getting up to a 20 to 40% reduction in the level of CO2 emissions. There is no other technology that reduces CO2 and saves money. Most companies tend to put it underground or convert it into something. What this company has said to us is that we are the only company they’ve come across that potentially reduces CO2 and saves money.

Could you give us an insight into what it’s like to work in your industry? What are the major challenges facing your company at present?
Generally speaking, launching any new technology can be difficult, especially in our target industries. If you took your mobile phone out of your pocket, chances are that it’s no more than two or three years old. That’s because the mobile phone industry moves to adopt new technologies and ideas very quickly. By contrast, the industrial gas business has far less innovation, and the people in that market are just not as used to changes like you and I are about our phones. There’s a tendency to stick to what we’re doing and less willingness to adopt to new innovations.

In terms of challenges, when you experience the type of rise our company has experienced in just one year, you attract a lot of attention and some of this can be quite negative. This negative attention typically comes from people who are speculators and manipulators, shorting your stock and writing wild and speculative things, which has led to a lot of potential distractions. We’ve worked hard to keep our eye on the prize.

As a growing company, it’s inevitable that you’ll continue to build your team. What are some of the qualities you look for when hiring staff?
We find that because our industry is not as dynamic as others, instead, we look for parallel or related industries and try and use the experience garnered there to add value to our company. We look for innovators and early adopters, those with an open mind as well as classical experience in the world of engineering.

In fact, we’ve actually had luck recruiting ex-military members, who now make up 40% of our staff, and it is very humbling to have them work for our company. Some of them have been incredibly decorated for their service and we find that that level of structure and experience and their ability to adapt has been very important to us.

As for the award, how does it feel to have been selected as CEO of the Month?
It feels great to be selected as CEO of the Month and it is certainly an honor. I would like to thank Wealth & Finance very much! Last year’s stock performance is something we’re obviously proud of, but what really drives us is that we are taking this fantastic technology and using it to try and create a strategic shift in the energy markets. I have often said that our work in the co-combustion of coal will be the biggest news in the energy sector since the advent of nuclear power. Our social media following has also demonstrated that a lot of people love what we do, and this is what motivates me to press forward.

During my time as CEO, we have had a lot of success in terms of product development and market penetration. I am an open integrator and one of the first things I did was to have a worldwide meeting with all of our various partners and collaborators. Actually, this was where the co-combustion model was born. We have brought in many fresh new faces from four years ago and are now moving into a new and bigger facility. And during this time we went from an over the counter company to being listed on NASDAQ.

Lastly, what would be your major plans for 2016 and beyond? Do you have any interesting opportunities on the horizon?Our objectives are quite simple and straightforward. First, we’re going to continue to penetrate the $5 billion industrial gas market. Later this year we are going to place our first unit in the US to produce gas. In addition to this, we have several other customers waiting in the wings for the placement of a unit. We’re going to grow at the right speed for our size and resources. Second, in the agricultural sector, we’re going to continue to partner with the USDA. We also have some very interesting testing going on, both in Europe and the US. Third, on the co-combustion side, we expect to complete our testing in Q2 and we anticipate several significant opportunities to come out of it. We will continue to do more and grow, develop and transform while keeping our operating costs under control. MagneGas Corporation has never been in such a fantastic position to grow and prosper.

City of Bellevue
FinanceInfrastructure and Project Finance

City of Bellevue, Nebraska – Opportunities for all

Bellevue, Nebraska is a dynamic and expanding Midwestern city, currently home to approximately 53,000 people, located within Nebraska’s fastest growing county, Sarpy County.

Bellevue, Nebraska is also home to Offutt Air Force Base, Strategic Command (STRATCOM) and the 55th Wing (55 WG), the largest wing of the United States Air Force’s Air Combat Command. As such, the base is a major economic hub for the area, and because of Offutt AFB, many defense contractors are drawn to the Bellevue area, including firms specializing in cybersecurity, programming, process design etc. Burks was hired in 2012 as Bellevue’s first Assistant City Administrator to support the City Administrator in the operation and management of the City. The Assistant City Administrator’s primary duties include economic development, organizational and community development, in addition to strategic planning, succession planning and providing administrative support. Burks states, “Our community currently has a number of exciting opportunities and I am proud to be supporting the people of Bellevue as we go through this exciting time.”

In April of 2015 Sarpy County’s unemployment rate was 2.4%, which is among the lowest across all of the American states. Additionally, the city is currently experiencing a wave of exciting new developments set to improve the City’s economic development and quality of life potential. One such development is a commercial retail expansion named Twin Creek Village, a modern commercial-retail development that will soon showcase the Bellevue Event Center.

Scheduled to be completed late summer of 2016, the Bellevue Event Center will be a state of the art conference and event center capable of hosting events as large as 800 people. The Twin Creek Development area will also be home to new restaurants, a larger theatre and other entertainment options, as well as a Courtyard by Marriott hotel connected to the Bellevue Event Center. Burks anticipates the Bellevue Event Center and Courtyard by Marriott Hotel will help to attract other businesses to the Twin Creek area. The catalyst intended to help support the City’s economy and establish a new destination place for entertainment and tourism.

Another key development supporting the city’s growth is the redevelopment of the Fort Crook Road Corridor, formerly the main thoroughfare between Offutt AFB and Omaha. In the 1990s, the construction of  the new Highway 75 led to traffic on Fort Crook Road diminishing. Therefore new uses were created to ensure the area’s full potential was reached.

The Fort Crook Road Corridor is now becoming an opportunity for mixed use developments, including successful data storage businesses in the Southroads Technology Park, formerly the home of PayPal and TD Ameritrade. These technological successes highlight the potential for significant investment along the Fort Crook Road Corridor, which could bring about a significant return on investment for those savvy enough to invest in the area.

There are also a number of automobile dealers expanding on Fort Crook Road supporting the local economy by bringing a lot of traffic into Bellevue and helping to support other area businesses. Bellevue is arguably the premier destination for buying a vehicle in Nebraska. Perhaps the most exciting aspect of Fort Crook Road’s redevelopment is Cornhusker Pointe. A former concrete plant is now being developed into a mixed use, residential and commercial-retail site. The City facilitated the environmental cleanup and marketed the redevelopment of the site in order to draw investment and raise social standards and property values in the area. Cornhusker Pointe is clearly one of the Omaha metropolitan area’s best success stories entering its final chapters.

Perhaps the most exciting aspect of the City’s redevelopment planning efforts is the work and growth potential from developing the Highway 34 corridor. This 4-lane road and new bridge over the Missouri River opened October of 2014. Highway 34 has created a connection between two major North – South routes, Interstate 29 and Highway 75. Improving the transportation connection to Interstate 80, one of the nation’s busiest East – West routes. Ultimately this development has expanded the City’s southern connections and provided greater links between southern Sarpy County and the City of Bellevue.

In order to take full advantage of these improved transportation links, the Bellevue citizens voted and approved local development incentive legislation, known as LB840, which provides the City with the opportunity to attract new projects through local incentives. The new Highway 34 Corridor is adjacent to a number of Greenfield and Brownfield sites, providing exellent new development opportunities for investors inside and outside of the United States to take advantage of.

Ultimately all of these new and innovative developments and redevelopments have an attractive, cost effective appeal to new developers, business owners and investors. Bellevue’s cost of living and quality of life are hard to match. New development will also help increase the area’s workforce expansion. By bringing new industries and businesses into the Bellevue area, an increase will be seen in the talent pool. There are a broad range of state and local incentives including, job training programs and tax incentives, which collectively offer those businesses and industries looking to move into Bellevue, Nebraska an attractive financial package called the Nebraska Advantage.

Bellevue, Nebraska prides itself on its patriotism, quality of life and strong work ethic, and has a lot to offer potential investors and businesses looking to move into the area. Burks wants potential developers and investors to know, “We believe that it is an exciting time in Bellevue and that the City is ready for and looks forward to the new opportunities and new relationships the future brings.”

To learn more about the opportunities in Bellevue, Nebraska, go to: Bellevue.net

Brexit Could See UK House Prices Drop By 5%
FinanceInfrastructure and Project Finance

Brexit Could See UK House Prices Drop By 5%

The wealth and financial and economic implications of an EU exit stretch far beyond the UK property market, however, for many UK residents the impact to property prices will be their primary concern as their home is the most expensive asset they are likely to ever own.

eMoov recently surveyed over 1,000 UK homeowners and found 55% of those asked, believed leaving the EU would impact the value of their property (34% think they could increase, 21% think they could decrease).

Since Great Britain joined the EU in 1973, the average house price has increased by over 2,000%. However eMoov believe that it won’t necessarily be leaving the EU itself that could see house prices drop, but the uncertainty amongst homeowners and buyers as to what will happen next.

eMoov believe that an EU exit would cause a nervous ripple effect across the UK, with homeowners and potential buyers choosing to baton down the hatches and weather the potential uncertain economic storm, before committing to such a notable financial decision. Will unemployment rise? GDP fall? Could exports fall, causing businesses to fail?

The resulting potential reduction in demand for housing will almost certainly cool the market and, as a result, house prices will reduce in turn to reflect this. In an already inflated UK market this could lead to a potential loss of £11,000 to the average UK homeowner.

Founder and CEO of eMoov.co.uk, Russell Quirk, commented:

“Should the UK public vote to leave the EU, we believe it could have a detrimental knock on effect to the UK property market. We’ve been part of the EU for over 40 years now, so it’s understandable that such a momentous change will lead to uncertainty amongst the UK public, as to the resulting implications an exit will have on them.

This air of uncertainty will lead to inaction amongst those looking to buy and sell and the resulting dwindle in demand, will always lead to a reduction in house prices. We believe it could easily drop by 5% maybe more, so the average UK homeowner could see their property reduce by £11,000 in value.

Since we joined the EU the average UK house price has increased by more than 2,000%, but even just the potential of an EU exit could start to slow the market. So the results of a yes vote on the main stage of the EU could have a much larger impact on the UK as a whole.”

Signs of a Balanced Housing Market in Northern Ireland
FinanceInfrastructure and Project Finance

Signs of a Balanced Housing Market in Northern Ireland

The Northern Ireland Residential Property Price Index (NI RPPI), produced by the Department of Finance and Personnel’s Land & Property Services (LPS) in conjunction with the Northern Ireland Statistics & Research Agency (NISRA), is published on a quarterly basis.

This statistical research uniquely examines every sale in Northern Ireland using data from HM Revenue & Customs and from LPS. It is therefore a valuable and reliable source of information for everyone interested in the local housing market.

Commenting on the latest report, the Minister said:

“The figures in the report for the fourth quarter of 2015 show a 1% quarterly increase in the Index – with small variations between property types. The analysis demonstrates that, viewed over the 12-month period, residential property prices have again shown steady progress, with an annual increase of 7%. The analysis at council level shows annual increases of between 3% and 13% across all district council areas.”

Mervyn Storey continued:

“Importantly, in tandem with price increases, the market exhibits a healthy balance with annual earnings. Looking back on the figures for 2015, it is encouraging to see evidence that we have an affordable housing market in Northern Ireland with an improved relationship where prices are 4.3 times earnings in 2015, compared to 4.5 in 2014, and especially compared to the figure of 9.1 in 2007.”

Transaction volumes in this quarter have once again remained reasonably steady, with over 5,000 residential properties sold. The Minister commented:

“This healthy level of activity has now been maintained for the last two years, and is almost double the level experienced in the years 2008 to 2011. I believe there is continued confidence in our housing market, which is encouraging for the Northern Ireland economy as a whole.”

Your Essential Guide to Building a Profitable
FinanceInfrastructure and Project Finance

Your Essential Guide to Building a Profitable, Sustainable Business in Today’s Marketplace

Rework occurs for many reasons: poor communication, inadequate skills, unmotivated people and no pride of ownership are just a few. If you are not a manager now, this will be a great lesson for you if and when you choose to become one.

I also suggest you share this information with your management team to help get them on the right track. Sharing ideas in a positive fashion that can assist your company in saving or making money is always a great way to be recognised for your upward mobility potential.

One major area of rework is employee retention. If you want to save tremendous amounts of money, you must hire the right people, retain the right people and motivate those people to perform as consistently close to excellent as possible. This is no easy task; however, it is not as difficult as most managers think.

Primarily this TYLER TIPS® will give you some excellent points on retaining and motivating employees. I will save attracting excellent people for another feature.

In employee surveys conducted by our research division, Tyler International Research Institute, as well as numerous other national research organisations, ‘feeling important’ and ‘receiving recognition for a job well done’ rank #1 with employees as to why they stay with or leave a company.

This is as long as a fair wage is offered for services rendered. You would think that as simple as this sounds all managers would be able to easily master this task, wouldn’t you? Well, they don’t!

Employers often tell me that their ‘supervisors’ are quick to point out the wrong and slow, if ever to point out the right. With that information as a starting point, one of your best tools to make improvements in recognition and performance should be your company’s formal employee evaluations or appraisals.

Notice I said should be. I feel very confident in telling you that 95% of all the evaluations or appraisals used today are counterproductive, a tremendous waste of time and could be thrown in the trash with no loss of productivity or negative effect on your company.

I say this for several reasons. They are:
1. Evaluations are not done frequently enough;
2. Evaluations are too generic;
3. Evaluations give very few specific enough improvement instructions; 4. Managers don’t know how to use an evaluation;
5. Employees don’t know how to improve from evaluations; 6. Evaluations are viewed by most as tools of punishment or deprivation; 7. Evaluations are not properly prepared for by anyone; 8. There is usually no clear-cut action plan with deadline dates and; 9. Evaluations are done unfairly or without consistency to employees for all the mentioned reasons.

Notice how the name correctly works from a positive rather than a negative premise. Recognition – the #1 reason for employees to stay or go is right in the title. Assessment – clearly indicates review of specific skills and or behaviours. It’s impossible to have an excellent tool if right at the start it turns the employee off.

1. Purpose
Clearly outline why this is important to the company and to the individual being recognised and assessed. Use an opening statement such as this one, which we developed for a number of our clients: To formally discuss with you the area’s ABC Corporation has determined are critical in striving for market dominance as they relate to your job function.
These areas have been determined through years of experience and by constantly evaluating existing market conditions. Some of these principals are unique to our industry and others are universal to all industries.

This assessment is meant to give you a straightforward analysis of how you are currently performing in the designated areas. This assessment is meant to recognise you for excellent performance so you may continue to develop and shape your strengths. This assessment is meant to give you a concrete diagram of the areas you currently need to concentrate your effort so that your performance standards may be elevated. Through this evaluation process you will better be able to achieve your personal and professional goals; thereby making it possible for ABC Corporation to achieve our company’s goals. Notice our Purpose outlines clearly our opening objectives.

2. Frequency
It is critical that Employee Performance Recognition and Assessments™ be done considerable more frequently than most evaluations are done today. I strongly recommend a minimum of once per quarter with monthly progress assessments based upon the formal quarterly Employee Performance Recognition and Assessment™.
If you truly want to retain and motivate employees this is critical. Imagine if the pilot of an airline only adjusted course one or twice during a flight. You would never reach your destination.

3. Specifics
Very specific, actionable areas must be outlined. They must be customised by; job, department and industry. As an example, if you were doing an Employee Performance Recognition and Assessment™ on a salesperson in the beverage industry you would have category headings like: Product Knowledge
• Merchandising, rotation, distribution;
• Sales – practices and performance;
• Personal and professional appearance and;
• Sales – technical skills.
Each category should have very specific action areas to recognise and assess.

4. Activity Programme
Every excellent Employee Performance Recognition and Assessment™ should include an activity program. This will list out the specific areas that the employee agrees to work on improving immediately. Activity programs should also make it clear that maintenance of other areas is necessary.

The activity program should include managerial review and an action plan with target dates. The employee and the manager should both affix their autograph to the activity program.

5. Resolution
Every Employee Performance Recognition and Assessment™ should have a specific set of resolutions at the end. Those resolutions are to be determined by the cumulative ratings on all the assessment points.

When all of these components are utilised properly in an Employee Performance Recognition and Assessment™ program you will begin to get excellent results. An additional benefit of this type of program is that it also makes an assessment of the manager since it clearly defines areas that the manager must be an expert in as well as the specific areas a manager must train in. Following these principles will improve your employee retention as well as motivate your people to excellent performance.

If you are an excellent manager or on your way to becoming one you will embrace these principles. If you are a weak manager, you will shrink away and say this ‘sounds too difficult’ or ‘that can’t work for our company or me’.
You decide. If you need help with developing your own Employee Performance Recognition and Assessment™ give us a call and we will design one for you.

©1989-2016, Richard Tyler. All rights reserved. Except as permitted under the United States Copyright act of 1976, no part of this publication may be reproduced or distributed in any form or by any means or stored in any database or retrieval system without prior written permission from Richard Tyler.

Company: Richard Tyler International, Inc.®
Name: Richard Tyler
Address: 5773 Woodway Dr., Suite 860, Houston, TX 77057-1501, USA Phone: Tel: ( 1) 713.974.7214
Websites: www.RichardTyler.com
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Infrastructure Fund Manager of the Year - 2015
FinanceInfrastructure and Project Finance

Infrastructure Fund Manager of the Year – 2015

Founded in 2000 in Munich, Golding Capital Partners now manages €5.0 billion of alternative assets in comingled investment programmes as well as individual managed accounts and has invested in more than 190 leading funds, secondary and co-investments transactions worldwide. Their clients are primarily leading insurance companies, pension funds and banks who typically require support and advice on establishing their dedicated private equity, private debt and infrastructure investment programmes.

The Golding Capital expertise covers the whole universe of investment styles, ranging from primary funds to opportunities in the secondary markets as well as co-investments in all three of the asset classes. A notable element of Golding Capital’s value-add is specialising in fulfilling the regulatory, tax, reporting and supervisory requirements of their institutional investors which are becoming increasingly challenging in the current regulatory environment. Their 70-strong team of professionals based in Munich, New York and Luxembourg has not only been helping their investors gain access to outstanding private equity, private debt and infrastructure investments but also structuring innovative products tailored to their clients’ needs such as their newly closed infrastructure fund.

Within infrastructure, their flagship fund of funds -the Golding Infrastructure 2013 SICAV- was closed in 2015 at a record €590 million, well above the target volume of €400 million. This makes it the largest diversified infrastructure fund of funds ever raised in the German-speaking area. More importantly, the closing underlines Golding’s position as one of the leading independent providers of infrastructure investments programmes in Europe.

The strong demand from institutional investors was fed by several factors. Firstly, it provides investors an easy and fast access to a broadly diversified, international portfolio of outstanding infrastructure fund managers. It focuses on the key markets in Europe and North America and covers all sectors including energy, transport, utilities and social infrastructure. Moreover, the fund pursues a conservative investment strategy with the objective of generating early and stable current yield as well as an overall attractive return of 8-9% net IRR. This is being achieved by systematically constructing a portfolio combining yield-driven infrastructure projects in the core and core-plus areas with return-oriented value-add projects. The “proof of concept” of this strategy was the first yield distribution of more than 3% at the end of 2015, being less than 10 months following the final closing. The investors also had the advantage of having full visibility on a growing portfolio of diversified infrastructure projects with the fund being 40% drawn at closing with over 250 individual projects and assets. Last but not least, Golding recently changed its fee model to an innovative, predominantly performance-driven fee model which has become an integral component of their investment programmes. This so-called “Golding Guarantee” has some major advantages for institutional investors against conventional fee models. Investors are only charged fees on invested capital and those fees due are only actually disbursed when the investor receives profit distributions thus effectively eliminating the typical but generally abhorred J-curve in the initial years. And should profits dry up in subsequent slow years the investor always receives more in profits than Golding earns in management fees thus ensuring full alignment of
interest with investors to maximize investment performance and reducing
their risk of paying high fees on underperforming investments.

The successor flagship fund “Golding Infrastructure 2016 SICAV” will be launched in Q2 2016. This fund will continue the successful approach of its predecessor by focusing on a similar conservative strategy of generating early yield of 4-5% combined with an attractive overall return of around 8% net IRR. In addition to creating attractive investment returns one further objective is to provide investors who may be new to the asset class with a means of accessing the infrastructure markets with broad diversification of risk. This will be achieved by pursuing a cautious strategy focusing initially on core and core-plus infrastructure within the most stable markets globally of mainly Europe and North America. Risk can be further reduced by giving investors access to a broadly diversified portfolio of infrastructure assets spread widely across managers, regions, segments, investment styles and vintages. As a result, Golding offers an optimally diversified and risk-reduced way of investing in infrastructure without giving up an attractive return potential and strong yield.

From the early days of its foundation back in 2000 Golding Capital Partners has grown to become one of the leading independent investment managers for alternative assets in Europe. This success can be put down to a number of factors which characterize the Golding culture. First and foremost, clients are at the core of the Golding culture which is highly service-oriented and solutions driven. Client requests for new structures, reporting data or general information are met promptly. The quality of reporting is second to none in the industry with an emphasis on total transparency down to the portfolio level as well as being prompt with audited valuations being made available within two weeks after year end to meet regulatory requirements. In addition the highly qualified investment team can rely on its longstanding network of international manager relationships to gain access to the hidden champions in the various asset classes and to ensure receipt of sufficient allocations in these times of severe competition for the best and often access-restricted managers. Last but not least, impressive investment performance has been a significant factor in enabling the Golding Capital team to cement its leading position in the market resulting in a record 2015 not only for infrastructure but also for buy outs and private debt.

After a another very successful year both in terms of investments and fundraising, the team at Golding Capital is looking forward to consolidating their position in the market for alternative investment programmes. The company will continue to invest heavily in staff, offices, and systems to support their ambitious expansion plans. Golding expects to launch further new products in the next few months with the objective of becoming partner of choice for their broad base of institutional clients. Demand for individual managed accounts is also increasing and Golding expects this to be a significant driver of their growth for the company in the next few years.

Cyber Security Risks to Fund Managers
FinanceInfrastructure and Project Finance

Cyber Security Risks to Fund Managers

LookingGlass is a threat intelligence-driven security company that provides the most comprehensive solution portfolio in the industry. In an age of doxxing, merged operations and convergence, cyber is not just an attack medium, but also an intelligence source for a wide range of threats.

As a result, multiple functional areas across companies and governments can benefit from threat intelligence information to properly protect the organization in its entirety.

This requires information, expertise and capabilities that help protect brand, ensure compliance, identify information leaks and abuse, manage the overall deluge of threat intelligence and efficiently operationalize that information into the IT security infrastructure. The LookingGlass portfolio of threat intelligence services, machine readable threat intelligence, threat intelligence management and network mitigation capabilities enable our threat centric approach to be proactively leveraged by our clients unlike any other company in the industry.

How LookingGlass can help fund managers that have been victims of cyber attacks
It’s important to understand why fund managers and their company could be targeted. There are a few drivers that would put a fund manager and their company on a target list. The most basic is simply credential harvesting and stealing. Next there is activism that might target the company and its employees for social reasons. For example, the fund invests in a controversial company. This could lead to attacks on brand and the funds executives. There could also be protests that impact the place of operations for the fund. Then there is financial incentive. I see the financial incentive motive to be two pronged. First is the simple aspect of stealing money through account access.

The next is a bit more lucrative and less obvious. An actor may target gaining access to future investments that the fund will be making to buy into a stock ahead of the fund’s investment. Obviously that type of access and the amount of money invested by most funds is traditionally significant enough to drive a stock price, even if short lived. The last one that is important to mention is the potential security risk that a target investment might be exposed. Should a company already have an ongoing but not a published breach, an investment could turn for the worse because of the lack of knowledge of that pre-existing compromise.

Addressing the full cyber intelligence lifecycle
LookingGlass solutions enable effective security decisions and efficient security operations at every stage of the threat lifecycle. We can provide very customer specific collections regarding the company, from its locations, its executives, and potential impacts to the physical assetsto phishing alerts, indicators of compromise and cyber risks associated with its current and future investments. This intelligence is collected both from open and closed sources and can be leveraged in human readable format to automated dissemination as machine readable.

With increasing volume and sophistication of cyber security threats, targeting phishing scams, data theft, and other online vulnerabilities, it is everyone’s responsibility to take securing their systems and information
seriously.

It has been proven time and time again that the human is the weakest link in the security chain. If our jobs are our livelihood, then protecting our livelihood, organizations and investments through being wary of suspicious phone calls, emails and how you share the company relevant information is critical.

Cyber security – who does it affect?
We live in a connected world. We have gone from a network centric environment to a network dependent environment. Our systems, our partners’ systems, our personal systems and accounts are all interrelated at some point. They are all a targets and can be used to daisy chain access. The Internet of Things, electronic currencies and other modern innovations are all potential targets and while you might have a bullet- proof security posture, if your physical asset controls for example are not secure then it can provide another means by which a determined adversary could impact your operations.

Advice for fund managers and investors
Be vigilant and operate with a healthy degree of paranoia. Understand that while a company may look like a great investment, if their cyber hygiene is poor, their brand is being tarnished on social media, and their account credentials are for sale on the underground, then the company’s potential may already be compromised. Leveraging Intelligence helps organization’s better understand and manage their overall risk posture within an ever evolving threat landscape.

Company: LookingGlass Cyber Solutions
Name: Chris Coleman
Web Address: www.lgscout.com
Address: 11091 Sunset Hills Road Suite 210
Reston, VA 20190
Telephone: 001 703 351 1000

Asset Manager of the Year - France
FinanceInfrastructure and Project Finance

Asset Manager of the Year – France

In an interview with Fabrice Dumonteil, he reveals the firm’s smart strategies for a low growth and low rate environment, his career history prior to joining Eiffel Investment Group and what makes them unique.

How does it fell to have been awarded the Asset Manager of the Year – France award?
We’re very excited by the Asset Manager of the Year – France award. The best reward obviously is making our clients happy. We strive to perform for them. The group’s substantial shareholders’ equity is invested in our funds, alongside our investors, to ensure a strong alignment of interest.

What previous experience did you have prior to joining EIFFEL INVESTMENT GROUP? How has this impacted on your present role?
I have 20 years of experience in general and financial management roles. Prior to the founding of Eiffel Investment Group in 2008 (then as a unit of the Louis Dreyfus group),I was the CFO of Neuf Cegetel, a €7.5bn listed telecom operator. I started my career as a consultant with the Boston Consulting Group. Combining corporate and financial expertise is very relevant when it comes to investing in corporate credit.

Please provide us with some information about how you came to join EIFFEL INVESTMENT GROUP?

The company started as a subsidiary of the Louis Dreyfus group, one of the world’s largest commodities trader. The idea was to use our understanding of the “real economy” to deploy capital. Senior team members have been investing together at the firm since 2009. Most of the principals had been working together and/or had known each other professionally for a longer period.

Tell us about your overriding philosophy when it comes to your clients?
Eiffel Investment Group is 100% client focused. It is committed to providing its clients with investment solutions which offer high added-value and that are tailored to their particular needs, as well as first-class service and transparency. Once again, I would mention alignment of interests as something that is vital.

What is your strategy when it comes to proprietary and third party assets in a range of absolute return strategies in European credit?
Our strategy is to provide (i) smart strategies for a low growth / low rate environment in absolute return / absolute performance strategies, (ii) superior research with in-depth sector expertise and “first hand” research on companies / platforms, and (iii) alignment of interests with EUR 100m invested across our funds and products.. We rely on superior research with in-depth sector expertise and “first hand” research on companies to do so. Alignment of interests is obviously key, with €100m invested across our funds and products.

What challenges did your alpha generating investment fund face during 2015?
Despite the low yield environment surrounding credit markets, we are convinced that Europe still has a lot of potential for smart investors and that a lot of value remains in smaller, below-radar situations. 

A lot of credit funds active in Europe do either distressed or structured credit, or are pockets of a larger global credit fund. We believe that our nimbler and opportunistic approach is adapted to the secular deleveraging by European banks and the ensuing changes of the European credit market provides interesting absolute and relative value opportunities.

We hold a concentrated book of core positions that are catalyst driven, so as to capture idiosyncratic opportunities, as un-correlated as possible of market conditions.

Capitalizing on our local team knowledge and expertise, we aim to capture “second tier” opportunities that may be outside the radar screen of larger global credit funds.

What is your approach when it comes to hiring staff?
The firm has a long term view and invests in talents (promotion program, increasing responsibilities, training to new tasks, etc.). Employee ownership is a key policy. The goal is that all employees become shareholders of the group in the long run.

What makes your company unique?
Our firm’s uniqueness relies first in our team and its local expertise of European companies. The team is a combination of solid investment and risk professionals. It is based at the heart of the Eurozone (France), giving it an edge on local situations in Europe / the Eurozone, including situations that may not be on the radar screen of global credit funds. 

We also provide an unusually robust infrastructure for a boutique with (i) ca. €100 million of shareholders’ equity at the firm level, providing solid revenue base for the Firm and allowing to add talented human resources when needed, (ii) over-resourced support teams (operations, risk, compliance) and portfolio and risk management tools and (iii) a strong visibility with trading counterparties due to history. 

When working in an industry that is constantly changing, what does your firm do to ensure that they are at the forefront of any emerging developments?
The firm is constantly looking at new strategies and internal and external development. We added new talents to the team in 2015, in research, in private debt, in online crowdlending solutions, in risk management, etc.

Company: Eiffel Investment Group
Name: Fabrice Dumonteil
Email: [email protected]
Web Address: www.eiffel-ig.com

Scottish Retail Sales Grow 0.6%
FinanceInfrastructure and Project Finance

Scottish Retail Sales Grow 0.6%

The value of Retail Sales, without adjusting for inflation, contracted by 0.3% in the fourth quarter of 2015 and contracted by 0.9 per cent annually.

The full statistical publication is available here.

The Retail Sales Index (RSI) is a measure of the total turnover at basic prices of businesses registered as retailers according to the Standard Industrial Classification (SIC), an internationally agreed convention for classifying industries.

Annual growth rates have been calculated by comparing the latest quarter with the same quarter of the previous year. The Retail Sales Index presents seasonally adjusted data. These statistics are a component of the Scottish Quarterly GDP Publication, accounting for approximately 5.5% of the Scottish economy.

Further information on Scottish economic statistics can be accessed here. 

Official statistics are produced by professionally independent statistical staff – more information on the standards of official statistics in Scotland can be accessed here.

£1.1 Billion Investment by UK MOD in Future Military Flying Training
FinanceInfrastructure and Project Finance

£1.1 Billion Investment by UK MOD in Future Military Flying Training

The new Fixed Wing flying training system will provide modern training aircraft as well as up-to-date ground based training devices such as simulators and classroom learning for aircrew across the Royal Air Force, Royal Navy Fleet Air Arm and Army Air Corps.

A £1.1 billion contract has been placed with Ascent Flight Training to design, deliver and manage the Fixed Wing training service until 2033 and is expected to provide roughly 200 jobs across the UK, particularly at the key training bases.

Minister of State for Defence Procurement Philip Dunne said:

“This is fantastic news for the future of our military aircrew, providing them with a modern training system which will equip them to deliver on the front line.

“With our strong commitment to air power as part of the Strategic Defence and Security Review and our investment of £178 billion in equipment over the next 10 years, this contract is further proof of our commitment to invest in the UK’s defence capabilities for the future, ensuring that we continue to be a world leader in military flying training.”

The contract, which will cover provision of Elementary Flying Training, Basic Flying Training and Multi-Engine Pilot Training, will deliver through a single prime contractor, ensuring coherent delivery of the training system.
Air Marshal Sir Baz North, the Senior Responsible Owner for UKMFTS, added:

“The UK MFTS Fixed Wind Contract provides enhanced synthetic and live flying training for the UK’s military aircrew out to 2033. The service employs modern, adaptable and sustainable systems which exploit the advantages of the simulated environment to prepare our aircrew to meet the challenges of future combat operations.”

Air Vice-Marshal Sue Gray, Director of Combat Air at the MOD’s Defence Equipment & Support said:

“This contract will replace legacy fleets of aircraft with new, modern platforms that better replicate the aircraft used by front line operational squadrons.

“Up-to-date training methods will also be developed to ensure that students are able to progress to operational training more efficiently and provide value for money.”

Multi-Engine Pilot Training will be in place from mid-2018 and Basic Flying Training element up and running by early 2019.

Ascent, selected as the MOD’s flying training partner in 2008, will be required to deliver the instruction, infrastructure and support required to provide flying training across the three Armed Services until 2033.

 

New Finance Minister for Northern Ireland
FinanceInfrastructure and Project Finance

New Finance Minister for Northern Ireland


Commenting from his Department’s Headquarters in Belfast Mervyn Storey said:

“I welcome this opportunity to serve all the people of Northern Ireland and I take the responsibility of managing our public finances very seriously.

“My priority, as the new Finance Minister, is to build on the agreed Executive budget as the foundation needed to put Northern Ireland on the right path to reforming and renewing our public services and stimulating economic growth.

“In spite of an increasingly challenging financial climate, the 2016/17 budget provides the stability that’s needed to get Northern Ireland moving forward. It delivers for the people by protecting health and providing a boost for education and skills as well as funding major infrastructure projects for the next four years, which is good news for the construction sector and the wider economy.

Addressing the issue of additional funding for flood relief the Minister explained:

“I will be working with the leading Departments on their flood relief proposals for next week’s Executive meeting. I want to do everything within my power to effectively use the £1.3million to help those in urgent need as well as addressing longer-term flood prevention measures.”

Turning to specific policy matters Mervyn Storey commented:

“The rate and date for the devolution of corporation tax has been set at 12.5% from April 2018 and I will continue the work already underway to deliver this step change needed to enhance our economic performance and benefit everyone in Northern Ireland.

“My Department is currently carrying out a consultation on the review of Northern Ireland’s non-domestic rating system and I want to encourage feedback, particularly from those in the business community. It’s important we hear as many views as possible to help shape the rating system to meet the specific needs of Northern Ireland at both a regional and local level.”

In conclusion the Minister explained:

“I don’t underestimate the challenge ahead with tight budgets and greater demands on our public services but I am determined to do my bit to improve services, raise productivity and reduce costs in the public sector.”

The Benefits of Investing in Renewable Energy Assets
FinanceInfrastructure and Project Finance

The Benefits of Investing in Renewable Energy Assets

Experience has taught Notz Stucki to pay as much attention to the individual as to the quantitative side of portfolio manager selection, which is part of the legacy of its founders, Beat Notz and Dr Christian Stucki. This approach has
enabled the firm to secure exposure to a new generation of highly-skilled PMs coming from famous houses who are now launching their own funds. Allocations have recently been made to two of these, with a third currently under review. It is this same approach to excellence that has led to the selection of Augusta & Co, a leading adviser in the renewable energy industry.

The launch of the new fund by Augusta
The new Fund started from two premises: firstly, that the risk-return profile of real assets is expected to be more attractive than that of equities and fixed income securities in the coming decade, with capital flows increasingly being directed into infrastructure investments that offer stable cash flows. Secondly, that there is increasing evidence that responsible, sustainable business and investments are profitable, and that conversely the cost of even short-term environmental impact is significant.

Combining this with the need to offer investors an ESG investment product that delivers attractive, risk adjusted returns, Augusta and Notz Stucki set out to structure a product that provides stable long-term returns and low volatility, with low correlation to the public markets. The product will be designed to deliver returns in a transparent way, with a full alignment of interests between the promoters and investors, and will offer investors a level of liquidity which is not ordinarily associated with the renewables asset class. Augusta Renewable Opportunities Fund, ‘AROF’, will be the first onshore open-ended structure of its type in the market.

The benefits of investing in renewable energy assets
In the infrastructure field, renewables have come of age, and taking the example of onshore wind, it is fair to say that technology and performance has evolved considerably over the last ten years. Significantly, business models are now more sustainable, and returns on invested capital with free cash flow generation have improved to the point where a wind turbine producing power with a predictable regularity, can now be structured as a reliable financial investment.

Market growth is assured, we believe, with renewables being on their way to becoming the ‘new mainstream energy source’. Only recently the International Energy Agency released figures showing renewables overtook coal in 2015 as the world’s largest source of installed power capacity.

This position is supported by:
– Renewable Energy representing an increasing part of total EU power capacity;
– Growth driven by the regulatory framework and reduction in CAPEX due to technological progress;
– Developers and investors alike looking to recycle capital, opening up substantial growth in the secondary market and;
– Renewable energy projects continuing to attract institutional investors due to attractive, and crucially, stable yields.

Taking the example of France:
– After hosting the COP21 climate change conference in 2015, France has committed to an energy transition towards renewable energy, and has recently announced the reduction of its nuclear power station fleet;
– Government support to become a leading financial market for renewables growth and;
– Mergers and acquisitions (M&A) activity currently in full swing in an increasingly commoditised onshore wind sector.
Wind energy will remain a driving force of a more sustainable future, while offshore wind will become more economic, while continued coal and nuclear plant retirements and improved grid storage solutions, all acting as long-term drivers.

Hydro power as a secondary technology – an important focus for the Fund

One of the markets for the Fund’s hydro investments will be Norway which generates over 96% of its power from hydro power. In addition to being an economically proven technology in terms of maintenance and operating costs, hydro power has among the best conversion efficiency rates of all energy sources with a factor of between 90-95%. A largely negative correlation is typically observed in the capacity utilisation within any given year between wind and hydro assets, which makes an allocation to hydro an attractive technological diversification to wind investments.
In all, the Fund has three types of diversification: technological: the two main technologies being onshore wind and large hydro power; geographical: across major north western European markets; and size: a diversification across many individual power producing projects.

Type of renewable energy projects the Fund will invest in

AROF will focus primarily on existing operating assets located in North Western European markets with stable jurisdictions. Moreover, AROF will focus on acquiring onshore wind projects with long term commitments, and hedged power price risk. The asset size will tend to be below 40MW in order to add diversification and to increase liquidity. With a view to optimising the IRR to investors, the Fund will invest on a leveraged basis to take advantage of current low interest rates but with flexible re-finance arrangements should interest rates increase substantially. A further aspect of the Fund is that AROF will actively seek to sell projects whenever a capital gain can be made which will provide further upside to investors that they do not get in traditional yield funds.

The Fund will focus on hydro power investments that deliver long-term stable cash flows which the Fund will reinvest or pay out (in the case of the Fund’s dividend share class). AROF will invest into Norwegian hydro projects, and is working closely with an Augusta-funded local team on deal sourcing. Augusta believes that for several structural reasons the market for such assets is currently very attractive. There are also significant barriers to entry to the hydro power market in Norway as investments require active management, extensive know-how and significant valuation, control and risk management resources.

The Fund’s investment highlights
– An existing portfolio of pre-negotiated assets to acquire, ensuring rapid deployment of capital:
– Stable 7-9% IRR (net of fees) for the accumulation share class or 5% (net of fees) annual cash dividend with the dividend share class;
– Regular active divestment and reinvestment strategy to take advantage of dynamic market movement and to boost capital gains
– Open-ended with regular subscriptions;
– 6-monthly redemptions after initial ramp-up period;
– Multi-currency share classes;
– Attractive management fees, with the performance fee subject to an annual 7% hurdle rate and;
– Luxembourg onshore structure offering transparency and leading industry standard terms.
– At the request of certain initial institutional investors, a separate, closed-end fund compartment will also be available with the same strategy but for separate assets and without the redemption feature.

In summary, access to these returns in this asset class, with these liquidity terms is not available elsewhere.

Liquidity – Augusta’s main advantage

As a leading specialist in the field, Augusta has handled more individual renewables transactions than any other adviser in Europe. The firm has been transacting as a mainly sell-side M&A adviser since mid-2002 and to date has completed over 74 transactions for a cumulative value of Euro 7.5 billion. With each transaction, it processes around 20 bids which represents significant knowledge in terms of investor demand and valuations.
Access to this proprietary data is key to understanding capital flows in the industry, and the knowledge Augusta has from its sell-side advisory business is a major advantage. This is especially true for a Fund which is designed to actively trade assets and provide liquidity by way of redemptions that may require asset sales, thereby relying on the core skill Augusta has developed.

The secondary market for onshore wind is strong, with the total recorded transaction volume for operating onshore wind projects amounting to 3GW in 2015 according to the Augusta database. The actual number of transactions including unreported deals may well be substantially higher. Transaction volume is expected to increase further in line with the overall growth of the market.

An entrepreneurial spirit – teamwork, flexibility and discipline Augusta has been working on renewables since its founding in 2002.

Since then it has had a relatively low staff turnover, especially of senior staff. The two current partners Mortimer Menzel (who will run investment management) and James Knight (who will run the advisory business) have been working together at Augusta since 2004. Teamwork is at the root of everything the firm does. Since inception the firm has been funded without outside capital and this continues to be the case to this day. The capital is owned by the partners who have managed the strategic growth entirely on their own.

The future
With the development of the fund management business, Augusta is recruiting three new staff, notably one for fund compliance and operations and another for hands-on asset management, as well as a support analyst. Two of these staff have already been recruited

Creating an investment management business out of a successful track record of advisory in a highly specialised industry is possible but not easy. The firm had been planning this move for a while but before the cooperation with Notz Stucki, the right product with the right characteristics was elusive. Market movements have helped here: the recent volatility of hedge funds, the lack of yield in government and investment grade bond markets, the lack of success of the classic private equity model in this sector, and the growth of a secondary market in renewables have all helped to make an innovative and practical proposition AROF into a truly interesting proposition. With its liquidity provisions, the Fund is a unique investment opportunity.

Given the growing allocation by investors to real assets that provide stable returns from reliable cash flows, the conditions to launch the Fund today are optimal.

Company: Notz Stucki (London) Limited
Name: James von Claer
Email: [email protected]
Web Address: www.notzstucki.com
Address: 22 Upper Brook Street,
London W1K 7PZ, United Kingdom
Telephone: +44 (0) 20 7529 5350

Company: Augusta & Co Limited
Name: Mortimer Menzel
Email: [email protected]
Web Address: www.augustaco.com
Address: 24/25 The Shard,
32 London Bridge Street, London SE1 9SG,
United Kingdom
Telephone: +44 (0) 20 7776 0826

Read this month's CPD Accredited Article to gain CPD Points
FinanceInfrastructure and Project Finance

Read this month’s CPD Accredited Article to gain CPD Points

On 11 April, the Prime Minister’s office issued a press release announcing that the draft legislation was being brought forward in light of the London Anti-Corruption Summit on 12 May. The press release also referred to plans for a cross-agency taskforce, led by HMRC and the NCA, to investigate illegality arising from the Panama Papers.

To be clear, the draft law is not a means by which the Government could seek the prosecution of those implicated in the Panama Papers. The law would, for example, have no application whatsoever to the type of offshore investment scheme which David Cameron’s father managed. The law does not expand the definition of tax evasion under UK law, nor does it criminalise what some regard as immoral tax avoidance. However, the timing of the consultation is no doubt calculated to deflect the current waves of criticism concerning the Government’s broader approach to combating tax fraud.

What is the offence?

The substance of the offence remains the same as originally proposed, namely to criminalise corporate bodies which fail to prevent an associated person from facilitating the fraudulent evasion of tax, either in the UK or overseas. The offence utilises the “failure to prevent” model of strict liability found in section 7 of the Bribery Act 2010, and replicates the definitions of “associated person” and “relevant body” almost exactly. The associated person who facilitates a tax evasion offence can therefore be legal or natural, and can perform services for or on behalf of the corporate as an employee, agent or subsidiary. There are three important differences between the draft law published yesterday and the draft published in December 2015. These are as follows:

1. An expanded definition of the circumstances in which a prosecution can take place of a foreign company for failing to prevent the facilitation of foreign tax evasion.

2. A restricted definition of the circumstances in which facilitation of UK tax evasion can occur.

3. A new defence whereby the corporate commits no offence if it was reasonable not to have any prevention procedures in place.

The first difference

The offence relating to UK tax evasion facilitation applies to all companies and partnerships, regardless of whether they are incorporated or formed in the UK. In contrast, the offence relating to foreign tax evasion facilitation requires one of the following:

1. That the relevant body is incorporated/formed in the UK;

2. That the relevant body is carrying on a business or undertaking (or part thereof) from an establishment in the UK; or

3. That any act or omission forming part of the foreign tax evasion facilitation offence takes place within the UK.

This third permutation did not appear in the draft law published in December 2015. Its inclusion in today’s draft law means, for example, that a Brazilian company, with a business located solely in Brazil, would be criminally liable in the UK if it fails to prevent one of its agents performing an act in the UK that constitutes an offence of facilitating the evasion of Brazilian tax (e.g. a telephone call in London which facilitates the evasion of Brazilian tax). On one view, expanding the draft law in this way simply reflects ordinary principles of jurisdiction under UK criminal law. However, prosecuting foreign companies for their failure to prevent foreign tax evasion, especially when they are not even carrying out any business in the UK, is almost inconceivable in practice.

Indeed, when one looks at the draft provisions relating to the facilitation of foreign tax evasion, it is difficult not to feel a sense of unreality. The draft law states that the tax evasion must be both an offence under the law of the country relating to evasion of tax payable in that country and a tax evasion offence under UK law. In addition, the facilitation of the tax evasion must be both an offence under the law of the country where the evasion takes place and an offence in the UK. These provisions sensibly contain a “dual criminality” protection, which means a company cannot be prosecuted in the UK in relation to facilitating a tax offence which would not be criminalised under UK law. Even so, one has to question the practicality and public interest in prosecuting companies in relation to foreign tax. A prosecutor would need to call expert evidence about foreign tax law, to prove both the evasion offence and the facilitation offence. Except in the most egregious cases, this is likely to be an insurmountable hurdle, given the varying (and difficult to interpret) thresholds of evasion and avoidance created in tax regimes across the world. Those defending the company would seek to sow confusion in a jury by turning any trial into an abstruse debate about foreign law.

The facilitation of foreign tax evasion bears the hallmarks of a similar provision – section 71 Criminal Justice Act 1993, which has sat on the statute books for many years but which has never, to our knowledge, been successfully prosecuted. This section created an offence of aiding or inducing conduct in relation to the evasion of certain defined taxes within the EU. To commit this offence, the evasion itself occurs in the EU (outside the UK) but the assistance or inducement of that evasion occurs within the UK. If prosecuting the evasion of EU taxes under section 71 CJA 1993 has proved impossible over the past two decades, what prospect is there of this foreign tax facilitation offence being successfully enforced? It is simply not in the public interest to create criminal offences which stand no realistic prospect of being prosecuted in practice. In the vast majority of cases, where the authorities of a foreign country have suffered a tax loss, the most pragmatic – and arguably the more just – solution is to place the culpable suspects on trial in that foreign country (and if they are in the UK, to extradite them to the foreign country).

The second difference

The draft law sets out what constitutes the relevant tax evasion offences alleged to have been facilitated. Unsurprisingly in the UK, this includes an offence of cheating the public revenue, but also covers any offence “consisting of being knowingly concerned in, or taking steps with a view to, the fraudulent evasion of tax.” The facilitation of this offence is committed where a person with the necessary knowledge and intent, aids, abets, counsels or procures the commission of the offence. The facilitation is also committed where a person is knowingly concerned in the commission of the tax evasion offence. However, a company cannot be criminally liable where the associated person was involved in “encouraging or assisting the commission of the offence” – the wording found in the December 2015 draft. This somewhat woolly language has now been removed, with the result that the concept of facilitation is now firmly based on well-established criminal law concepts of accessorial liability.

The third difference

The draft law provides the corporate with the same defence to both the UK and overseas offences. To rely on this defence, the corporate must prove that, at the time of the facilitation, one of the following applied: 1. That the corporate had in place such prevention procedures as it was reasonable to have in place; or 2. That in all the circumstances, it was not reasonable to expect the corporate to have any prevention procedures in place.

This second defence was not found in December 2015 draft. It has no precedent in the Bribery Act 2010. Its introduction marks a policy shift which gives greater protection to a corporate suspect. It seems to recognise, quite rightly, that small to medium entities should not be unduly burdened with creating compliance procedures if they reasonably perceive the risks of tax facilitation in their business to be non-existent. Whilst the guidance elaborates helpfully on how reasonable prevention procedures might be developed, it has nothing useful to say about the circumstances in which an absence of procedures might be reasonable. The devil will be in the detail, of course, because the reasonableness of the procedures will be determined by the risk profile of the particular corporate. The consultation invites respondents to suggest case studies on this point.

Conclusions

There are many statutory and common law offences which criminalise tax evasion. There are the so-called “professional enablers” provisions under the Serious Crime Act 2015 criminalising those who facilitate offences including tax evasion. There are far more serious criminal offences of money laundering under the Proceeds of Crime Act 2002, which criminalise all dealings with the proceeds of tax evasion.

What distinguishes the proposed offence from all of these existing laws is the stringent obligations it places on corporates to monitor persons associated with them. The clear objective of the draft law is to impose on the corporate the compliance burden of policing its employees, agents and subsidiaries, with the aim of creating more responsible corporate citizens, thereby helping to stamp out tax evasion at its source, or helping HMRC to identify tax evasion it might not otherwise detect.

Over the past few years, the Government has repeatedly said that it is serious about investigating and prosecuting aggressive tax fraud. But it also knows how difficult it is to gather evidence and secure convictions, particularly where the evasion involves opaque offshore structures. Only last week the House of Commons Public Accounts Committee lambasted HMRC’s “woefully inadequate” prosecutorial record.

Given HMRC’s stretched budget, and to improve HMRC’s prosecutorial record, it is no doubt politically expedient to criminalise the easier targets – the corporates which fail, even inadvertently, to prevent the facilitation of tax evasion, and which may have little appetite for contested criminal litigation. A cynic would say that business is being asked to bear the burden of HMRC’s inability to prosecute the true tax evaders. However, that perspective ignores the raft of other measures, both domestic and international, that are being planned so as to bolster the fight against tax evasion, not least the introduction of the Common Reporting Standard in 2017.

Businesses can take limited comfort from the fact that the consultation emphasises that they need only act proportionately to the risks arising in their sectors, so as to develop compliance procedures which are reasonable rather than all-encompassing. However, it is not easy to square that position with the Government’s insistence on criminalising the failure to prevent the facilitation of foreign tax evasion – a prospect which any significant multinational business would rightly regard as a compliance nightmare. For this reason, as well as the significant legal difficulties of proving the commission of foreign tax crimes, the authors believe that the offence should be limited to the failure to prevent the facilitation of UK tax evasion.

Corker Binning is a law firm specialising in business crime and fraud, regulatory litigation and general criminal work of all types.

For further information on the CPD Certification Service please visit their website, here.

 

 

Allied Wallet Next Gen Payment Gateway with Flexible
FinanceInfrastructure and Project Finance

Allied Wallet Next Gen Payment Gateway with Flexible, New API Platform

This new payment gateway offers a flexible, new API platform. With over 70 APIs, the Next Gen Payment Gateway allows for simpler integrations for merchants and payment processors. Additionally, any internet-connected applications and devices can access the functionalities of Next Gen Payment Gateway. Merchants can now use Allied Wallet’s Tokenization API to build their own self-hosted payment pages without worrying about the scope of PCI. They will be protected by Allied Wallet’s PCI Level 1 security. In an interview with the firm’s Andy Khawaja, he lifts the lid on the wonder of the Next Gen Payment Gateway and how he is changing the way the world transacts.

Can you tell us about the background and the lead up to the announcement of the new payment gateway called Next Gen Payment Gateway?

The new payment gateway Next Gen Payment Gateway is state-of-theart 4.5 dot.net code and is a platform of API’s, and it is the simplest and unique way to connect hardware, software, a third party gateway, bank and merchant, a shopping card and it is therefore very easy to connect to. Other gateways however can take up to two months to integrate, but with the Next Gen Payment Gateway it the API can integrate and download within five or six minutes.

Imagine you are running a business, and you need to integrate into a platform to process credit cards where you can do foreign exchange or use a shopping card and so on. If you have Next Gen Payment Gateway as your primary gateway service provider, any platform you want to add to it will take minutes instead of 1 or 2 months.

Giving an example, if you have a conference running and you have 6 or 7 developers that cost between £6-7million per year in salaries, as dot. net developers today are in very high demand and are also expensive. The reason you need them is maintain your system and to integrate it, because when you integrate into a different platform in this business, integration is very much part of our life and it happens 2-3 times per month.

If you a platform that doesn’t have the functionality of the Next Gen Payment Gateway which took me years to build, then it doesn’t have a unique API which is extendable to other API’s. We spent about £1million per year on the developers, and you have to maintain the product and you need a coder to ensure the code is correct and no issues occur. You need a data warehouse also, to make sure the data is correct and not interrupted.

However, if you have all of that electronically done in the Next Gen Payment Gateway you don’t need any of these staff. That’s why we call it the Next Gen Payment Gateway because it is replacing everything that we have paid over the last 20 years. The STRIPE 4 years ago was every web developer’s dream to have, but not with the Next Gen Payment Gateway it makes STRIPE look like it is from the 1970’s!

What implications do you feel this has on online payment processing?

Everything related to online payment processing, the back-end of it of credit card processing is the gateway. The base is the core and the core is the gateway. If you have a state-of-the-art gateway that functions in a way that can eliminate a lot of the down-time and hiccups, and by way of example in Germany their gateway was once down for 16 hours. Imagine a bank being down for that period of time. They can’t even process credit cards. Imagine the restaurant in Knightsbridge that is linked to the bank, and customers are lined up with their credit cards but credit cards cannot be accepted because the gateway of that bank is down. This happens because the gateway system here is weak, so that is why Allied Wallet have created a Next Gen Payment Gateway which has zero downtime, and it can run a million transactions per second with no hiccups.

We are also concerned with multi-currency and identification of IP address here and the system locates the bank issuer in terms of which region, bank, country and currency and it is diverted back to the exact same jurisdiction bank in that country so you can get the lowest fees on it, the highest approval on it. For example, if you are outside the UK it is likely your card will be blocked after the second transaction and you would have to call the bank and identify. The Next Gen Payment Gateway identifies where the card has been issued by the first six numbers on the card and identifies from which region it is from. Even if you are in the US using a UK, German or Japanese credit card for example it identifies the issuer and immediately it diverts and settles it into the bank where it has been issues from in that juristriction, regardless of the merchant and gets the higher approval required.

It gives you the higher approval, and the issuing bank doesn’t think twice about suspicious transactions because the consumer may be travelling in the USA for example, and perhaps the wallet is snatched. For many customers, it is a nightmare when you go to a shop and your card is swiped and you try to call the bank but they are closed the next day because you can’t use your card anymore because it is blocked.

How does this fit in with Allied Wallet’s proud status as a “one-stop shop” payment solution?

This is going to improve the business of Allied Wallet because it will add more shopping cards as we have already integrated around 37 of them into the back end of the Next Gen Payment Gateway. By themselves, they have at least six or seven million merchants and more than 300 million customers use those shopping cards. All of this will be the Next Gen Payment Gateway platform, which is automatically going to generate traffic for Allied Wallet. Can you outline how the Next Gen Payment Gateway allows for simpler integrations for merchants and payment processors? It has the most sophisticated mobile payment system, so you have the parent ship and swiper all in one, some cards don’t have the chip (such as the US, Australia and Canada) but some do (in Europe) and both can be used in one device. Drop down currency processing is when the customer is for example from London where you have a lot of Saudi shoppers and they can choose which currency they would like to be billed in, so all the features Allied Wallet have are for the future.

How does The Next Gen Payment Gateway allow for universal integrations with any shopping cart solutions, analytics, booking, fundraising, and mobile payment platforms?

We have a simple dedicated API that can be downloaded into the system being used, and you can click on it and it analyses the system being and syncs itself in a way that will ensure primary use. Anything can then be added to the Next Gen Payment Gateway, which makes it much easier than what your current system can live up to. Basically, you have a cloning a server with much more advanced technology and with just a few minutes of download time.

How is this exciting initiative leading the payment services industry in a direction of inter-connected services and a simpler set up?

It is improving it, making it more advanced and think better with the new technology and it promotes the consumer to spend more money online, and it will make it more secure as well as eliminate fraud. It will be a safe haven for credit card users online, including mobile phone payments, and any device you use will make the experience more secure. This is what everybody is looking for, security.

The security is very important because the encryption that links to the bank the Next Gen Payment Gateway is mass of tokenisation which memorises 20 different cards by the last four digits of each one. You can also register with the virtual card execution which means that any time you go on a website and execute a transaction, it will ask you to identify yourself by your finger print and it gives you the option of which card you want to use. Then you don’t have to take your wallet out and everything is encrypted, so it is literally impossible for anybody to steal the card from you or rip you off. Even if a hacker accesses the server, there is nothing related to cards there because everything there is related to digits and alphabets, so that is what the Next Gen Payment Gateway is all about.

We have the largest negative database in the world which has more than 10 million websites registered, so we give you the heads-up once you execute a transaction based on the reporting we get from consumers all around the world. Before you make the transaction a pop up will come up giving you advice from consumers about merchants and it will ask you do you want to proceed, a feature that nobody else has today except Allied Wallet.

Is there anything else about the Gateway you would like to mention in closing?

I am changing the way the world transacts, so I am literally making a way for entrepreneurs to build businesses, become somebody and build wealth for themselves, because the platform Allied Wallet are building is not only just for businesses that exist but the purpose is to get start-ups going. This motivates me as I will get the system and product for them. I know the cost is heavy and the banks will not believe in you, so I believe the problem with the world’s economy is that nobody is giving start-ups a chance but I am doing it on a platform in a unique way. It’s like I am giving out free land and giving people the opportunity to build on it, so I am doing my part in this world. Company: Allied Wallet, Ltd. Web Address: www.alliedwallet.com

CEO of the Month USA
FinanceInfrastructure and Project Finance

CEO of the Month USA

The Norwegian American Hospital has more than 350 physicians as part of its network, and services include everything from emergency, acute care, surgery, outpatient clinics and internal medicine to cardiology, respiratory, imaging, behavioral medicine, family medicine and pediatrics, detox and substance abuse, physical therapy and corporate health services. Norwegian American Hospital also has a women’s center of excellence, a GI lab and endoscopy services, and a wound healing center. President and Chief Executive Officer of Norwegian American Hospital José R. Sánchez provides insight into his role, his previous career experience and the challenges of providing healthcare in his region.

Please can you give us with an insight into your role and responsibilities as a CEO?

My role and responsibility is to set the strategic vision for the hospital, to improve quality, financial stability, best practices, human capital development and improve the health of the community, creating a coordinated care environment to support the hospital’ s mission. In addition, leveraging technology as a tool to promote efficiency and to prevent harm to patients has become an important strategic focus.

What is your previous experience and how do you draw on this in your current role?

I am Chicago’s only Latino hospital CEO, a senior health care executive with 30 years’ experience in the operational, strategic and fiscal management of healthcare and multi-hospital systems. I began my career as a clinical social worker before advancing through the ranks of the New York City Health and Hospitals Corporation (HHC), the largest public health system in the nation. I ultimately served as Senior Vice President and Chief Executive of the Generations /Northern Manhattan Health Network, comprised of three acute care hospitals, three diagnostic and treatment centres, and 20 community based health centres in Manhattan and the Bronx.

What is your overall mission for the hospital? How did you come to decide on this? How do you ensure this mission is upheld?

Norwegian American Hospital provides high quality and compassionate health care services by partnering with patients and their families, our employees, physicians and the communities we serve. We recognize that healthcare should not just be addressed within the walls of our hospital. As a steward of our community’s health, it is necessary for Norwegian American Hospital to take our mission to improve the health of our community into the community. We believe that effective leadership in healthcare transformation means inviting and promoting collaboration that will positively influence the overall health and wellbeing of our community. We are focused on major issues such as health disparities, diabetes, congestive heart failure, and high risk pregnancies, as examples.

When providing a service as vital as healthcare, what steps do you take to ensure that every client receives the best possible care?

The recent success of Norwegian American Hospital has been largely driven by a relentless focus on measurable improvements in clinical care and patient safety. Our strategy for improving quality begins with a hospital-wide culture of safety and a fundamental understanding that avoiding patient harm is everyone’s top priority.

Critical to Norwegian’s success has been our ability to leverage investments in technology to “hard-wire” clinical best practices, reducing human error and supporting our care givers. We have demonstrated our cultural commitment to patient safety through our participation in numerous voluntary quality reporting programs, including Leapfrog, The Joint Commission and Healthgrades, in addition to mandatory state and federal quality programs. Our results have been exemplary, setting us apart from our peers for the level of care and safety we provide. Every service line has trackable clinical measures which keep the pulse performance on gaining quality improvements.

How do you balance between the need for profitability and the needs of your patients?

Sound financial performance and growth are vital to ensuring our longterm success and ability to meet our mission of service to the community. Fiscal year 2015 was a banner year for NAH with significant growth in operating revenue, cash flow, and operating margin. We managed costs effectively and efficiently, implementing a cost reduction plan to offset lower Medicaid payments without reducing staff or eliminating jobs. The hospital saw improvements in our billing and collection processes, reducing insurance denials and ensuring we were appropriately paid for the clinical care we provided. What this means for our patients is we have the ability to fund improvements to patient care which have previously not been possible. $3.1 million was invested in development capital in 2015, aimed at space renovation and acquisition of new technologies. These investments included projects for new ultrasound units, ventilator replacements, “smart” medication pumps, EKG and EEG machines, bone densitometry suite, new surgical lights and tables, a modern infant abduction system, 52 new parking lot spaces, campus lighting upgrades, and cardiology growth with a new intraortic balloon pump.

The financial health of our institution has never been stronger, and will be the foundation for strategic planning and growth in the coming years. These results are significant for our quest toward measurable quality improvements and have helped us gain the confidence of our physicians and our patients.

When working in an industry that is constantly changing, what does your firm do to ensure that they are at the forefront of any emerging developments?

We have made a significant investment in technology and have developed a spirit of creativity and innovation as an important component of our organizational culture. Innovation has become a part of the soul of our hospital, ushering us into an era of excellence and pointing us toward a future of even greater care.

Since 2010 the hospital invested over $7 million in our Electronic Health Record System, and we have made the highest use of our system to protect patients and improve care. We have taken significant measures to ensure the privacy and security of our patient data and health information, an initiative of vital importance in our current environment. A new video remote interpreting platform has made providing care to patients who require an interpreter, including the deaf, much more patient focused. The service provides immediate two-way video access to certified health care interpreters in a number of languages.

We debuted “smart” medication pumps which promote medication safety by connecting us to standardized drug libraries with information about hard dose limits and a lock function to prevent tampering by unauthorized users. This development puts us on the vanguard of medication safety among acute care hospitals. Technology has bridged many gaps for NAH. Our nurses, doctors, and other staff can now communicate more quickly and effectively than ever before, and they have greater, more immediate access to the most comprehensive medical data we’ve ever possessed.

How have recent changes in the American healthcare system, both in terms of regulation and funding, affected your business? How have you adapted around these changes?

Recent changes in the healthcare delivery system have had both a positive and negative impact on NAH. The Affordable Care Act (ACA) has increased access for patients in our community resulting in a higher level of Medicaid coverage versus uncompensated care. This has increased NAH operating revenues by $1.5 million per year. The State of Illinois’ recent shift of the Medicaid population into Managed Care has resulted in additional challenges to providing necessary care to NAH patients. This change has resulted in longer patient wait times for services, higher staffing costs related to meet new insurance requirements and a need to explain to patients what their insurance coverage and benefits are. In addition, the new Medicaid system has reduced NAH’s payments by more than $3.0 million per year.

NAH has responded with a redesign of its revenue cycle operations to add front line services and staffing to assist patients gain access to these new benefits. NAH works with each patient to qualify for Medicaid and or other available insurance coverage offered by the State exchange. These changes have produced a 25% increase in cash collections, year over year, and have brought in more than $5.0 million of additional collectible revenues. NAH continues to make changes to its billing and collection systems to maintain and increase the benefits achieved to date. NAH is reducing its cost structure by renegotiating many of its supplier contracts and vender relationships. Changes in operating services have been redesigned to place the patient in the right level of care and provide timely service. NAH has implemented labour management systems to ensure the right amount of staffing is available to meet patient care needs. These combined changes have reduced NAH costs by more than $1.2 million to date and will continue to identify opportunities to improve performance.

What makes your hospital unique and sets you apart from other healthcare providers?

One of the most remarkable aspects of Norwegian American Hospital’s turnaround and expansion is how it defies industry-wide trends. As large healthcare providers consolidate and grow and independents shrink and falter, we have found ways to increase our business and provide more care.

Our cardiology department is now more than three times the size it was in 2011, addressing prevalent heart conditions in the area. Our oncology services have grown by more than 275%, including a biweekly Tumour Board and an Oncology Patient Navigator system that helps guide patients through every stage of cancer care, from breast exams to chemotherapy.

Norwegian’s Surgical Services concluded its first year of providing stateof-the-art general surgery, minimally invasive surgery and surgical oncology services and our Women’s Health Associates and Midwife Health Associates each grew, allowing us to increase access to obstetrics and gynaecology services at the hospital and community locations. Sixty new physicians and allied health professionals were credentialed by our Medical Affairs staff in 2015 in key specialties including Vascular Surgery, Radiation Oncology, Minimally Invasive Surgery, Gastroenterology and Maternal-Fetal Medicine.

What does the future hold for your firm? Do you have any upcoming plans or projects you would be willing to share with us?

Norwegian American Hospital is planning to partner with a Federally Qualified Health Centre on the development of an Ambulatory Health and Wellness Centre with comprehensive health and wellness services including: Comprehensive Diabetes Centre; Primary Care; Exercise/ Wellness; Rehab; Day Care; Dental; Nutritional Education/Test Kitchen; Specialty Care; Alternative Medicine; Women’s Health; Pharmacy; and Commercial Space

We have innovative plans in place that will help us continue to grow and solidify our vision for the future. First is the full implementation of the expansion of our emergency department. The renovation includes a dramatic redesign of the facility’s footprint and will ensure that the residents of Humboldt Park have access to expert emergency care close to home.

The second initiative we are excited about is the plan for a full campus development, utilizing the resources of the hospital to bring economic prosperity, stability and growth to our community. We will be working with the community on a project that we can all be proud of.

To improve access to specialty services for our patients and community, our third area of focus is our clinical programs. We will be working toward meeting all requirements for a cancer centre and developing a comprehensive diabetes program to address this major health concern in the community by leveraging our natural resources for economic growth.

Company: Norwegian American Hospital
Name: José R. Sánchez
Email: [email protected]
Web Address: www.nahospital.org
Address: 1044 N. Francisco Ave., Chicago, IL 60622
Telephone: 773-292-8204

Crowdfunding Takes off
FinanceInfrastructure and Project Finance

Crowdfunding Takes off

Created by coffee enthusiasts’ entrepreneur Colin Pyle, chef John Quilter and former model and LSE Graduate, Bodil Blain in 2013, CRU Kafe challenge the ethics and sustainability of coffee giants like Nespresso by using only the best high altitude, organic and fair­trade coffee, resulting in a blend unlike any other. The unique grounds are then packaged inside eco­friendly Nespresso compatible pods and delivered direct to customers’ doors.

CRU Kafe was born out of a desire to have great coffee at home that was ethical and easy to make. Co­founder Colin has successfully built, scaled and lead four companies prior to co­founding CRU Kafe. He sold his first company for 5 million CAD. John, a restaurateur, has a joint venture with Jamie Oliver’s Food Tube, where he appears regularly as the Food Busker ­ one of the fastest growing food You Tube channels in the UK. Coffee is the second largest commodity in the world and the biggest traded resource on the planet. Speciality coffee equates to 37% of volume and 50% of the revenue of this $32 billion dollar market and it’s clear to see that the continued trend, and demand, for better tasting coffee from a better coffee company presents many opportunities for CRU Kafe who was voted ‘best coffee in a capsule’ by an independent taste test led by The Sunday Times.

CRU Kafe takes a technology lead approach to business through leveraging offline and online to curate a social platform that sells coffee. Utilising video content CRU Kafe engages customers on their mobile friendly website and creates value for their monthly subscribers by offering resources that its competitors don’t, including an extensive bank of recipes. CRU Kafe currently distribute product to The UAE, Kuwait, Ireland and Norway. In the UK CRU Kafe is stocked within selected retail outlets including Harrods, Partridges, Whole Foods, Jamie Oliver’s Recipease and the Grocer (Notting Hill & Chelsea) as well as online at Ocado and grow by 15% in terms of sales month on month.

With a £300,000 investment CRU Kafe aim to stabilise their working capital and focus upon customer acquisition via print media and TV.

The move highlights the increasing popularity of crowd funding schemes as faith in traditional lending declines.

Study Shows Pensions Savings Often Neglected
FinanceInfrastructure and Project Finance

Study Shows Pensions Savings Often Neglected

American workers say the biggest risk to their retirement security is failing to save enough money. Yet 60% set aside less than 7.5% of their income for retirement and nearly four in 10 have tapped into their retirement accounts, largely to meet other financial goals, according to a survey released today by Natixis Global Asset Management.

“We’re seeing a conflict between investors’ long-term goals and the pressure they feel to address their immediate financial needs,” said John Hailer, CEO of Natixis Global Asset Management in the Americas and Asia. “For many, the short-term pressure wins out and they make minimal contributions, or opt out of their retirement plan altogether. And many borrow against their accounts, eroding the assets they’ve worked hard to accumulate.”
The Natixis 2015 Retirement Plan Participant Study surveyed 1,000 employees with access to a workplace defined contribution plan, such as a 401(k), 403(b), SIMPLE or SEP IRA. It found that 60% of employees contribute less than 7.5% of their annual income to their retirement accounts, and 40 percent contribute less than 5 percent. The estimated average annual income of survey respondents is $100,118.

Since retirement plans are often the biggest pool of liquid assets workers own, many turn to their long-term savings account for cash flow to cover immediate expenses or reach financial goals that are a higher priority now. The survey found: 
37% have borrowed from their retirement accounts, including 38% who needed emergency funds for a financial hardship and 19% who used the funds to buy a home.
Of those who have changed jobs, 43% have taken a lump-sum distribution rather than keeping assets in the company plan or rolling them into another qualified plan.
One in three (30%) have taken an early withdrawal from their retirement plan.

Low contribution rates, low account balances

On average, survey respondents say they will need $805,000 to fund their retirement and expect to live on that for another 23 years after they stop working. To date, they have accumulated $83,000 in their workplace savings plan and $95,000 overall, including all sources of retirement savings – or 11% of their stated goal.

Baby Boomers (age 51 to 69) have put away only 20 percent of the $946,000 they estimate is needed to fund retirement. Workers in Generation X (age 35 to 50) may be the most financially pressured group. They’ve saved only 10 percent of the $741,000 they estimate they’ll need, and are more likely than any other group to have opted out of their workplace savings plan because of debt.

Younger workers (younger than age 34) may be a bright spot among plan participants. While having only saved about 3 percent of the $769,295 they estimate is needed to retire, Gen Y, or Millennials, began contributing to a workplace savings plan at a younger age (23 years old, on average) than other generations, giving them a head start in accumulating assets. Members of Generation X began saving at age 30 and Baby Boomers began at age 33.

“It’s a positive sign to see Millennials are saving and thinking about retirement as early as right out of college,” said Edward Farrington, Executive Vice President, Business Development and Retirement at Natixis Global Asset Management.

Financial pressures inhibiting participation

Some 250 of those surveyed have access to a company-sponsored defined contribution plan but choose not to participate. Those who opt out are clear in the factors that keep them from participating:

51% agree with the statement “I need my money today.”
50% say their employer does not provide a match for workers’ contributions, or the company match is too small.
34% overall, and 40% of Generation X non-participants, say they have too much personal debt to be able to save for retirement.
23% say they need to pay off student loans.

Participants motivated by dreams and fears

When active plan participants were asked why they contribute to their retirement account, 68% said they are motivated to achieve financial security, 52% said they didn’t want to work for the rest of their lives and 50% want to be able to provide for themselves.

In addition, 44% said they don’t want to end up being old and poor and 38% want to avoid being a burden to their family.

The retirement horizon

Robust social services and dependable pension plans are common in countries that consistently rank higher than the U.S. on retiree financial preparedness, according to the annual Natixis Global Retirement Index1, an in-depth analysis of retirement security in 150 nations. This might suggest that achieving widespread retirement security in the United States will rely on the combined initiative of individuals, plan sponsors and the government.

Despite the retirement savings challenge in the U.S., Natixis’ survey of retirement plan participants found that most are wary of the government interfering with their retirement planning and skeptical that Social Security will even be available to them, with 85 % stating that they do not believe a government-mandated savings requirement would help them be more successful in reaching their retirement savings goals.

Joker Of The Pack - Joke Writer Turned Worldwide Financial Networker
FinanceInfrastructure and Project Finance

Joker Of The Pack – Joke Writer Turned Worldwide Financial Networker

It’s exactly by providing trust that Opportunity Network adds value to its members, by unleashing the potential for their companies to do business with trustworthy business partners worldwide. This has enabled Opportunity Network to grow to be valued at over $100m.

This company is the coming-together of all my business experiences. Several years back, I worked for my family’s corporate event business in Italy, organising meetings and fairs for international clients. Later, as a private equity associate in New York, I evaluated investment opportunities in multiple sectors and helped launch big projects for portfolio companies. This meant working for a number of years with world leading companies, devising and executing planned strategies for corporate mergers, across a myriad of industries.

The problem with deal-making. Those experiences changed the way I looked at medium-sized businesses; they fueled ideas for how things could be improved, and how I could help.

In everyday life, the world now seems a lot smaller and we think on a global scale. The availability of flights to anywhere in the world, the ubiquity of the internet, even in the farthest flung parts of the world, are a testament to this changed mentality. By contrast, traditionally, businesses have focused nearly exclusively on trade growth in their own backyards because geographical proximity meant familiarity and trust. This is something I believe has to change.

Nowadays, global digital networks have made growth opportunities just as possible in far-flung corners of the globe. Your company can strike a supply agreement, enter a partnership with or be acquired by another one on a different continent entirely.

But how do you trust potential partners when you have never met face-to-face, when you have not yet established trust? World Economic Forum research have proven the hardest part of making business happen is finding a trustworthy counterpart to do business with.

My idea was to tap into existing networks and to extend them in order to create a broader one characterized by trust.

I began this journey by tapping into existing Family Business Clubs of top MBA programmes. From this essential starting point, I then expanded Opportunity Network by securing the top clients of the best financial institutions and professional service firms around the globe. I took this approach in order to maintain the high quality and broker trust among our members.

Opportunity Network is now a world-leading platform that enables companies globally to achieve growth through partnerships, M&As, and supply trade agreements.

Trust is the fuel of business

It is a members-only platform that enables CEOs of middle-market companies, family offices and ultra-high-net-worth individuals to share business opportunities with one another, anonymously and seamlessly.

We have a deal flow of roughly $15bn. When members look for an opportunity, no matter how exotic, they are usually able to find something. And all interactions are opportunity-centric, so it really sorts the wheat from the chaff.

As a clearing house that brings together global networks from the top financial institutions and service providers around the world, the trust and opportunities within Opportunity Network are by default maximised many times over. In our first year, we added over 40 such partnerships. The network now counts thousands of companies from more than 75 different countries.

Everyone is able to find trustworthy partners wherever they want to achieve growth. We have many success stories and hundreds of thank-you notes.

The make-up of a CEO

I used to think that the best thing about being a CEO was being fully responsible for developing an idea, and being the owner of all my company’s decisions. But that was before I became one. Now I understand that there are so many external and internal factors that impact on a company beyond your control, that is not realistic to think you can be across everything fully.

A CEO should always have three things uppermost in mind. First is to think about long-term growth strategies. Second is communicating them properly, so that they are clear to everybody. Third, is all about hiring the best talents and providing them with the resources and freedom to express as much as possible their knowledge and potential, while being there if they need support.

Turning org charts upside-down

At Opportunity Network, I have implemented an atypical organisational structure. Usually, companies have their most senior people at the top of the tree, but we are the reverse – we put our most senior people below our juniors. Some people who are three reports away from me are paid more and have more experience than people who are closer.

Usually, companies hand junior workers routine tasks and occasional decisions, leaving senior executives’ energy cluttered up with frequent important decisions. The management team, however, may need spare capacity to tackle unpredictable events. So we drive as much business-related decision-making as possible down to our experienced executives, leaving those farther up the ladder to think bigger. We find it’s a very efficient way to work.

This is the approach I try to bring to my work. Trust is key – you need to trust the people you work with, both within your organisation and with clients and suppliers. The result is achieved collaboration and collective growth.

Overcoming international barriers

In the business world right now, we are in front of an unprecedented moment – we are living the fourth industrial revolution, fueled by digital economy. The world is changing at a speed that humanity has never experienced before and this is translated in the speed and number of opportunities that can be captured to grow your company.

More and more countries are emerging and growing, thanks to their demographics and investments. After the “BRICs” of Brazil, Russia, India and China, just look at the growth of Indonesia, or Nigeria, for example. Growing countries represent new opportunities for ambitious CEOs in developed markets.

But, although the world has become smaller through globalisation, it is still full of barriers to companies. Fragmented national laws, cultural unfamiliarity and opaque foreign markets challenge companies to grow overseas, despite clear opportunities.

The future is bright

The future is full of opportunities and Opportunity Network wants to help seize them. Our mission is to stimulate economic growth by removing barriers and brokering trust among businesses from all over the world.

We have become familiar with the idea that there are six degrees of separation between people. In the business world, we want to reduce them to just one, trustworthy, degree of separation. We hope that what we are doing will have a long-term effect on GDP growth at a global level.

What’s in Store for the Alternative Finance Sector?
FinanceInfrastructure and Project Finance

What’s in Store for the Alternative Finance Sector?

 James Codling, Managing Director of VentureFounders

With a growing total value of £1.78bn, the UK alternative finance market is currently the largest in Europe. Within this market, equity-based crowdfunding is rapidly gaining traction, with a growth of 600% between 2012 and 2013.

Crowdfunding in its purest form can offer seed-stage businesses a great opportunity to seek investment outside of friends and family. However, a lot of the opportunities available via crowdfunding sites have not undergone the rigorous due diligence and valuation evaluation undertaken by venture capitalists or angel networks.

While many of the businesses raising funds through crowdfunding sites offer benefits to investors, the profit to be made from investing in these companies is yet to be proven, with few exits taking place since the crowdfunding boom.

Recent reforms to pensions and the possible introduction of an alternative finance ISA will have a positive impact on the alternative investment market. The benefits offered by alternative investment models are attracting sophisticated investors, who are looking to invest in a crowdfunding-type model. Many of the alternative investment options currently dominating the market are not tailored to this audience. This breed of investor is less part of the ‘crowd’ looking to support a business they personally like, but is more interested in backing smart investments that are likely to return a profit.

So what can we expect from alternative finance in the coming years?

Much of the future of the alternative finance market will be driven by investor demand. As the sophisticated investor takes more of an interest in the alternative finance market, those that lead will be the investment platforms that fully understand this audience’s needs and preferences.

Collaboration between alternative and traditional investment models

To make opportunities more attractive to shrewd investors, we will see alternative finance platforms partner with VCs and Angel investors to offer opportunities to co-invest in businesses that were previously only available through these networks. These traditional models will be keen to move into the alternative finance market in order to be more competitive – we have already seen this happen in the P2P market.

Giving individual investors access to this asset class also benefits the company raising funds by giving them a group of sophisticated investors to draw from for support, whilst maintaining close links to the powerful venture capitalists. This new co-investing model goes some way to bridge the gap between a crowdfunding approach and private equity finance.

As the market gains traction and further credibility, we will also see equity investments from alternative investment platforms being included in the list of ISA-eligible investments, much like the P2P loans that currently qualify for the Innovative Finance ISA to be launched next year.

Increased professional standards

With more emerging investment models, there will be a need for increased investor protection as alternative investment becomes mainstream. It is likely that the FCA will raise the minimum investment amount to minimise frivolous investing from those who do not understand the risks in investing in growth businesses.

There has also been a worrying trend towards celebrity-led brands using crowdfunding to inflate their valuation figures. As over-valued companies start to mature but not return the expected profit, we will see even more regulatory calls for transparency into a potential investment’s performance, plans and forecasts, in order to understand the true opportunity.

The introduction of more regulations is only a good thing for the alternative finance market as it helps to boost the image of the industry and in turn increase investor confidence.

Alternative finance emerging as a true asset class

Alternative finance will emerge as a true asset class as the market evolves and return metrics can be quantified. Early adopters will be joined by a broader investor base and sophisticated investors are likely to see it as an attractive place in which to invest and dedicate a portion of their portfolio. We should see a continual rise in the amount committed by individuals through alternative finance platforms.

This liquidity will be driven by several factors coming together. As the changes to pension regulation come in, investors will be looking for advice on alternative investment options. IFAs are seeing demand from their clients and are looking at ways to recommend alternative investment products to their clients, which will further raise awareness of the market. This, coupled with the inclusion of alternative finance investments in ISAs, will further build trust with investors, who will be willing to invest more in this credible market.

It is also likely that we will see asset managers offering alternative finance products as part of their product mix. Expect to see your pension fund dedicating a portion of its investable assets in to this space.

A new benchmark for success

Currently the success of an alternative finance platform is measured on how much it has raised for companies. Over the next three to five years platforms will be measured on how they benefit investors. As the companies currently receiving investment through alternative finance mature, the platforms that funded them will be measured on the success of the companies’ exits and return to investors.

This will be a turning point in the alternative finance market, with a shake-out of those platforms that have not managed to deliver the expected returns being snubbed by investors in favour of those that have a proven track record of delivering real returns.

A sustainable industry

In light of these predictions, we should continue to see more high-quality investment opportunities becoming accessible for individual investors, with the best opportunities no longer being reserved.

Find out more about VentureFounders

 

AdvisorLoans Begins Financing Advisors' Business & Personal Needs
FinanceInfrastructure and Project Finance

AdvisorLoans Begins Financing Advisors’ Business & Personal Needs

AdvisorLoans is now the first national lending solutions firm catering exclusively to advisors for business, acquisition, and personal loans. Founded by financial industry and banking insiders, AdvisorLoans was founded based on the growing need for access to capital by advisors where there has historically been an industry-lending gap.

Many advisors in the financial sector have income, revenue, net worth, and credit scores higher than other types of coveted bank customers, but are often overlooked by lenders because of a lack of industry understanding, financial sector nuances, and lack of tangible assets to collateralize.

“Advisors have multiple lending needs over their career. We help advisors get the financing they need from a business credit line, refinancing their mortgage, acquiring a practice, financing a vehicle, and everything in-between,” shared President Frank Zoldak.

AdvisorLoans has multiple lending capabilities as a licensed mortgage company (NMLS#1312184) and SBA lending specialist. They are the borrower’s advocate for consumer and commercial conventional lending and provide an array of resources for the advisor including an internal tax and credit resolution division.

“We prepare and package SBA loans in-house, invite our lending partners to offer their best rates and terms, and then process the loan through the bank the advisor selects. There is never a handoff, we’re there every step of the way,” said Helena Hauk, SVP SBA Lending.

AdvisorLoans is committed to providing greater choice and access to loans, at better rates and terms. They are implementing the same high-touch approach service model advisors have with their clients. “There are many advisors needing financing advice and want a firm to do the heavy-lifting for them. We consult with advisors about their goals and available strategies, compare options, and support advisors in loan packaging through funding,” said Michael Fritze, SVP Operations.

“We exclusively serve advisors and their referred clients. Our job is to provide world-class service and solutions for advisors so they feel good sharing our company as a resource to their clients,” says John Pierce, SVP National Accounts.

“Our purpose is in our name. Being an advisor’s advocate in lending is what we do. We hope advisors will find value in that,” concluded Zoldak.

About AdvisorLoans:
AdvisorLoans finances advisors’ business and personal lending needs.

For more information on AdvisorLoans visit http://www.advisorloans.com.
Contact: John Pierce
Phone: 844-229-2553
Email: [email protected]

Palamon Invests in Il Bisonte
FinanceInfrastructure and Project Finance

Palamon Invests in Il Bisonte


Founded in 1970 in Florence by Wanny di Filippo, Il Bisonte is one of the few remaining independent Italian brands for hand-crafted luxury leather handbags and accessories. It is globally recognised for its artisanal products made from naturally treated, vegetable-tanned leather sourced from Sante Croce sull’Arno in Tuscany.

Il Bisonte’s footprint covers Europe, the US and Asia and the Company sells its products through a retail portfolio of over 50 sites including mono-brand boutiques and department stores. The Company has established a particularly strong presence in Asia, led by Japan where its products are sold through a rapidly growing network of more than 30 stores in partnership with listed distributor Look Inc.

Palamon’s investment in Il Bisonte stems from its ongoing thesis work in specialty retail that identified well-positioned European brands that could rapidly accelerate growth in a global market. Palamon believes Il Bisonte, an established brand in the fast-growing affordable luxury segment, offers a particularly exciting opportunity for growth through continuing geographic expansion across both developed and emerging markets and improving its distribution capabilities through retail, wholesale and online channels.

Palamon’s previous investments in the specialty retail sector include: dress-for-less, a German online retailer for designer apparel, and feelunique.com, the leading pure-play online retailer of premium beauty products in the UK.

Following the transaction, Wanny di Filippo will remain President of Il Bisonte and on its board and continue to lead the design of future collections. The Company has appointed Giuseppe Bonfiglio as CEO. Mr Bonfiglio has built an extensive career in leading a number of international luxury and fashion brands and was most recently CEO of Harry’s of London, the luxury footwear brand. Previously, he was President and CEO of US luxury handbag and accessories brand Lambertson Truex and Commercial Director of Bottega Veneta.

Commenting on the investment, Fabio Massimo Giuseppetti, partner of Palamon Capital Partners, said: “We are delighted to be able to partner with Wanny di Filippo and Il Bisonte, a Company which has genuine heritage, deep artisanal expertise and a strong brand with proven global appeal. We look forward to building on the current success and fulfil its growth potential.”

Wanny di Fillipo, founder and President of Il Bisonte added: “I could not be happier to have found in Palamon strategic partners who share my vision for the future of Il Bisonte. Their understanding and appreciation of the unique strengths of the business, coupled with their knowledge of how to introduce the company to a broader range of customers while ensuring it remains true to its roots in Tuscan leather craftsmanship, convinced me that they can help to deliver continued success.”

Il Bisonte is Palamon’s 35th investment since the Firm’s founding in 1999. To date, the Firm has invested almost €1.1 billion in lower mid-market companies across 10 European countries, with a focus on growth as the principal driver of value creation.

Financial Services Targeted By Hackers
FinanceInfrastructure and Project Finance

Financial Services Targeted By Hackers, Again

Out of more than six billion analyzed attacks in 2014, finance represents the No. 1 targeted sector of malicious cyber attacks, according to new report from NTT Group. NTT Group’s Global Threat Intelligence Report reveals the evolving threat landscape and the quantifiable shifts since last year.

Some key findings include:

– Finance continues to represent the No. 1 targeted sector with 18 percent of all detected attacks. The long-term trend of targeted attacks against the finance sector continues; most incident response engagements supporting the finance sector were directly related to wire fraud, phishing and spear-phishing attacks.

– Most payloads in exploit kit attacks are banking Trojans, ransomware or botnet applications.

– Hacktivist group likely targeting U.S. banks with a Distributed Denial of Service attack using botnets in Java vulnerability. Based on infection profiles, banks can expect the attacks to originate from Asian source IP addresses.

“Banks continue to be attractive targets for cyber criminals. Financial institutions need to protect their assets – and their customers’ – through practical fundamentals including mature patch management processes, incident response procedures, endpoint protection controls, and proper training to detect phishing attacks or malware. Attacks don’t need to be advanced to succeed in the financial sector,” stated Chris Camejo, director of assessment services for NTT Com Security US.

Small Business Demand for Alternative Finance Set to Soar
FinanceInfrastructure and Project Finance

Small Business Demand for Alternative Finance Set to Soar

The research further revealed that in 2014 the total amount raised through alternative forms of lending was an estimated £1.74 billion, double that of 2013. The research further revealed that:

• 42% of small businesses said they considered using alternative finance in the last five years.
• The most popular option, considered by 24% of respondents, was crowdsourcing finance, including peer-to-peer lending and crowdfunding, followed by cashflow/invoice finance (18%), property finance such as bridging loans and commercial mortgages(8%) and asset finance (6%), which covers areas such as plant and machinery and business equipment
• On a regional basis, 77% of small business owners in London predict a rise in demand for alternative finance, the largest portion in the UK
• Business owners in Scotland and Wales were equal second with 69%
• SMEs in the West Midlands were the least enthusiastic about alternative finance with 53% anticipating an increase

Budget Must Keep Growth Heading in Right Direction
FinanceInfrastructure and Project Finance

Budget Must Keep Growth Heading in Right Direction

 John Cridland, CBI Director-General, said:

“First and foremost what we need is a responsible budget – let’s make sure we don’t put politics ahead of economic growth and investment.

“So let’s look to build on our hard-earned sound economic footing by creating a stable investment environment for ambitious firms looking to expand.

“And if lower inflation allows the Chancellor some room to manoeuvre, extending free childcare can lend a helping hand to families whilst supporting employment and growth in the long-term.

“Our economy is in good shape, but there’s still no room for complacency, so spending wisely on measures that will help to keep growth heading in the right direction while staying the course on deficit reduction has got to be the priority.”

 

The CBI’s Budget Submission proposals include:

* Making the Annual Investment Allowance permanent from 2016 at £250,000 – to provide stability that will in turn promote investment.

* Boosting the availability of long-term growth capital, by promoting a market for privately placed debt, which could unlock up to £15 billion.

* Encourage the full spectrum of Research and Development (R&D) activity to take place in the UK, by supercharging the R&D tax credit to incentivise the domestic development, commercialisation and manufacture of our ideas here in the UK.

 * Fully committing to reduce the Supplementary Charge on North Sea oil producers back to 20% – to boost investment plans and create jobs.

* If funds are available free childcare (currently 15 hours) should be extended to 1 and 2 year-olds, with the longer-term aim of increasing the number of hours provided.

* A rise in the threshold for firms paying Quarterly Instalment Payments of Corporation Tax from £1.5 million to £5 million.

* A reduction in the number of companies caught within transfer pricing rules by increasing the threshold from 250 employees to 500.

* At a minimum, the Government should freeze Band B Air Passenger Duty (the remaining long-haul band).

* The Government must address skills shortages in the economy by developing partnership funding models for business-relevant degrees. It should also press ahead with plans to reform apprentice training funding to put businesses more in control.

* The Government review on the Business Rates tax system must be ambitious and far-reaching – the CBI wants the smallest firms removed from paying rates, changing the indexation of rates from RPI to CPI and introducing more frequent valuations.

Balfour Beatty Appointed as Civil Contractor to £300 Million Thames Estuary Asset Management Programme
FinanceInfrastructure and Project Finance

Balfour Beatty Appointed as Civil Contractor to £300 Million Thames Estuary Asset Management Programme

The £300 million programme is the largest single flood risk asset management programme ever awarded in the UK. It is designed to manage and deliver capital investment works to the Thames tidal flood defences along the 170km length of the Thames Estuary, protecting 1.25 million people from flooding risk across Kent, Essex and London and £200 billion worth of property, UK government assets, major infrastructure and businesses.

The programme will involve creating tidal walls and embankments, refurbishing works of active assets, (including major flood barriers), new assets such as pumping stations, capital renewals and replacements. Packages of major or complex maintenance works will include repairing fixed flood defence walls or subsidence of earth embankments. CH2M Hill leads the programme supported by delivery partner Balfour Beatty and a number of other specialist suppliers.

Leo Quinn, Balfour Beatty’s Group Chief Executive, said: “We look forward to being part of an integrated team that will deliver this vital programme along the Thames Estuary. Balfour Beatty is bringing significant expertise in flood defence to protect one of the world’s greatest cities from the sea. And, with our partners we will offer long-term, skilled, opportunities to the next generation of civil engineers.”

Individual projects are expected to be awarded from the third quarter of this year with each expected to be worth up to £10 million in value.

Balfour Beatty Completes Acquisition of £352 Million Offshore Transmission Project in Wales
FinanceInfrastructure and Project Finance

Balfour Beatty Completes Acquisition of £352 Million Offshore Transmission Project in Wales, UK

Balfour Beatty will jointly own Gwynt y Môr OFTO with Equitix. Balfour Beatty will invest £28 million of equity, which represents 60% of equity required.

The Gwynt y Môr OFTO, previously operated by Gwynt y Môr Offshore Wind Farm Limited, is the high-voltage electricity transmission system connecting the 576MW offshore wind farm, in North Wales, to the onshore transmission grid. The wind farm will be capable of generating enough electricity for around 400,000 homes each year. The assets include three substations – two offshore and one onshore – and over 80 kilometres of subsea cables. Balfour Beatty’s Services division is responsible for the assets’ operations and maintenance under a licence granted by Ofgem with a 20 year revenue stream.

To date, Balfour Beatty has achieved financial close on three OFTO projects and now has responsibility for OFTO transmission assets worth £833 million with a combined transmission capacity of 1380 MW. Financial close was achieved on the £317 million Greater Gabbard OFTO in November 2013 and the £164 million Thanet OFTO in December 2014.

Leo Quinn, Balfour Beatty Group Chief Executive, said: “The offshore transmission market has a future pipeline to 2020 of up to £10bn, which represents a sizable growth opportunity for our Investments business. Combining our investment and operational capabilities gives us a leading offering in this market and we have already used this to establish a strong early presence.”

EEF Release Guidelines for New Construction Regulations in the UK
FinanceInfrastructure and Project Finance

EEF Release Guidelines for New Construction Regulations in the UK

CDM 2015 is a revision of existing regulations designed to protect the health and safety of people when building, using and maintaining premises. It comes into force in April and EEF is using this to issue a timely warning to busy business-owners not to fall foul of the regulations by assuming that ‘construction’ relates only to things like building new factories, extending existing premises, renovating a factory or renewing external signage.

In fact, the regulations define ‘construction’ in the broadest way and this could leave unsuspecting manufacturers open to potential prosecution for non-compliance.

To help companies understand the potential pitfall, EEF has listed the following common practices in manufacturing that fall within CDM Regulations:

1. Moving machinery within the factory

2. Dismantling a machine for repair or refurbishment

3. Creating new working areas by installing (or removing) structures such as walls, additional levels or elevated walkways

4. Almost anything involving mechanical, electrical, gas, compressed air, hydraulic, telecommunications, computer services including installation, commissioning, maintenance, repair or removal

5. Dismantling existing machinery for decommissioning

6. Redesigning factory layout

7. Building, or dismantling, an extension

8. Installing new machinery.

These projects – and many more – need to be managed in a formal way from the planning stages right through to completion. As a result, projects such as buying new machinery or moving machinery require a team covering the roles and duties specified by the regulations, something that can catch unsuspecting firms out.

To help companies get to grips with this, EEF is running a series of breakfast briefings across the UK. The sessions will help manufacturers to:

-Understand the impact of the CDM Regulations 2015 on projects

-Determine if a project is covered by the regulations – or not

-Identify the roles required within the project team

-Understand the duties of the individual business and their contractors

-Maintain compliance with the new Construction (Design & Management) Regulations 2015.

Mike Denison, Health and Safety expert at EEF, says: “These regulations have an important role to play in protecting health and safety. But there is a danger that manufacturers could inadvertently fall foul of them simply by making some very natural assumptions. When it comes to CDM 2015, ‘construction’ doesn’t mean ‘construction’ in the sense that you or I would understand, but encompasses a far wider range of activities regularly undertaken by manufacturers.

“Forewarned is forearmed, which is why we are reminding companies now so that they can ensure their full compliance ahead of CDM 2015 coming into force.”

New Chairman Appointed to Lead Balfour Beatty Board
FinanceInfrastructure and Project Finance

New Chairman Appointed to Lead Balfour Beatty Board

Philip has extensive international business experience in the industrials and resources sector having worked across the UK, US, Asia and the Middle East. He is currently non-executive Chairman of Aveva Group plc, a non-executive director of National Grid plc and of Newcrest Mining Limited. Philip will be stepping down from the board of National Grid plc on 25 February 2015.

Current Chairman Steve Marshall will retire from the Board on 25 March 2015. Peter Zinkin, Planning and Developments Director will step down from the Board on the same date and will retire in August.

Leo Quinn, Balfour Beatty Group Chief Executive, said: “Philip has many years of highly relevant international Board-level experience at the top of industry and we look forward to his valuable contribution to the business, including areas of paramount importance to the Group such as safety. The Board is focused on the group wide transformation programme and capturing the significant opportunity to drive leaner stronger processes, improved profits and strong cash generation to the benefit of our shareholders.

“We would like to thank Steve and Peter for their many years of commitment and determination and wish them well for the future.”

Philip Aiken said: “I am very much looking forward to working with the Board and the executive team in setting the business back on the course of value creation with Leo and his team. Balfour Beatty has great people and a vast depth of engineering capability and technical expertise. The Group is striving to ensure that the value delivered to our customers translates into best-in-class performance and restores Balfour Beatty to strength.”

The Company confirms that there is no further information about Philip Aiken requiring disclosure under paragraph 9.6.13 (2) to (6) of the Listing Rules of the UK Listing Authority.

Financing the UK's Infrastructure Needs
FinanceInfrastructure and Project Finance

Financing the UK’s Infrastructure Needs

The report finds that up to £80 billion of essential transport and energy projects are struggling to attract project finance. Instead of reflecting a lack of available finance, the paper finds a mismatch between the types of projects the Government wants financed and the market’s appetite for financing them.

The Government wants to press ahead with a new wave of large-scale nuclear power stations, renewable energy and carbon capture and storage projects. Many of these have been identified in its recently updated National Infrastructure Plan (NIP), which identifies a pipeline of specific projects it expects to be financed privately. This is where the blockage exists. The NIP seeks to attract money for projects that banks and investors are less confident financing. They are more comfortable financing less complex social infrastructure and energy schemes with a proven track record, such as on-shore wind, where the cash flows are clearly defined and underlying risks better understood.

Our report “Financing the UK’s Infrastructure Needs” examines this logjam, explaining why the market considers some types of infrastructure as more attractive to finance than others. We also examine how the financing market has evolved post-crisis, including growing competition between banks and institutional investors, and offers suggestions for how the situation can be resolved.

-Government interventions should be carefully sculpted to ensure they are supporting investment activity which would not be taken by the private sector alone.

-The broader regulatory environment around infrastructure projects (particularly energy) needs to be more certain and predictable.

-The private sector needs to recast its expectations about the type of deals available. Infrastructure needs have changed and the constraints of the public finances and context of workable funding models means the world is very different now in terms of opportunities.

Above all there needs to be a much better dialogue between the financing industry, the Government (Infrastructure UK) and the infrastructure industry. This will help foster the required innovation in the financing arena to ensure that the proposed pipeline evolves from being somewhat of a wish list to a “concrete” reality.

Commenting, BBA Chief Economist Richard Woolhouse said:

“The stakes are high. The potential prize is not just meeting the infrastructure needs of the coming decades. It is also maintaining London’s position as a centre of excellence in project financing and establishing infrastructure as an asset class for institutional investors.

“Failing to clear the blockages in the UK pipeline of projects threatens to hinder our economy for decades to come.”

Clifford Chance enhance project and infrastructure capabilities in Latin America
FinanceInfrastructure and Project Finance

Clifford Chance enhance project and infrastructure capabilities in Latin America

One of the most respected legal advisers for project finance matters in Latin America, Bacchiocchi’s arrival bolsters Clifford Chance’s market-leading projects and infrastructure practice and enables the Firm to provide even greater support to clients in the region.

At Clifford Chance, Bacchiocchi will be based in the New York office while continuing to spend a significant amount of time on the ground in Latin America. He comes to the Firm from the Chicago office of DLA Piper.

“The continued development of our presence across the Americas – both in the US and Latin America — remains an important point of emphasis for Clifford Chance,” said Americas Regional Managing Partner Evan Cohen. “Gianluca’s recruitment fits perfectly with what we’re trying to accomplish — he is an outstanding lawyer who further solidifies and broadens a practice in which we are already a recognized leader. The experience and creativity he brings will be invaluable to our clients as we continue to expand our regional footprint.”

Bacchiocchi focuses his practice on representing sponsors, issuers and underwriters in cross-border capital markets transactions with Latin America, including project bond financings, public and private issuances of asset-backed securities, private issuances of future-flow backed securities and high-yield debt issuances. He also assists sponsors, borrowers and lenders with project and infrastructure financings, public-private partnership transactions, general secured and unsecured lending arrangements and international debt restructurings. He is recognized as a leading practitioner in the Latin America finance, projects and capital markets sections of Chambers and Legal 500, with the former noting that he is “considered a pioneer in the area of project bonds.” He is also fluent in English, Spanish, Portuguese and Italian.

Americas Banking and Finance Practice Area Leader Tom Schulte noted: “In addition to having been involved in many of the landmark transactions in the region, including the recent development and financing of the US$ 5.4 billion Metro Linea 2 in Peru, Gianluca has also been at the forefront of the growing trend towards financing energy and infrastructure projects through the capital markets in Spanish Latin America. Some lawyers work on the biggest deals, others on the most innovative. Gianluca is among the few who can honestly say they do both.”

“Access to capital markets, whether for greenfield or take-out financings, is now in every client’s playbook,” added Fabricio Longhin, co-head of the Firm’s Spanish Latin America group. “Gianluca is widely acknowledged as a leader in that field and we are delighted to welcome him into our Latin American team.”

The addition of Bacchiocchi brings to 73 the number of Clifford Chance partners in the Americas. His is the third major partner hire made by the firm in the region over past few months, following on the high-profile arrivals of structured finance partners Bob Gross and Will Cejudo in December.

“Having worked with and been impressed by many of the Firm’s lawyers, I am extremely excited about the move to Clifford Chance,” said Bacchiocchi. “The Firm’s exceptional regional platform, expansive global network and culture of collaboration present new and exciting opportunities for me, and for my clients.”

Clifford Chance has been working in Latin America for many years and is consistently recognized as one of the region’s preeminent law firms. The Firm’s lawyers understand the region’s distinct business, legal and regulatory landscapes and provide expertise that cuts across the full range of capital markets, banking, corporate, project finance, structured finance and litigation practices. They pride themselves on their ability to develop innovative solutions that align with the unique characteristics of the Latin American market and the changing needs of clients, with recent highlights including the financing of the US$1 billion Chaglla hydroelectric project in Peru, Ecuador’s US$2 billion sovereign bond offering, the Reventazon hydroelectric project “B bond”, and Banco do Brasil’s US$5.7 billion IPO of BB Seguridade – 2013’s largest globally.

Skanska Delivers Infrastructure Improvement Program in the UK
FinanceInfrastructure and Project Finance

Skanska Delivers Infrastructure Improvement Program in the UK, Worth GBP 100 M

The contract is in total worth about GBP 2-2.5 billion, about SEK 25-31 billion. The value to Skanska over the first two years will be about GBP 100 M, about SEK 1.3 billion, which will be included in order bookings for Skanska UK in the first quarter of 2015.

Thames Water is the largest water and waste water company in the UK, and the contract will run from April 1, 2015.

Skanska UK reported revenues of about SEK 13 billion in 2013. It has around 5,000 employees. The company is active in building and civil construction, utilities and building services, as well as facilities management and commercial development. In the UK, Skanska is a leader in public private partnerships, PPPs, also known as Privately Financed Initiatives, PFIs.

Skanska AB may be required to disclose the information provided herein pursuant to the Securities Markets Act. Skanska is one of the world’s leading project development and construction groups with expertise in construction, development of commercial and residential premises, and public-private partnership projects. Based on its global green experience, Skanska aims to be the client’s first choice for green solutions. The group currently has 57,000 employees in selected home markets in Europe and the US. Skanska’s sales in 2013 totaled SEK 136 billion.

A Further £58m Confirmed to Support New Jobs and Skills in London
FinanceInfrastructure and Project Finance

A Further £58m Confirmed to Support New Jobs and Skills in London

Providing the jobs and skills to support soaring population levels in the capital is crucial and the new funding is on top of a £236m ‘Growth Deal’ for London that was signed off with the Government last year. The London Enterprise Panel, which is chaired by the Mayor, is at the heart of those plans and they will now consider where best to allocate the new funds, which have the potential to support up to 2,400 new jobs.

The Mayor of London and Chairman of the London Enterprise Panel, Boris Johnson, said: “This extra cash will deliver real change and new opportunities in communities across the capital. We’ve got some fantastic proposals in the pipeline that will not only reinvigorate our town centres and colleges, but help people to learn, earn and fill thousands of new jobs.”

The Growth Deal for London runs for six years from 2015 to 2021. With the new funding in place the Deal has the potential to generate a total of £190m of new public and private investment in London and up to 8,000 jobs. Of the £58m announced today around £38m will be used to support colleges and further education in the capital. The remaining £20m will be used to support the creation of new jobs on the capital’s high streets. The Government plans to make another £5bn of funding available nationwide over the period of the Growth Deal and London will be bidding for a share.

Over 48 organisations have already bid for shares of the funding that was announced last year. The bids now being considered would help provide learning and skills across a variety of sectors including digital skills, science, engineering, health and child care. The London Enterprise Panel is due to announce which organisations will receive that funding later this year.

Deputy Chairman of the London Enterprise Panel, Harvey McGrath, said: “The release of capital funding for London’s further education estate is a huge step forward in ensuring providers are delivering the skills that London’s residents and businesses need. We are now working with providers, London’s boroughs and businesses to build a pipeline of projects for the next three years, and look forward to discussing further years of funding through future Growth Deal funding rounds.”

The Chairman of London Councils, Mayor Jules Pipe said: “Boroughs are hoping to use the £20million for London’s high streets to build on existing programmes which help traders adapt to the changing needs of shoppers and the local community.

“They are also looking forward to the opportunity to invest in more affordable space for start-ups, so they have somewhere to set up and grow their business.

“All in all, this funding will help keep the economic lifeblood of London flowing, which will benefit everyone, while the £38 million will help young Londoners better prepare for the labour market.”

North-South Divide Becoming Increasingly Trenched
FinanceInfrastructure and Project Finance

North-South Divide Becoming Increasingly Trenched

Centre for Cities’ 2015 Cities Outlook report also makes grim reading for a host of North West towns, with Rochdale, Blackpool and Burnley among those performing poorly.

The report found that for every 12 net new jobs created between 2004 and 2013 in cities in the South of England, only one was created in cities throughout the rest of Great Britain.

It added that national growth between 2004 and 2013 was largely driven by only a handful of cities – mainly located in the south – which have seen their populations boom, their number of businesses grow, and thousands of new jobs created.

At the same time in other cities, migration of young and skilled workers, a lack of business growth, and falling employment opportunities have led their economies to contract.

In the North West, Rochdale, Blackpool, Wigan and Burnley were found to have suffered the lowest jobs growth between 2004 and 2013. Rochdale was ranked 62nd out of the 63 towns and cities featured in the list, with a -12.2 per cent change.

You can read the full report here.

Scotland Could Become Carbon Capture and Storage Powerhouse of Europe
FinanceInfrastructure and Project Finance

Scotland Could Become Carbon Capture and Storage Powerhouse of Europe

A recent seminar at the University of Aberdeen focuses on the next steps to ensure that Scotland makes the most of opportunities highlighted in the report The Economic Benefits of CCS in the UK. Key findings from the report include:

CCS can play a vital role in helping the UK meet its statutory target to reduce greenhouse gas emissions by 80 per cent by 2050. It has been estimated that without CCS, the cost of meeting this target will rise by £30-40bn per year.
Inclusion of CCS in the mix of low-carbon technologies would result in a 15 per cent reduction in wholesale electricity prices – leading to an average cut in household bills of £82 a year.

Each new-build CCS power plant would generate between 1,000 and 2,500 jobs in construction, with a further 200-300 jobs in operation, maintenance and the associated supply chain.

CCS could help the UK to retain existing industries, such as coal and gas power generation, and support vital energy-intensive industries (such as chemicals, steel and cement manufacture) which employ 800,000 people directly and in supply chains.

TUC General Secretary Frances O’Grady said: “Carbon capture storage technology offers a way to meet our environmental targets, while creating thousands of skilled, well-paid jobs and transforming regional economies.

“This is a great opportunity to re-invigorate our manufacturing sector and bring new research and development, design and construction jobs to areas like Yorkshire, the North East and Scotland. But without stronger government backing the UK risks losing its competitive advantage, and all the jobs and economic activity that CCS could bring.”

The North East of Scotland has been identified as one of the best places in Europe to develop CCS. The Shell and SSE Peterhead CCS project in Aberdeen promises to deliver a world first; a full-scale CCS project at a gas-fired power station. There are also many other CCS projects in Scotland which could be in operation by the end of the decade.

CCSA Chief Executive Dr Luke Warren said: “This report definitively shows that the successful deployment of CCS has wider benefits for the UK economy. Respected international and UK organisations agree that without CCS in the mix, costs of meeting climate change targets will rise significantly. We have gone further in this report to show that the cost savings from CCS have a real impact on the average UK household – increasing their disposable income and reducing the risk of fuel poverty.”

FSB Brings Business Champions in Parliament Together to Tackle Supply Chain Bullying
FinanceInfrastructure and Project Finance

FSB Brings Business Champions in Parliament Together to Tackle Supply Chain Bullying

Last month a number of large companies including Premier Foods and 2 Sisters were identified and criticised by the FSB for supply chain bullying.

Recent research by the Federation of Small Businesses (FSB) revealed that almost one in five small businesses had been subject to some form of poor payment tactics. Five per cent had experienced the so called ‘pay to stay’ practice used by Premier Foods, who asked suppliers to pay a flat fee in order to be considered for future contracts.

The cross-party parliamentary roundtable will be co-hosted by the FSB and the All Party Parliamentary Group for Small Business. The event will be held in Parliament on Tuesday 20th January 2015 at 8.30am to 9.30am.

Debbie Abrahams MP, having previously led a cross-party parliamentary inquiry into late payments last year, will host the event. Also at the table will be Anne Marie Morris MP, Chair of the Small Business APPG, Tessa Munt MP, Parliamentary Private Secretary to Business Secretary Rt Hon Vince Cable MP and Mike Cherry, FSB National Policy Chairman.

Mike Cherry, FSB National Policy Chairman, said: “It is simply unacceptable for any company to exploit its market position to enforce unfair and unreasonable payment terms. The money outstanding in late payments is in the billions and has consistently grown larger and larger. We need greater leadership from all parties competing to be in the next Government to toughen up the prompt payment code and improve the UK’s payment culture.”

Debbie Abrahams MP, who is hosting the event and has previously convened her own cross-party inquiry into the issue, said: “Late payment is something that CEOs and board members in big businesses can influence and I have always maintained that a late payment culture in a company is set at board level.

“That makes it a leadership issue and it’s time that deliberately paying late, finding ways to pay late, or making unilateral changes to pre-agreed contracts is seen as being as unethical as tax evasion.

“It’s simply a case of big businesses using smaller businesses as a credit line by applying bullying tactics that are unfair and have the knock-on effect of stifling growth in the economy.

“As politicians we must work to change business culture and make it unacceptable to pay contractors late as well as shifting the burden of having to take legal action away from the victims of late payment practices once and for all.”

Anne Marie Morris MP, Chair of the Small Business All Party Parliamentary Group, said: “For our small and micro businesses, late payment presents a real challenge when it comes to managing their cash flows. Our job is to make sure that is it as easy as possible to set up and run your own business, which means addressing the issue of late payment is crucial.

“The Government recognises this and is using the Prompt Payment Code to commit businesses to paying their debtors on time. This is a voluntary scheme, but already has over 1,700 firms signed up. Moreover, the Small Business Bill currently going through Parliament will name and shame larger companies who will not commit to this practice of ensuring a fairer payment culture.

“We must continue to do more however to ensure small businesses are not endangered because of late payment, even if this means more mandatory measures need to be put in place.”

Tessa Munt MP, Parliamentary Private Secretary to the Secretary of State for Business, Innovation and Skills, Rt Hon Vince Cable MP: “I pay tribute to the work of both the FSB and the Small Business APPG towards tackling the growing problem of late payment and the associated issue of extended payment terms.

“We should be clear that large companies, pressuring small businesses to accept unfair payment terms is completely unacceptable. MPs from across all parties have a responsibility towards casting a light on unfair payment practices and helping to redress the balance between small and large contracting parties.

“Going forward the challenge is for politicians and businesses to work together in order to create real cultural change that makes the exploitation of small suppliers a thing of the past.”

As part of the FSB research into poor payment practises, small businesses were asked to give examples of the most common poor payment practices they had to deal with. The FSB has used these examples to create a list of the five most resented payment practices in use today:

1) Flat fees – ‘pay to stay’
Also known as ‘supplier assessment charges’ or ‘supplier investment payments,’ these are flat charges which companies levy on suppliers either as a requirement to be on a supplier list, or packaged as an investment into hypothetical future business opportunities. It is often indicated that non-payment will result in de-listing. New research has indicated that more than a quarter of a million (260,000) businesses could be facing so called ‘pay to stay’ charges after five per cent of businesses surveyed said they had been asked to make a payment by a customer or face de-listing.

2) Excessively long payment terms – ‘pay you later’
In 2011 the EU issued a directive requiring all businesses to pay their suppliers within 60 days, or face interest payments on money owed. However, the UK implementation of the directive allows businesses to agree longer terms “provided it is not unfair to the creditor.” This has led to many companies insisting on payment terms of 90 or even 120 days. In effect this becomes an interest free loan from firms in the supply chain to large companies with excessive payment terms.

3) Exceeding payment agreements – ‘late payment’
As well as insisting on long payment terms, many companies are routinely exceeding agreed terms, or changing terms retrospectively to allow them to miss agreed payment dates. Also thought to be common is the practice of extending payment dates if money is owed on, or close to, the end of a financial reporting date in order to smooth a big company’s balance sheet.

4) Discounts for prompt payment – ‘one for you, one for us’
Prompt payment discounts are arbitrary discounts big firms give themselves for paying early or even just on time. For example, a firm that has agreed to pay 120 days following receipt of an invoice may also apply an automatic discount of 3% if they pay on or before the 120th day.

5) Retrospective discounting – ‘balance sheet bonuses’
Some firms seek to apply retrospective discounts to outstanding money owed to a supplier. This involves the company effectively changing the terms of the contract signed with the supplier after a contract has been agreed. Methods used to extract these vary, but include threats of de-listing, withholding payment, ‘marketing contributions’ and previously un-agreed discounts applied to specific volumes of business.