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Universal Group Has A Client Looking To Purchase Projects In The Price Range Of One Hundred Million USD To One Billion USD. Please Read On
Information About Our Client - From Universal Group
Company Background
Our client is a consortium of various
private companies and trusts that invest partner
equity in a broad range of infrastructure assets.
Founded in Australia, it now encompasses interest in
assets in Asia (principally Japan, South Korea, and
Taiwan), Europe (Russia, Ukraine, Serbia, Hungary,
Germany and France), the United Kingdom, North
America, Australia and New Zealand.
Our client, having designed the trust to meet the needs
of his partners and requirements of the banks, whilst
also appointing advisers (28) in various countries (12)
and acting as sole buyer for the group.
Owing to the ages of the principals, a more
conservative acquisition style from former years (of
intense development, risk-taking and preference for
undervalued assets capable of renovation) is now
preferred and a common criteria under Our clients banner was developed by
Our client to provide income to the
superannuation funds of the principals.
To this end, The criteria agreed
by Our client and its bankers is quite straight-forward:
Investment Strategy
Our client is a US-Australian-UK
consortium that invests principally but not solely in
renewable energy resources. It is made up of private
sector investors who seek to purchase long-term
conservatively- yielding assets that provide a secure
stream of passive income.
Those assets, though infrastructure, are of a broad
type and cover 3 main areas of:
1. Renewable Energy
2. Shipping, and
3. In-ground commodities.
All assets must be:
Over $100 million in purchase price – Australia,
New Zealand and Singapore (or £100 million for
UK / ¤100 million for Europe)
Leased by a strong entity for 20 years or longer.
Shorter terms are possible but require a higher
initial yield.
Leased on a triple net lease structure (or bareboat
charter basis if shipping)
An agreed annual inflationary increase payable
(at say, 3%) on rental
The “strong entity” defined as rated by Standard &
Poor’s at no lower than BBB (or ‘investment grade’)
Note that the equivalant Moodys minimum rating is
Baa2.
Acceptable Risk
Free of construction risk - achieved by fixed-priced
turn-key contracts with known, substantial builders
prepared to put up their balance sheet and a
completion bond.
Free of operational risk - achieved by known,
substantial operators in the respective field being
prepared to provide 20-year operations and
maintenance agreements and/or a maintenance
contract of the same period with an annual non-use
fee; or the off-taker accepting step-in rights in the
event there is a serious break in production.
Free of feedstock risk - quantum and base price of
any long-term feedstock needs to be supplied for the
same term as the offtake (otherwise there exists a
timing mismatch) plus be agreed by a very strong
supplier with the floor and/or collar price to the
feedstock to ensure affordability of it throughout the term.
Asset types
As this consortium seeks passive income, its interest
is broad and incorporates:
Renewable Energy
Geothermal power plants
Waste-to-energy plants
Biomass power plants
Forests
Wind-farms
Bio-diesel power plants
Bio-ethanol power plants
Waste disposal plants
Solar plants
Water Assets
Dams
Pipelines
De-salination plants
Water purification plants
Sewerage Systems
Shipping - Tankers
LNG
Port Infrastructure
Natural Resources – Energy Assets
New and existing forests
Oil
Iron ore
Gas
Gravel pits
Coal
Including these assets in-ground, plus the
facilities to assist the above to operate -
Pipelines – oil / gas Paper mills
Smelters Refineries
Oil rigs Plant and machinery
Steel mills Service stations
Coal-gasification plants Coal-loaders
Other
The breadth of other assets is wide and includes:
Property – office, industrial, retail
Airport facilities / Aircraft
Highways
Telco infrastructure
Rail infrastructure /Railway stations
Railway Carriages
Vineyards
Theme parks
Municipal chambers and facilities
Hospitals
Police Stations
Universities / Schools
Prisons
Hotels
Financial assets (including mortgage books
and long-dated factoring)
Our Clients Services
Outside of the government/public arena, our client provides corporations with the
opportunity to retrieve large quantities of capital tied
up in static assets and re-use those funds in more
profitable areas.
Assets/buildings can be sold to our client, converted to cash, then leased back for
long periods at historically the lowest yields/rental
possible over the past 40 years.
Assets removed from ownership that are passive,
showing little growth and little return to the bottom
line, will instead become highly valued liquidity that
will improve corporations’ ratings and credit standing
with lenders and suppliers. Companies
pressed for lack of cash may become highly liquid
without raising debt or debt-levels and thereby
decreasing annual outgoings and debt-service costs.
Capital Available
Our client has negotiated sizeable
blocks of capital for minimum 20-year terms at
highly competitive margins and rates, all fixed for
the 20-year period through its bankers. This enables
Our client to invest the capital
requiring only relatively low yields, depending on
asset type and whether land is leasehold or freehold.
Our client has equity via associated
entities that ensures its debt-level on
commencement of a purchase is conservative and
remains so throughout the life of any lease.
Our client is well funded with sums of
$50 million to $500 million available for each
transaction. Larger sums are available provided they
are invested in $500 million tranches.
Significant equity is also available in multiple
jurisdictions and therefore currencies, most notably
US dollars, Pounds sterling, Yen and Euro, Singapore
dollars, New Zealand dollars and Australian dollars.
No guarantee of the principal is required from the
vendor/lessee, purely the agreement to pay all rent
on time.
In a multitude of areas, public funds are forever
demanded and locked up for long periods of time,
often decades, over-burdening the public sector
whilst our client has relatively low cost
private equity that it is happy to place as a
long-term investment with only a low annual yield
required. This enables a great deal of public sector
assets to have its wealth liberated, the capital
returned to Government and those funds deployed in
more needed areas. The requirement for related
future Government capital expenditure is also
removed and taken over by our client.
Investment Where Bank Debt Precedes
our client’s Equity
All of our client’s capital is equity.
In the case of certain investments eg. a mine or steel
mill, it may be required to utilise our client’s equity as the final component of
investment or development, whereby significant
bank/senior debt precedes the equity invested by
our client. This is acceptable, though
may require a profit-sharing arrangement owing to
the high leverage of the project. In this case also,
our client’s equity would be long-term
passive investment.
our client is seeking only
conservatively - leased assets and is not sensitive to
pricing of those assets, therefore normally not
requiring market valuation prior to purchase. Of
importance to our client’s Corporation is a stable
basic yield, small annual inflationary increases and all
income being net of outgoings/costs.
Where a company wishing to do business is not
rated at all, or its rating is too low (ie below BBB by
Standard & Poor’s), our client may deal
with that company provided it sells its product or
service to an off-take party that is rated BBB or
above. Agreements to buy or supply the
product/resource/service over 20+ year periods are
then required to secure revenues for our client.
Shipping and Associated Assets
Our client also acts as adviser and
negotiator for all shipping and associated facilities
acquisitions. The criteria agreed by ourclient and its bankers is quite straight-forward:
All assets must be:
Over $100 million in purchase price
Leased by a strong entity for 20 years or longer.
Shorter terms are possible but require a higher
initial yield.
Leased on a bareboat charter basis
The “strong entity” defined as rated by Standard
& Poor’s at no lower than BBB* (Note that
Moodys Baa2 is the equivalent minimum rating)
All maintenance issues and daily operations are
handled and paid by the charterers. Our client
has no expertise in ship and facilities
management and will neither bid for nor is
interested in this during the term of the charter. Its
role is to be purely passive investor.
Assets require use and profit extraction, not
ownership, which shows little growth and little
return to the bottom line. Instead, utilising
our clients equity, they become highly
valued liquidity that will improve corporations’
ratings and credit-standing with lenders and
suppliers. Maritime companies pressed for lack of
cash may become highly liquid without raising debt
or debt-levels and thereby decreasing annual
outgoings and debt-service costs.
In market downturns such companies will have
unused credit still available with its bankers, having
used our client’s credit and equity
instead, plus the cash reserves provided by
our clients Corporation’s purchase of vessels.
Gifting Provision/Buyback Provision
At the end of the charter period our client’s
Corporation is prepared to gift 50% ownership in
each vessel to the charterer.
It is unlikely that any asset will be sold by our client
prior to 20 years.
Our client, though not requiring it from a vendor,
is prepared to offer a buy-back arrangement whereby
the charterer has the first right of re-purchase of the
remaining 50%, with, if need be, a formula for how
the price is set, agreed in advance of the sale to
our client.
Lease Type
A bareboat charter is required, with monthly rental
payable in advance, and annual CPI or say, 3% pa
increases, whichever is the greater.
Our Client is prepared to make available
in advance all the capital required to permit the
upgrade or replacement of vessels once or twice
throughout the charter, so that the life and
effectiveness is maintained until charter end.
Plant/Equipment/Wiring/Depreciating Assets
A conservative yield also is required for these asset
types, though marginally above property yields.
Corporate Philosophy
As Advisor
Internally, Our Client advises its
affiliates and associated companies of the best time
for them to invest their surplus capital or to divest
themselves of a large proportion of their real estate
holdings and repatriate funds to other activities.
Investor
Our client’s Corporation acts principally as the
adviser and partial investor in each asset. Our client’s
strength comes from its willingness to
invest its own equity profits and transferred capital
into each acquisition and to back investment in real
rather than in theoretical terms.
On Accounting
Stringent monthly reporting requirements indicate
great emphasis from the parent company that assets
be managed with initial objectives in mind without
excuse, that projections be met without subsequent
watering down of those projections. The financial
projections on the company's activities in each asset
including leasing and financial trends, will become
the basis for a comprehensive operating program for
each asset and for the implementation of
renovation/upgrading strategies as needed.
Sound management requires comprehensive
accounting and reporting procedures for the benefit
of our investment partners and lenders. Annual
operating budgets and asset management plans will
be prepared in advance and monthly financial
statements are compiled in conformity with the
strictest accounting principles and income tax
requirements.
The emphasis will remain on safety of yield, then
capital profit.
Acquisition Philosophy (In real estate)
Our Client’s Corporation philosophy is to ferret out
opportunities available on a wide range of different
markets where economic and market conditions
suggest that property is not at the time the most
appropriate or attractive investment medium. We are
attracted to adverse market conditions that offer
high yield and profit potential.
Summary
Our Client is looking for a secure
revenue base. In essence, well-located assets with
excellent tenants, reliable revenue and above average
returns. Importantly, a strong and virtually assured
potential to increase the capital value of any
acquisition is paramount.
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