Infrastructure transactional support

Our advisory support services in respect of acquisition and disposal include:

• commercial and financial due diligence;
• financial model development or amendment;
• preparing information memorandums;
• identifying and introducing potential buyers or lenders;
• advising on the data room requirements and general process requirements for an equity sale or refinancing;
• support negotiations; and
• help assess bids.

Undertaking financial model due diligence when buying and selling equity investments in infrastructure projects is a core element of any transaction. Mazars’ experience lies on both the buy and sell side of secondary market transactions while we also have significant experience in the related area of model audit. 

We are able to advise on the robustness and functionality of in-house developed portfolio models and perform analysis on the single asset or portfolio basis. Where multiple assets are acquired/disposed of it is important to be able to:

• quickly identify the aggregate purchase price;
• compare the assets being bought and sold; and
• review in aggregate key indicators of the projects’ relative health such as yield, returns and cover ratios.

Mazars follow a transparent approach to valuation modelling. Starting with the last bank approved model we incorporate adjustments to the model’s assumptions and calculations in a flexible manner. This allows the user to amend them with ease and identify the variance in NPV caused by each adjustment both separately and in aggregate. The adjustments incorporated are based on a combination of financial, model and technical due diligence findings and advice provided by the buyers/sellers in relation to items such as macro economic assumptions and other input configurations.

These adjustments may include items such as:  

• modelling of insurance/lifecycle risk sharing mechanisms;
• modelling of basis swaps (where permitted);
• changes to macro economic assumptions;
• changes to SPV management cost assumptions;
• removal of artificial distribution delays;
• optimisation of working capital balances;
• optimisation of deposit interest calculations;
• corrections of model errors;
• modelling under swap benefit; and
• modelling of interest on VAT balances held.

Sensitivities

In order to understand how sensitive the yield, returns and cover ratios are to fluctuations in macro economic and other assumptions, it is important to be able to run and report these results and compare them against the current valuation. Our approach to sensitivities allows for the smooth running and reporting of the results and clear comparison and analysis at both project level and on an aggregated portfolio basis.