A large UK based utility was purchased by a consortium of infrastructure investors in a highly leveraged transaction. As its income stream was regulated by the UK government and therefore influenced economically by the level of British inflation, the group required a hedge to be put in place to manage the spread between this income and GBP denominated interest rates.
The consortium appreciated the fact the large scale and the long duration of the transaction meant a ‘constructively disinterested’ third party would be required to manage the hedging process in a professional manner.
- Employ sophisticated modelling techniques to gain a detailed understanding of the exposure’s many facets;
- Develop solid working relationships with each of the three banks involved;
- Provide independent and constructive input into the implementation strategy;
- Manage a professionally orchestrated the execution process.
Results & Recommendations
We devised an appropriate execution strategy for the consortium while managing the transaction in a manner which instilled and retained the confidence of all participants.