Regulated Utility – Generating yield in regulated markets

Situation and Challenge

  • Regulated Utility acquired by two large infrastructure funds required experienced , commercial and well connected executive to deliver the following
  • Maximising a complex financing structure inside a regulated price and revenue framework [OFGEM]
  • Securing a fully rated bond listing 9 weeks from appointment
  • Optimising the up coming regulatory price review and how to convert to investor yield within OFGEM parameters
  • Understand how to create long term and increased investor yield within these constraints

Approach

  • Add new skills to the finance team covering treasury, tax and complex financial modelling
  • Bring in subject matter experts to support the bond listing and credit rating process to be effected in 8 weeks
  • Build a portable financial model reconciling managements view of performance with the alternate language used by government for price reviews using domain experts [Lazuli Solutions]
  • Revisiting operating assumptions and suggesting and delivering a vertical integration of the distribution companies operating arm generating improved yields and opportunities into the future
  • Embedding the highest level of control and governance into a highly complex and technical environment with top flight skilled staff

Outcomes

  • Delivered £1.2bn full business securitisation, over subscribed bond and full hedging package at market best rates
  • Introduced via an existing RTC network of relationships, an opportunity to acquire a useful , value adding asset.
  • Sought and gained approval for a vertical integration of a network operations business , improving the value chain
  • Ensured the financial structure was designed to outperform the OFGEM regulatory review by careful, strategic hedging strategies
  • Clarifying and maximizing the treasury and tax positions at all times
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