For a long time, we have been concerned by the common practice in Over the Counter (“OTC”) derivative markets of end users conducting all their hedging activity with a small group of their “relationship” banks.
Corporate finance theory has long established that companies should maximise their Enterprise Value no matter who the shareholders are.
Banks have traditionally provided funding and hedging acting as principals. The financial crisis has critically reduced banks’ appetite for risk, thus often reducing their role in several traditional investment banking functions to that of ‘matched brokers’.
Finance Arrangement & Execution
TradeRisks assists clients in raising cost effective financing for the project, whether structured as a PPP/PFI or a conventional project financing. TradeRisks can assist in the evaluation, sourcing and arranging of cost effective and committed debt (senior, mezzanine, subordinated) and equity financing for the project and offers borrowers the full spectrum of services from credit rating to deal structuring, documentation and placement. Our finance arrangement and execution services include:
- Developing preliminary project funding strategy and finance plan
- Identifying funding sources for both debt and equity
- Running funding competitions (e.g., bank funding vs. capital markets funding)
- Preparing/reviewing financial bids and reviewing/validating financial terms sheets
- Negotiating with banks and Mandated Lead Arrangers
- Negotiating optimum capital structure and security package
- Developing and executing optimum hedging and funding strategy
- Ensuring value for money through transparency and competition on hedging
- Facilitating direct access to end investors and swap counterparties (e.g. pension funds)
