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Project Finance & Infrastructure

Overview

Over 25 years’ experience advising on infrastructure and renewable energy projects.

The infrastructure market is uniquely complex and the long-term commitment of major project investment exposes you to myriad financial risks.

JCRA’s Project Finance and Infrastructure team advises on both PPP engagements and project finance mandates.  We are a leading advisor to government authorities worldwide, developers, infrastructure funds, and institutional investors. We have expertise in all types of renewable energy projects (onshore and offshore windfarms and solar), toll roads, bridges, smart metering, power generation and airports.

We work with you to create flexible, transparent hedging strategies that reduce your costs and financial risk exposures throughout the project lifecycle and beyond.

How we help

Interest Rate Hedging

Interest rates changes can adversely impact the profitability of a company.

Interest rate exposure needs to be understood and managed in the context of the sensitivity of the business to fluctuations in rates.

Rates risk typically arises from floating rate borrowings, which means that hedging solutions often need to satisfy lending conditions, while still supporting business needs.

We have experience in all interest rate derivative markets which means we can assist you irrespective of the jurisdictions in which you operate.

We advise on hedging strategies, negotiate pricing, assist with documentation and benchmark rates; helping you to achieve the best pricing possible.

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FX Hedging

Failure to identify, evaluate and hedge against foreign exchange risk can lead to significant losses for your business.

Our experience in advising on foreign exchange risk means we can guide you through any challenge you face – whether that’s evaluating your exposure in relation to competitors, managing the uncertainty around the timing and size of exposures or managing liquidity and credit constraints of a hedging programme.

JCRA will work with you to evaluate your FX exposure and then design and execute bespoke hedging strategies that are aligned with your objectives.

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Commodity Hedging

We understand the interaction between your commodity exposure and other commercial arrangements.

Commodity risk covers a broad range of exposures creating complexity across various areas of your business and often introduces currency risk. JCRA understands this interaction between your commodity exposure and your other commercial arrangements such as debt covenants and supplier arrangements.

Our pricing capabilities provide you with complete transparency, and our expertise in this area allows us to source the best hedge counterparties for your complex needs.

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Inflation Hedging

Inflation risk can arise within a business either explicitly, through a contractual arrangement, or implicitly, through cost or revenue base.

Risk associated with index-linked income or expenditure is particularly prevalent in long-term contracts commonly found in project finance, utility companies, and rental agreements.

Our team can advise you on how to evaluate your exposure to inflation, and identify any natural offsetting hedge already present in your business.

We can then ensure that the most appropriate derivative product chosen and will negotiate fair and transparent pricing on your behalf.

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Deal Contingent Hedging

Financial risk arising from a new investment, acquisition,  merger or  IPO can be challenging to effectively hedge.

A deal contingent hedge is a cost-effective solution to cover these risks and allows the client to avoid hedge termination costs as the hedging agreement dissolves if the transaction falls through as a result of pre-defined conditions precedent (CPs) not being met.

Since deal contingent derivatives are tailor-made to each transaction, pricing is, by definition, less transparent than for vanilla products. Strict protocol and process management between competing banks leads to optimal outcomes.,

Deal contingent hedging is required during the intensive period around the exchange, when stakeholder time is scarce and expediency is critical.

From designing an optimal hedging strategy to implementation with competitive pricing, our experience and contacts in the market mean we are able to offer a streamlined and transparent process with a quick turnaround.

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Hedge Accounting and Valuations

We can ensure accuracy in the reporting of your derivative instruments.

Accounting for derivatives under IFRS (IA39 and IFRS9), USGAAP and other local standards (e.g. new UK GAAP, FRS101 and FRS102) can often be complex to understand and implement. Entities wishing to avoid earnings volatility due to hedging activities that could adversely impact EBITDA and distributable reserves need to understand the accounting implications of hedging.

We can support the hedging decision from the outset by providing expert accounting assistance, recommending the most appropriate hedging instruments from an accounting perspective.  We can then help you to implement the most effective strategy to reduce or neutralise income statement volatility.

We make post-trade accounting for derivatives easier, assisting with post-trade valuations, documentation, disclosure notes and stakeholders questions (mainly external auditors) on a monthly, quarterly or annual basis.

We can also assist you in applying hedge accounting.

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Cash Management

The risks inherent in managing surplus cash are counterparty credit risk, concentration risk and liquidity risk.

We work with you to establish the intentions for the cash holdings and consider the relative importance of security, liquidity and yield.

We advise on cash from a risk management perspective and will incorporate a wide range of short-term investment opportunities, including bank treasury deposits, call accounts and money market funds, and design and document bespoke cash management policies and strategies.

Our independence means we refuse any introductory commissions from cash product providers, instead requesting that they divert this payment to you in the form of an improved rate of return.

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Dispute resolution and expert witness

If you have a dispute related to hedge mis-selling, our experience and independence mean we are well placed to help with the resolution of your case.

Whether in mediation or in a full litigation under the CPR35 guidance for Independent Expert Witness, our systems can recreate historical markets in which the instrument was traded to provide context and determine whether the hedge was suitable and appropriate at the time.

A hypothetical hedging strategy is designed alongside the cost implications and is used to benchmark the hedge under dispute and provide guidance on an acceptable level of redress using the output of the counterfactual calculation.

You may need an expert witness if you have initiated a legal claim and require independent input as part of the litigation process. We can assist under instruction from legal counsel on the case. Our service encompasses the aspects described above and delivers an in-depth appraisal of the communication between defendant and claimant pre, during and post hedge execution.

In the UK, all reports comply with requirements set out in Practice Direction 35.

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Clients we have helped

These are just some of the companies we have worked with:

 

Project Finance Successes

Success stories
Hedging advice for a Dutch PPP
Project Finance & Infrastructure, Public Sector July 2018
Success stories
Fort McMurray West
Project Finance & Infrastructure, Public Sector June 2018
renewable-energy
Success stories
Renewable project with multiple funding sources
Project Finance & Infrastructure November 2017

Leading Project Finance Experts

View full team
Ian MacFarlane Director

T: +44 (0)207 493 3310
Email Ian

Rishin Patel Director

T: +44 (0)207 493 3310
Email Rishin

Lionel Kruger Director

T: +44 (0)207 493 3310
Email Lionel

Hugo Cusani Associate Director

T: +44 (0)207 493 3310
Email Hugo