We work with private equity firms and their portfolio companies, and advise on more than 100 transactions each year. We are a strategic partner, who understands your aspirations and acts swiftly to help you stay one step ahead. You can trust us to act as a partner to senior management and PE sponsors during complex transactions and decision-making processes and to help free up senior management’s time. The bespoke advice you receive is delivered by an international team of cross-sector specialists, at a transparent fee.
Private Equity Firms
Our strategies are clear and straightforward because we have a complete understanding of private equity investment models. In partnership with private equity sponsors, we work to appraise and hedge risk in the fund, and appreciate the specific issues and exposures that impact returns. Our aim is to protect the profitability of your investments.
For investee companies, our in-depth knowledge of the hedging requirements, at the point of acquisition and beyond, allows us to take into account all aspects of financial risk. Our expert team can also act as an extension of your finance team, providing specialist advice when you need it.
We provide a range of hedging strategies and derivative solutions designed to reduce volatility and protect your profitability.
We arrange cost-effective solutions to eliminate FX and IR ‘Event Driven’ Risks (M&A, IPO, Tender Offer, Project Finance etc)read more
We analyse the target’s FX risk during the Due Diligence stage of an acquisition and advise on how the risk might best be mitigated on an ongoing basisread more
Too often, FX hedging programmes are only reviewed after a turbulent period where they failed to mitigate FX risk. In fact FX policy needs continuous attention and refinement to protect the business.
Both private equity funds and corporates should be consistently revisiting their policy to ensure optimal hedging strategies.
That said, change of ownership often creates an opportunity to review the existing FX policy. At the very least, a PE house should be fully aware of the FX risk in a potential investment and how it is currently managed, if at all.
When conducting FX Due Diligence work on a potential investment for a Private Equity house investor, we evaluate the business’s FX exposure and its potential impact on key metrics (EBITDA, cash flow, financial ratios etc.), ensuring that the investor is aware of the exposure.
Post acquisition we often work with the investee company, assisting in formulating/improving the hedging strategy and assessing its performance. Optimal FX management necessitates working within credit constraints and around the inevitable fallibility of forecasts, whilst also considering natural hedges.
Often mandatory, but with the right advice you can make it work in your favourread more
Management of a transaction’s interest rate exposure is often a condition of sanction from providing banks who directly benefit from providing ancillary services. We evaluate your interest rate risk and create a hedging strategy that satisfies any particular lending requirement and meets your business objectives. Unlike the bank, our strategy advice is impartial. As an independent firm, we have no other motive than to deliver a strategy that is best aligned to your business goals.
Mitigate losses and risk associated with currency fluctuationsread more
Importers, exporters and investors with overseas assets are all exposed to foreign exchange risk. Failure to analyse risk and implement a bespoke hedging strategy can lead to significant losses.
We evaluate your business’s FX exposure: transactional and translational; short, medium or long term. Some FX exposures are easily identifiable, while others are less obvious. Optimal FX management involves the ability to work within credit constraints and around the inevitable fallibility of forecasts, while also considering natural hedges.
Your commodity exposure is connected to your commercial arrangements. We understand thatread more
We structure hedge solutions that match your objectives. We understand the interaction between your commodity exposure and other commercial arrangements such as debt covenants. Our pricing capabilities provide complete transparency on pricing, and our experience and contacts within this specialised area mean we can source the best hedge counterparties.
How do you mitigate exposure to index-linked income/expenditure? We assist with this, and moreread more
Inflation risk can arise within a business either explicitly, through a contractual arrangement, or implicitly, through cost or revenue base. It is important when assessing inflation hedging requirements to identify any natural offsetting hedge already present in your business. We can advise you on how to mitigate exposure to index-linked income/expenditure. We offer you our expertise to assess the risk, ensure that the appropriate hedging structure has been chosen and negotiate fair and transparent pricing with the hedge provider.
We support your accounting teams to effectively manage your derivativesread more
Whether your accounting team requires support or additional expertise with hedge accounting under IFRS, USGAAP and new UKGAAP, or derivatives valuations for internal management or financial reporting, we tailor our services to meet your needs. Our service can ensure accuracy of the reporting of your derivative instruments. Through the full life cycle of hedge accounting, or just one part of the process, we can help ease the workload on your accounting team. We provide guidance on whether to apply hedge accounting, help you meet documentation and effectiveness assessment requirements, and deliver the analysis needed for the relevant disclosures. If you need to convert into IFRS, US GAAP - or into the new UK accounting standard, FRS 101/102 - we can complete a comprehensive analysis of the impacts and considerations and support you with your conversion project. With valuations, we understand that the introduction of CVA/DVA adjustments has deepened the complexity of traditional counterparty bank valuations. We use sophisticated technology and processes to deliver bespoke derivatives valuations.
How do you manage surplus cash? Our independent advice ensures a strategy that’s best for youread more
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, as well as factors such as risk versus return and complete capital preservation. We advise on a wide range of short-term investment opportunities, including bank treasury deposits, call accounts and money market funds, designing and documenting 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.
Unbiased and expert opinion in hedging disputes based on forensic analysis and cross-sector experienceread more
If you have a hedging dispute related to hedge mis-selling, our experience and independence means we are well placed to help with the resolution of your case. We look at the core objectives of the borrower, review all correspondence and documentation pertaining to the hedge and the pricing, as well as any alternatives which may have been offered. Our systems 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 and our opinion on what would have been the most suitable course of action are formulated. This is used to benchmark the hedge under dispute and provide guidance on an acceptable level of redress.
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.
We constantly monitor the regulatory environment and analyse how changes will impact your business.read more
We constantly monitor the regulatory environment and analyse how changes will impact your business. No matter how complex your organisation’s structure, we can ensure you meet AIFMD, EMIR and Dodd-Frank requirements. In a rapidly changing regulatory environment where your investors and regulators need reassurance that you are up-to-date with regulation, you can trust that our advice is clear, independent and correct.
Benoit Duhil de Benaze
Have you got a question about how you hedge your financial risks, or structure and arrange your debt?
Find out how we can help you by contacting us today.