Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Infrastructure investment:
legal constraints and issues
Clifford Sims and Edward Johnson
24 June 2014
2squirepattonboggs.com 2squirepattonboggs.com
 Introduction: some fundamental issues
 Investment powers for public and p...
3squirepattonboggs.com 3squirepattonboggs.com
 Fiduciary duties and ESG factors
 Pension funds as lenders/investors: cou...
4squirepattonboggs.com 4squirepattonboggs.com
Public (LGPS) schemes
 Investment Regulations 2009
 Statement of Investmen...
5squirepattonboggs.com 5squirepattonboggs.com
Vehicle Liquidity? Transparency
Collective Investment Scheme
• Unit Trust
• ...
6squirepattonboggs.com 6squirepattonboggs.com
PPP Primary Investment Structure
PROJECT CO
Government Body
HOLDCo
PROJECT
A...
7squirepattonboggs.com 7squirepattonboggs.com
PPP Secondary Investment Structure
Pension Fund
Joint Venture
SHARE SALE
AGR...
8squirepattonboggs.com 8squirepattonboggs.com
PPP – Govt. backed long-term guaranteed
revenue?
Govt. Body
Loan Note Coupon...
9squirepattonboggs.com 9squirepattonboggs.com
Aggregator model
Investor
10squirepattonboggs.com 10squirepattonboggs.com
 Nature depends on when and how you invest
 Exercisable indirectly or vi...
11squirepattonboggs.com 11squirepattonboggs.com
 Background
 Limited Partnership Act 1907 inflexibilities:
 “Management...
12squirepattonboggs.com 12squirepattonboggs.com
 Establish contractual rights as early as possible
 side letters
 Most ...
13squirepattonboggs.com 13squirepattonboggs.com
 Time to create new vehicle
 Resources, personnel, deal flow, expenses
...
14squirepattonboggs.com 14squirepattonboggs.com
Clifford Sims
Tel: 020 7655 1193
Email: clifford.sims@squirepb.com
Edward ...
15squirepattonboggs.com 15squirepattonboggs.com
This information has been prepared as a general guide and does not constit...
16squirepattonboggs.com 16squirepattonboggs.com
Worldwide Locations
Upcoming SlideShare
Loading in …5
×

Infrastructure Investment: Legal Constraints and Issues

537 views

Published on

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

Infrastructure Investment: Legal Constraints and Issues

  1. 1. Infrastructure investment: legal constraints and issues Clifford Sims and Edward Johnson 24 June 2014
  2. 2. 2squirepattonboggs.com 2squirepattonboggs.com  Introduction: some fundamental issues  Investment powers for public and private sector schemes  Structural legal issues and the choice of vehicle  Lessons from Henderson PFI Secondary Fund II Overview
  3. 3. 3squirepattonboggs.com 3squirepattonboggs.com  Fiduciary duties and ESG factors  Pension funds as lenders/investors: counterparty risk and credit security  Limited liability?  Termination rights  Management control Fundamental legal issues
  4. 4. 4squirepattonboggs.com 4squirepattonboggs.com Public (LGPS) schemes  Investment Regulations 2009  Statement of Investment Principles  Procurement  Knowledge and understanding: Public Service Pensions Act 2013 Private sector schemes  Trust deed and rules  Statement of Investment Principles  Knowledge and understanding: Pensions Act 2004 Investment powers/framework
  5. 5. 5squirepattonboggs.com 5squirepattonboggs.com Vehicle Liquidity? Transparency Collective Investment Scheme • Unit Trust • Investment Company • Authorised Contractual Scheme • Limited Partnerships x ? Insured Fund x ? Direct IMA x √ Real Estate Investment Trusts √ √ Direct Equity in Infrastructure Companies √ √ Structural issues: characteristics of alternative vehicles
  6. 6. 6squirepattonboggs.com 6squirepattonboggs.com PPP Primary Investment Structure PROJECT CO Government Body HOLDCo PROJECT AGREEMENT Construction, Operation & Maintenance SUPPLY CHAIN Infrastructure Fund Sponsor/Investor Senior Funder JOINT VENTURE SENIOR DEBT CREDIT AGREEMENT MEZZANINE CREDIT AGREEMENT Mezzanine Funder Pension Fund LOAN NOTES
  7. 7. 7squirepattonboggs.com 7squirepattonboggs.com PPP Secondary Investment Structure Pension Fund Joint Venture SHARE SALE AGREEMENT PROJECT 1 PROJECT 1PROJECT 1 PROJECT 1 LOAN NOTES & DIVIDEND RIGHTS Government Body Infrastructure Funder & Investor
  8. 8. 8squirepattonboggs.com 8squirepattonboggs.com PPP – Govt. backed long-term guaranteed revenue? Govt. Body Loan Note Coupon & Dividend Pension Fund Rent/Unitary Charge Pays Rent/Unitary Charge Hold Co Debt ServiceProject Co Senior Lender SENIOR DEBT LOCK-UP
  9. 9. 9squirepattonboggs.com 9squirepattonboggs.com Aggregator model Investor
  10. 10. 10squirepattonboggs.com 10squirepattonboggs.com  Nature depends on when and how you invest  Exercisable indirectly or via derivative actions  Price of exercising rights against third parties? Structural issues: Investor rights
  11. 11. 11squirepattonboggs.com 11squirepattonboggs.com  Background  Limited Partnership Act 1907 inflexibilities:  “Management” is very wide  Removal of GP no help  PPM not binding  No misrepresentation claim  No negligence claim  Construction of documents key  No breach of investment restrictions or objectives Lessons from Henderson PFI Secondary Fund II (1)
  12. 12. 12squirepattonboggs.com 12squirepattonboggs.com  Establish contractual rights as early as possible  side letters  Most Favoured Nation clauses  Understand/agree investment objectives and restrictions before investing  Due Diligence on proposed/actual portfolio: investment consultancy  Indemnities – from GP/Manager?  Understand underlying insolvency risk of investee entities  Is Limited Partnership still the right model? Lessons from Henderson (2)
  13. 13. 13squirepattonboggs.com 13squirepattonboggs.com  Time to create new vehicle  Resources, personnel, deal flow, expenses  Investor-friendly terms, but still LP Lessons from the Pension Infrastructure Platform
  14. 14. 14squirepattonboggs.com 14squirepattonboggs.com Clifford Sims Tel: 020 7655 1193 Email: clifford.sims@squirepb.com Edward Johnson Tel: 020 7655 1097 Email: edward.johnson@squirepb.com Questions?
  15. 15. 15squirepattonboggs.com 15squirepattonboggs.com This information has been prepared as a general guide and does not constitute advice on any specific matter. We recommend you seek professional advice before taking action. We accept no liability for any action taken or not taken as a result of this information. The small print
  16. 16. 16squirepattonboggs.com 16squirepattonboggs.com Worldwide Locations

×