”Concentrate on your goals as we manage your financial risks for you in segregated pools.”
Myndos Capital is a specialist Emerging Markets investment manager with on the ground experience in CEEMEA Emerging Markets. We aim to innovate, offering new strategies and methods that provide an opportunity for investors to participate in global and Emerging Markets trends.
We offer a wide range of different equity, debt and regional investment strategies. Our active management approach has been tailored to help meet the requirements of changing investor needs. Myndos Capital adapts its services according to its clients’ needs. Our open architecture approach prevents any conflict of interest, placing performance at the heart of our concerns.
We recognize the growth and cost base improvements in fintech investment management and expect to manage 100% of assets through order processing technologies in client accounts in less than 5 years. We have taken steps to move out asset management platforms to cloud based technologies and we do offer the services for early adopter clients.
Please contact us for further information.
Structured Financing for Public Private Partnerships and Large Scale Concessions
- Equity Contributions
- Debt Contributions
- Bank Guarantees/ Letter of Credit/ Performance Guarantees
- Bond/Capital Markets Financing
- Mezzanine/Subordinated Contributions
- Intercreditor Agreement
- Commercial bank financing (local/ international)
- Capital markets financing (local/ international)
- Equity funds
- Export credit agencies
- Development finance institutions
- Bilateral agencies
- Multilateral Development Banks
- Sovereign wealth funds
Corporate or On-Balance Sheet Finance
The private operator may accept to finance some of the capital investment for the project and decide to fund the project through corporate financing – which would involve getting finance for the project based on the balance sheet of the private operator rather than the project itself. This is typically the mechanism used in lower value projects where the cost of the financing is not significant enough to warrant a project financing mechanism or where the operator is so large that it chooses to fund the project from its own balance sheet.The benefit of corporate finance is that the cost of funding will be the cost of funding of the private operator itself and so it is typically lower than the cost of funding of project finance.
One of the most common – and often most efficient – financing arrangements for PPP projects is “project financing”, also known as “limited recourse” or “non-recourse” financing. Project financing normally takes the form of limited recourse lending to a specially created project vehicle (special purpose vehicle or “SPV”) which has the right to carry out the construction and operation of the project. It is typically used in a new build or extensive refurbishment situation and so the SPV has no existing business. The SPV will be dependent on revenue streams from the contractual arrangements and/or from tariffs from end users which will only commence once construction has been completed and the project is in operation.
Guarantees, including guarantees of debt, exchange rates, convertibility of local currency, offtake purchaser obligations, tariff collection, the level of tariffs permitted, the level of demand for services, termination compensation, etc.;
Indemnities, e.g. against non-payment by state entities, for revenue shortfall, or cost overruns;
Hedging of project risk, currency exchange rates, interest rates or commodity pricing; or
Contingent debt, such as take-out financing (where the project can only obtain short tenor debt, the government promises to make debt available at a given interest rate at a certain date in the future) or revenue support (where the government promises to lend money to the project company to make up for revenue short-falls, enough to satisfy debt-service obligations).
The government may wish to use its support to mobilize private financing (in particular from local financial markets), where that financing would not otherwise be available for infrastructure projects. The government may want to mobilize local financial capacity for infrastructure investment, to mitigate foreign exchange risk (where debt is denominated in a currency different than revenues), to replace retreating or expensive foreign investment (for example, in the event of a financial crisis) and/or to provide new opportunities in local financial markets. But local financial markets may not have the experience, or risk management functions, needed to lend to some sub-sovereign entities or to private companies on a limited recourse basis.
Project Development Funds
The large amount of upfront costs for procuring PPP projects, in particular the cost of specialist transaction advisers often meets with strong resistance from government budgeting and expenditure control. But quality advisory services are key to successful PPP development, and can save millions in the long-run. Therefore, funding, budgeting and expenditure mechanisms for project development are important to a successful PPP program, enabling and encouraging government agencies to spend the amounts needed for high quality project development.
FX & Commodities Overlay & Risk Management
In PPPs, an optimal risk allocation generally means that a risk should be allocated to the party that is best positioned to manage or bear that risk, or more specifically, the party that can accept the risk at the lowest costs. However, regarding currency risk in these markets, this optimal risk allocation may not be so straightforward. A typical private sector developer has no influence over the exchange rate.
Developers and investors have no control over the exchange rate and will therefore try to either manage the risk (see below for risk management strategies) or price the exchange rate risk in their rates/tariffs. As currency risk can also have an upside (or lower downside than expected), it could create a windfall for the developers/investors. From the lenders’ perspective, beyond receiving interest payments on the principal, there is no potential for upside. Lenders will therefore typically not accept any significant currency risk and expect the developer to ensure that any currency risk the project may assume will not affect its debt service.
Currency overlay is a financial trading strategy or method conducted by specialist firms who manage the currency exposures of large clients, typically institutions such as pension funds, endowments and corporate entities. Typically the institution will have a pre-existing exposure to foreign currencies, and will be seeking to:
- limit the risk from adverse movements in exchange-rates, i.e. hedge; and
- attempt to profit from tactical foreign-exchange views, i.e. speculate.
The currency overlay manager will conduct foreign-exchange hedging on their behalf, selectively placing and removing hedges to achieve the objectives of the client.
Many types of currency overlay accounts are more focused on the speculative aspect, i.e. profiting from currency movements. These so-called ‘pure alpha mandates’ are set up to allow the manager as much scope as possible to take speculative positions. As such, they are similar in nature to foreign-exchange hedge funds in terms of objective and trading style. Currency overlay is a relatively new area of finance; the first institutional overlay mandate was awarded only in 1983 when the UK water Authorities Superannuation Fund awarded a contract to Record Currency Management.
Please contact us for further information.