The barriers

We address two common barriers to institutional capital.

The investment may need a different structure, risk allocation, scale, term or currency. Investors may need better evidence to assess an unfamiliar strategy. In other cases, the organisation needs access to a different investor base to finance its next stage of growth.

The financing structure needs to change

We start with what suitable investors require, then determine how to structure the financing and allocate the risks. This can involve senior debt, junior and preferred capital, equity, guarantees, concessional capital or corporate investment. The aim is to make the investment suitable for a wider range of capital providers.

The investor base needs to change

A specialist manager may have a strong investment record but lack the relationships and processes needed to raise institutional capital. A corporate platform may be seeking third-party investment for the first time. A newly independent business may have an experienced team and track record but need investor relationships of its own. We help each build the investment case and reach the investors suited to its next stage.

The components

The full cost of raising capital.

The cost includes the financing terms, advisory fees, preparation and management time. Together, these can make an otherwise viable investment uneconomic.

  • Risk

    Investors may charge a premium for risks that can be reduced, transferred or better understood through stronger evidence.

  • Structure

    The type of capital, repayment schedule and investor rights need to suit the investment. A mismatch can increase financing costs, dilute ownership unnecessarily or create pressure to repay before the asset generates cash.

  • Regulation

    The choice of domicile and regulatory structure affects which investors can participate and what the fund costs to establish and operate. We design these arrangements around the intended investor base from the outset.

  • Information

    We prepare the information investors will need before diligence begins. Gaps create uncertainty, delay decisions and add friction.

  • Distribution

    Multiple advisers, duplicated investor approaches and layered fees add to the cost of a raise.

  • Time

    A long, intensive fundraising process takes management time away from running the fund or business.

Investor eligibility

An attractive return does not make an investment eligible.

Investor mandates can rule out an opportunity before its merits are considered. Financing design can address some of those restrictions.

The instrument does not fit the mandate

Structure the investment in a form the mandate permits. This may involve a different instrument or vehicle, with terms that reflect the investor’s requirements and the underlying investment.

The jurisdiction sits outside the permitted universe

Where the restriction concerns the vehicle’s domicile, establish it in a jurisdiction the investor can accept.

The evidence does not meet investment committee requirements

Prepare clear track record attribution, obtain independent verification and build a model that can withstand detailed scrutiny.

The investor cannot accept a particular risk

Allocate that risk to a party able to bear it, through subordinated capital, a first-loss layer or a guarantee from a balance sheet the investor already accepts.

The regulatory arrangements do not allow participation

Put the necessary arrangements in place, working with specialist counsel and regulated partners. These may include placement filings, an alternative investment fund manager or a chaperone arrangement for US investors.

Senior

Private institutional capital

Paid first, absorbs losses last

Mezzanine

Private or public capital

Takes the loss once first loss is gone

First loss

Concessional or public capital

Absorbs losses first

Losses are absorbed from the bottom up and payments made from the top down. Placing concessional or public capital at the base, or a guarantee over the senior tranche, lets an investor hold a risk they could not otherwise hold. GEEREF is the example: the EU, Germany and Norway took a deferred return so the private capital we raised could sit senior.

We cannot change the fundamental economics of an asset. But we can often change who holds which risk, how it is evidenced and how it is financed, and therefore whether an investor can participate.

Impact

The impact case needs the same rigour as the investment case.

Investors with impact mandates run their own diligence. A case that will not survive it excludes them, whatever the financial returns.

We assess expected outcomes against what would otherwise happen, using recognised methodologies such as Project Frame for climate impact. We distinguish displacement from new demand, account for improvements in competing technologies and identify the assumptions that most affect the result.

This work informs the investment case before fundraising begins and carries through into measurement and reporting as the investment develops.