As a service element of any "sell side" (or "procurer side") transaction advisory mandate under a competitive tender, DCS advisors can provide our public and private sector clients with "stapled financing" services. In the context of a PPP/P3, an M&A or privatization, or a development/construction or service contract, "stapled financing" generally involves the pre-commitment of the seller (or procurer) or a seller- (or procurer-) arranged lender or investor, who is able to provide financing for all or a portion of the up-front costs related to the development/construction or implementation of a project or provision of a service, or for the acquisition of an asset or company. Stapled financing may also be in the form of a fee-based guarantee, letter- or line-of-credit. In all cases, stapled financing shall be universally available, on a non-discriminatory basis, to all qualified investors/bidders (subject to confirmatory due diligence) at the same terms and pricing.
Stapled financing is generally offered as an optional (on a "take-it-or-leave-it" basis) debt, equity or quasi-equity/debt instrument, and which is provided at the same standardized terms and conditions to all qualified bidders in a competitive tender process. Stapled financing can be particularly useful in cases where our seller (or procurer) client is uniquely positioned to offer attractive financing to all competing bidders, which is anticipated to increase investor/bidder competition and favorably impact bid offers. Stapled financing may be pursued in cases where we advise our client that other commercial, institutional and capital markets financing sources and types accessible to investors/bidders may be constrained or the terms and costs of such financing may be unfavorable. Stapled financing, in other cases is pursued more or less out of necessity, in the case where there may be a clear "financing gap" that may exist between the capital costs of a project relative to all available prospective debt and equity resources available to fund the project.
Particularly in the case of our public sector clients (such as governments and government-owned or controlled enterprises), it is not uncommon for these entities to provide "stapled financing" in the form of government or governmental-backed loans, minority/preferred shareholding and sovereign guarantees; and/or international/development finance institution (IFI/DFI) credit, guarantees and other support. In some cases, our private sector sell-side (or procurer-side) clients may also be well-positioned to provide "stapled financing" which may be directly, via relationship commercial lenders/investors, through supporting governmental entities and/or IFI/DFI relationships.
DCS is well positioned to advise our "sell-side" (and "procurer side") clients as to which stapled financing opportunities may exist, as well as the potential advantages and benefits that may be realized through inclusion of a stapled financing mechanism in a competitive tender. To the extent that our client decides to pursue stapled financing, we will provide full transactional support with respect to negotiating final terms, executing financing agreements and achieving a timely financial closing between the financing provider and the successful buyer/contractor.
DCS advisors are able to provide stapled financing services on a stand-alone basis on behalf of clients who are pursuing a PPP/P3, M&A/privatization or a development/construction/financing/services contracting transactions. In most cases, as stapled financing services will be only one element of a larger project delivery program, DCS will also be providing numerous other complementary transaction advisory services in relation to other transaction elements. Our preference is always to provide such comprehensive transaction advisory services and coordinate all elements of the transaction, including investor/bidder outreach services on behalf of our clients.
Under any stapled financing services mandate, DCS will draw from our global network of veteran industry expert advisor affiliates and our relationship consultants in order to assemble the most appropriate team to match the specific needs of the transaction at hand. This will always include leadership of DCS affiliate experts who possess decades of global public and private sector experience related to the specific sector and transaction type. In any stapled financing advisory mandate, our preferred role is always to serve as the lead project/program manager. Within this role we are also able to assist in the selection and procurement (or subcontracting) and management of the other advisors and consultants, including local and international legal, tax, commercial advisors or other specialized advisors, as the specific transaction may require. To the extent that other third-party advisors are required, there are many value added advantages of allowing DCS to assist in the procurement of these advisors. First, DCS expert affiliates themselves possess many of the legal, technical and commercial skill sets and we are best positioned to determine which additional outside third-party skill sets are required and which firms or individuals should be hired in these roles. Secondly, stapled financing advisory services require the organizational management and coordination of many simultaneous workstreams. DCS advisors are experts in project and program management services and are ideally suited to manage and coordinate a multi-dimensional advisory team most efficiently and effectively.
Complementing our stapled financing advisory services, DCS advisors offer the following complementary advisory services that may be applicable, dependent on the specific transaction situation.
DCS experts provide stapled financing advisory services in the following sectors that we specialize in. Please click on the below links to learn more about the sectors that we cover:
DCS experts provide comprehensive stapled financing services to the following categories of clients: