SF group uses innovative methods to provide private debt financing

REYL Group recently established a new structured finance department as part of the Corporate Advisory and Structuring (CAS) group. It has a heavy focus on private debt - mainly on a secured and securitised basis - to facilitate funding across a range of asset classes and jurisdictions, including initial transactions in commodities and project finance.

Ante Razmilovic, who joined as head of the new structured finance group earlier this year, says that the firm likes to run the complete deal chain structure from start to finish, including origination and structuring. Additionally, it constructs hedges and oversees placement and also acts in an advisory role for companies, throughout the process.

 “We are focused on the private debt space”, adds Razmilovic, “and utilise securitisation technology to facilitate the financing of secured deals. Our approach is to look for opportunities where investors are rewarded for the illiquidity premium and our willingness to deal with structural complexities. In doing so, this typically provides investors with additional security.”

The group is asset class and geographically agnostic, focusing on where the “economics” work and where an opportunity presents itself, in terms of capital shortages and market dislocation. Recent focal points have included energy, emerging market development projects and infrastructure.

Razmilovic elaborates: “We are currently working on two upstream oil and gas projects, one in West Africa and one in the US, both of which involve the securitisation of offtake proceeds. We are probably currently overweight in emerging markets, including Latin America, Africa and South East Asia.

“Cashflows will be generated from the sale of oil over ten years,” Razmilovic continues, “with the revenues protected by a hedging facility with a price guarantee, before flowing through a cash waterfall inside a bankruptcy remote vehicle. The securitisation vehicle then issues listed clearable notes which are fully transferable.”

James Spooner, who recently joined the new structured finance department as md, says that it is a “pretty standard structure” using familiar technology, but applied in a slightly different way. This is deliberate, he says, because both the firm’s clients and investors prefer well-structured robust transactions, as far as possible.

Spooner adds that the firm is also engaged in project finance “with a development angle”, meaning it has “significance to the infrastructure of a country, to jobs, the local economy or environmental benefits.” As part of this, his firm looks “to work with DFIs and tries to find projects at an early stage. We then look at how these may be of interest to private investors and how we can facilitate this investment.”

Looking to the future, Razmilovic says that his firm is challenged most, “not so much by the macroeconomic environment” but more, as a smaller team, in displaying the discipline to choose the right deals to work on. This is particularly so as the group wants to avoid becoming overweight in any individual area.

Spooner adds that the structured finance unit is fully operational to deliver on its current plan, leveraging off strategic partnerships with third party individuals, while benefiting from offices in strategic locations. He concludes: “We are based in London but benefit from REYL’s global presence, in particular with the offices in Singapore and Dubai as well as our head office in Geneva, which helps with our focus areas in commodities and project finance deals there.”

Richard Budden