DEBT & CAPITAL ADVISORY - PWC
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Debt & Capital Advisory
Debt & Capital Advisory
December 2017
Introduction to
PwC Debt &
Capital Advisory
11 PwC Debt & Capital Advisory
PwC Debt & Capital Advisory is a team of specialist providing independent
financial advisory services to clients in debt financing or capital raising
Carl-Wilhelm Levert
Director - Head of Debt & Capital Advisory
Stockholm
Christer Bois
Director – Debt & Capital Advisory
PwC Stockholm
Christoffer Adrian
Senior Manager – Debt & Capital Advisory
Stockholm
Assist in competitive Support in dialogue
Daniel Johansson
capital raising with debt and
Senior Manager – Debt & Capital Advisory
process capital markets
Stockholm
Deal Quick process to
structuring market
Henrik Borgfeldt
Competitive through Associate – Debt & Capital Advisory
Investment wide range of Stockholm
presentation financing sources
Debt & Capital Advisory December 2017
PwC 31 PwC Debt & Capital Advisory
Borrowers may face financing situations such as…
Acquisition financing Cash out
You are aiming to acquire a business and need You want to recapitalize in order to pay out
additional capital to meet your acquisition dividends. Additional proceeds raised through a
aspiration. The acquisition can be new or a follow Acquisition debt raising process will be paid out to
on acquisition Cash out shareholders
financing
Expansion capital Buy outs
You have growth plans that for example You are aiming to buy out one or more owners
include expansion or restructuring of in a take-private transaction or to gain further
operations, product development or entering a Expansion control and ease decision making processes in
new market Buyouts the company
capital
Financing
situations
Asset
Refinancing Asset financing
financing
You are aiming to finance large capital
Refinancing
expenditure and seeking to obtain best
You want to replace an existing debt obligation possible terms and conditions on asset-backed
and attain a change in terms financing
Recap- Procurement
italization of financing Procurement of financing
Recapitalization You are running a competitive financing process
You want to change the company’s capital with various lenders and need support to manage
structure. The aim can for example be to stabilize process, maintain dialogue with financiers and
or implement an exit strategy compare and analyse offers
Debt & Capital Advisory December 2017
PwC 41 PwC Debt & Capital Advisory
Questions we regularly hear from our clients and can help with
I keep reading about What is the most
alternative lenders efficient way to fund I've always sourced financing from the
and funds - who are they, I'm running close to growth in my business? banks. Is it time to access the bond
what do they do and how covenants and my markets?
do I reach them? lenders are making
noises - what's my best
course of action? My long-term relationship
banks have hit their
exposure limits - who
should I go to now?
Would a credit rating
help me access
cheaper funding? How
What is the best way of
do I go about this?
returning capital to
shareholders?
Should we fix interest
at current rates?
How do I know that I’m How do I protect my
getting the best deal? business and best
position it for future
recovery?
Debt & Capital Advisory December 2017
PwC 5Swedish debt &
alternative credit
market
22 Swedish Debt Market
Development in Swedish capital markets
• Historically the majority of Swedish non-financial corporations debt financing
01 Strong
corporate
lending market
from bank loans – typically relationship lending
• Strong banking sector
New regulation • Basel III banking regulations are expected to increase the price on bank loans to
02 corporations and to decrease the supply
• Swedish banks and financial institutions anticipate a growing demand for Swedish
corporate bonds.
Funding gap for • Large corporates benefitting from attractive lending and strong demand in bond
03 SMEs markets
• Reduced bank lending to SMEs due to stricter regulation
• Funding gap
Increased use of • SMEs turning to new sources of financing and alternative debt financing options
04 alternative
lending
• Growing direct lending market
Debt & Capital Advisory December 2017
PwC 72 Swedish Debt Market
Development in Swedish capital markets (cont.)
1 Strong relationship lending market in Sweden 2 Growing bond financing market
• Traditionally strong banking relationships/spheres of influence with Issuers on the Swedish bond market (bn SEK, 2005-2014)
designated “house banks” supplying funding at attractive terms to
3 500
corporates
• Limited tradition of corporates (SMEs) seeking and obtaining credit 136
3 000
rating 115
330
283
89
• Large Swedish multinationals have moved into the international 2 500
94 70 63
78 192
bond markets directly 188 30
210
40 538
71 509
88 169 18 297
• Non-financial companies’ borrowing on the fixed-income market 2 000 90
164
18
18 290 372
290
has increased to one-fifth of the non-financial companies loan-
bnSEK
81 143 298
71 117 21
based funding 120
16
20
115
196
1 500 91
1,241 1,223 1,267
• Majority of funding (approximately 70%) still provided by 1,035
1,105 1,159
937
commercial banks 685 747 821
1 000
Corporate Funding Mix - Reliance on bank loans
500
817 812 768 802 796 761 801 794
US EU Sweden 753 741
-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Central government Mortgage institutions
Banks Municipalities & county councils
Low High
Non-financial corporates Other credit market corporates
Source: Swedish Central Bank, PwC analysis
Debt & Capital Advisory December 2017
PwC 82 Swedish Debt Market
Trends in the alternative credit market
• Credit funds and direct lenders supply liquidity back to mid-market
01 Increased
liquidity
• Larger funds are increasingly able to operate in the upper mid-market
• Loan volumes are recovering
• Lenders are increasing their lending targets
• The use of alternative lenders are increasing in Europe
02 Intensified
competition
• Competition increase between both lenders and debt products
• Increased competition between lenders improve borrowing terms
03 Improved
borrowing
and bring a range of new products to the market.
• Erosion of covenant packages
terms • Alternative debt products provides significantly more leverage
Debt & Capital Advisory December 2017
PwC 9PwC Debt
Advisory
33 PwC Debt Advisory
PwC Debt & Capital Advisory – can assist you in obtaining appropriate,
long-term sustainable financing for your business
We know how to ‘frame the ask’
We have experience of presenting to lender credit
committees. We know how lenders think
Our expertise and resource
allows you to run your business
while we arrange your
financing package We have access to a diverse
We are a well resourced international investor community of over
team, providing us with the 200 global investors, which
experience of driving a financing provides current market
process and ensure we deliver the liquidity and pricing guidance
best terms, on time We tailor our approach to the
financing requirements of our clients
We will access the relevant sector
experience in our global network to Why PwC? and target the right lenders for each
address your specific transaction opportunity
issues and create value for you
We consider all options available to
drive the most appropriate funding
options and solutions for you
We have expertise across a range of products We find the best solution for you with
including senior and subordinated debt no bias toward the product or
loans, hybrid products, high yield bonds, financing parties to be used
private placements and real estate Our independence means we provide
We place high priority on developing objective and expert advice on optimal debt
sustainable financing structures that help structures
you achieve your financing objectives within
appropriate debt market parameters
Debt & Capital Advisory December 2017
PwC 113 PwC Debt Advisory
PwC can assist you in every phase of the investment lifecycle
• Solve upcoming debt maturity issues
• Debt market assessment to optimise finance costs
• Identify and structure alternative non-bank
sources of capital • Sell-side staple finance raising
• Debt discovery exercise to confirm
Investment lifecycle
market appetite and underpin price
Maturity • Recapitalisation and equity release
Growth
Realisation Realisation
Investment
• Acquisition debt finance raising
• Capital expenditure programme and
working capital finance raising Distress/
• Construct financing solutions restructure
appropriate to the business and assets
being funded
• Advice through public/private bond • Options assessment, liquidity solutions and covenant renegotiation
issuance, including rating advisory • Modelling of sustainable debt capacity in the business
• Stakeholder management and facilitation of consensual solutions
• Investigate alternative sources of fresh capital
• Restructure debt to stabilise the business and preserve value
Our typical process
Understand Identify best Identify Negotiate
Run competitive debt Analyse and advise
financing solution / appropriate commercial
process to optimise offers you on optimum offer
issues / need product lenders / investors loan documentation
~1-2 weeks ~1-3 weeks ~3-6 weeks
Debt & Capital Advisory December 2017
PwC 123 PwC Debt Advisory
Helping clients to make confident debt decisions throughout the cycle
Lifecycle stage Your objective How PwC is able to support
• Deliver a competitive financing process to get the best deal for you
“What is the most efficient way • Raise finance for bolt-on or transformational acquisitions
Growth/
to fund growth in my
Investment • Raise capital expenditure or working capital facilities
business?”
• Leveraged buyout financing for financial sponsors
• Solve upcoming debt maturity issues
“How do I know that I’m • Optimise finance costs
Maturity
getting the best deal?” • Identify and structure alternative non-bank sources of capital
• Advise through public/private bond issuance and credit ratings process
• Optimise working capital, operating costs and EBITDA ready for sale
“What is the best way of • Return of capital to shareholders via dividend recapitalisations
Realisation returning capital to
• Implement pre-arranged ‘staple’ financing packages for potential buyers
shareholders?”
• IPO financing packages
• Sustainable debt capacity and options analysis, including covenant
renegotiation
“How do I protect my business
Distress/ • Stakeholder management and facilitation of consensual solutions
and best position it for future
Restructure
recovery?” • Investigate alternative sources of new capital
• Restructure debt to stabilise the business and preserve value
Debt & Capital Advisory December 2017
PwC 133 PwC Debt Advisory
Overview of financing options
Bank loan Bond/ Alternative Convertible Preferred stock New share issue
Private credit market debt
(mezzanine/unitranche)
placement
Large liquidity on Lower regulatory Can lend to Low coupon Has no maturity No interest rate
the market demands on the businesses not Interest rate tax Classified as equity payments
Provides issuer suited for bank deductible Classified as equity
No voting rights
confidence to other Lower interest loan
The debt contrary to Improves financial
lenders Possibility of a Offers a high “disappears” if common stock ratios
× Demands longer maturity flexibility in the converted Can be bought With a directed
amortization for with fixed interest design of the
× Uncertain if back to a pre- issue the process
highly leveraged rate instrument
convertibles are to determined offer can be simplified
businesses Control is kept × Can include be payed back or and faster
× Dividend is made
× Relatively high within the restrictive converted with taxed capital × Equity is diluted
demands on the company covenant, that also
× If converted, × The company can × Can give the
borrowers could restrict how
× Interest rate is equity is diluted not cancel impression that
financial position the capital is used
dependent on the dividends, unless it the share price is
credit rating of the × More expensive
is also cancelled over-valued
bond than more senior
for common stock, × If a directed issue,
loans
× Low flexibility in and doing so exclusion of
regards to interest entails a fee investors
payments
Debt & Capital Advisory December 2017
PwC 143 PwC Debt Advisory
PwC has built an extensive network of financiers including…
Commercial banks Multilateral banks etc Bond arrangers Credit funds
PwC offers an extensive network of lenders. We maintain a close
relationship with key market players enabling us to provide a
competitive landscape for debt financing. By leveraging our
extensive network of lenders as an independent advisor we
ensure the most optimal financing solution for borrowers
Debt & Capital Advisory December 2017
PwC 153 PwC Debt Advisory
PwC Debt & Capital Advisory has an unrivalled global presence…
Owen
Lewis
Carl-Wilhelm
Levert
Soeren
Kviewgaard
John
Williams Ard Piotr
Burgers Zdrojewski
Daniel
Judenhahn
Stephanie
Hogue Hervé Shoichi
Colson Oka
Stephen
Oldfield
Gianandrea
Diego A. Perco Aykut
Martinez
Tasel
António
Rodrigues Matthew
Wilde Girish
Sahajawalla
Jose
Braga
Matthew
Santoro
PwC Debt & Capital Advisory has unrivalled global presence. Every local PwC team has unique access to local liquidity but it is the
interconnectivity within the global PwC firm that makes it truly powerful when put to use for our clients
Debt & Capital Advisory December 2017
PwC 16www.pwc.se/en This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Öhrlings PricewaterhouseCoopers AB, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details.
You can also read
