Capella Capital acts as a financial sponsor, developer and manager of infrastructure projects and assets throughout Australia and New Zealand. The company prefers to be a long-term equity investor in the projects and assets that it sponsors, and provides leading strategic, financial and implementation advice to high-profile clients. Who’s Who Legal spoke to Chris Oliver, associate director, about his role within the company, recent projects the Australian team has undertaken and the banking law issues encountered on a regular basis.
Tell us about Capella Capital
Capella Capital is an infrastructure financing and development business which provides a fully integrated infrastructure solution – from project inception and development, through to financial advisory, investing up to 50 per cent of the required equity and performing the asset management. Our recent PPP successes have included working with several different D&C contractors, 14 banks, three different forms of State financial contributions and a multitude of co-investors focusing on long term superannuation fund investment.
Describe a typical day as Associate Director at Capella
Early on in a project’s life we engage with various construction and operations contractors, consultants, banks and co-investors to form the strongest consortium possible. During the bid phase we are ensuring that the bid, including the technical solution, is structured as efficiently as possible so that we can deliver the most competitive bid for the State and are simultenously performing our financial advisory function by leading the detailed negotitating and structuring process with the State and lenders and investing up to 50 per cent of the equity in a transaction.
Tell us about any recent special projects your team has been working on. Which law firms did you hire?
Capella Capital has won over A$4 billion of PPPs in the last 12 months including all of the last four PPPs in Australia. Most recently we have closed the $2.5 billion Sydney International Convention, Exhibition and Entertainment Precinct, the $630m Bendigo Hospital PPP and the $1.8 billion Sunshine Coast University Hospital PPP whereby we worked with Herbert Smith Freehills Sydney, Herbert Smith Freehills Melbourne and Clayton Utz Melbourne, respectively.
What criteria do you use when deciding which firms/lawyers to instruct in relation to a legal banking issue?
Typically we rely on the quality of the individuals rather than the law firm per se when deciding who to work with. We usually require exceptional banking and projects partners who are dedicated to the project and supported by a strong team of senior associates/associates. Whilst we would like to form longer term relationships with law firms we understand this is not always possible.
How competitive is the legal marketplace for banking in Australia? Is there a lot of choice for clients such as yourself?
The legal marketplace for banking in Australia has become significantly more competitive in recent times with a series of new firms entering the market who are keen to build market share and are marketing aggressively.
Would you say that the aggressive marketing techniques of some law firms are particularly successful? In your experience, is there a certain marketing method which is more effective in attracting clients than others?
Yes I think they have been successful, particularly on the State side, though not always as consortium legal counsel. A substantial track record of working with successful consortiums is the best marketing method but there is always a value for money balance.
What makes a good private practice lawyer?
Aside from the obvious qualities, including a perfectionist attention to detail and meeting or exceeding timelines or expectations, I think a demonstrable ability to think through issues from first principles, as no deal is identical to the last, rather than being precedent driven is highly important and can differentiate a good lawyer from a great lawyer, as does an ability to think through issues from their clients’ commercial perspective.
How would you describe the current PPP market in Australia? How easy or difficult is it currently to finance new projects?
The current PPP market and average deal size has increased significantly in the last 24 months. After a series of billion dollar health PPPs, multiple state governments are now embarking on a wave of very large transport PPPs including the A$6-$8 billion East-West Link PPP that Capella Capital has been shortlisted for. Whilst both debt and equity capacity has increased significantly to match the growing average deal size, various state governments are now also making capital contributions to ensure that bidders are fully funded on an exclusive basis.
What unique finance structures or innovations are you noticing in Australia?
Large state capital contributions are becoming a common feature in PPPs in Australia. State capital contributions can complicate the finance structure as they involve balancing a best for bid approach with various other detailed legal, commercial and tax considerations. For example, Capella Capital has successfully won and closed PPPs with three different contribution methods in the last 12 months and each transaction involved its own unique complications. As such it is vital to have the best legal team to work with as possible.