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Law Firm Counsels Magnetar Capital on Acquisition

A counsel or a counsellor at a law firm is a person who gives advice and deals with various issues, particularly in legal matters. It is a title often used interchangeably with the title of lawyer. The word counsel can also mean advice given outside of the context of the legal profession.

Magnetar Capital is a hedge fund based in Evanston, Illinois. The firm was founded in 2005 and invests in fixed income, energy, quantitative and event-driven strategies. The firm was actively involved in the collateralised debt obligation market during the 2006–2007 period.

Eversheds Sutherland is pleased to announce that it represented alternative asset manager Magnetar Capital in the acquisition of international property and investment group Lendlease’s renewable energy business unit, which will operate under the name Vesper Energy moving forward.

Since its start in 2015, Vesper Energy has commercialised over 680 MW of utility-scale solar projects in the United States. Working closely with communities and customers, the company develops, builds and operates high-quality, high value assets that contribute to a sustainable, decarbonised electrical grid.

Its current customers include municipalities, higher education institutions, large corporations and integrated electric utilities.

Vesper Energy has an existing 3 GW solar and 2.5 GWh energy storage development pipeline across the United States, encompassing 20 unique projects. The company plans to begin construction on three new projects in 2021 in California, Ohio and Pennsylvania.

“We are excited to extend Magnetar’s existing renewables franchise into the rapidly growing utility-scale solar and storage market in North America,” said Adam Daley, co-head of Energy and Infrastructure at Magnetar.

“This investment complements our existing solar portfolio companies and reflects our continued commitment to providing growth capital to businesses actively reducing carbon emissions.”

Eversheds Sutherland is a global multinational law practice created by a combination of law firms Eversheds LLP and Sutherland Asbill & Brennan LLP, in February 2017, and is one of the 50 largest law practices in the world.

Eversheds Partner Thomas H. Warren led the deal team.

Comments on the Government’s infrastructure spending plans

In his first budget, Chancellor Rishi Sunak (who, let’s remember, has been in the job for less than a month) unveiled a series of exciting spending promises, designed to increase infrastructure spending to a level not seen for decades. Overall, the Chancellor’s plans involve investing a massive £640bn for capital spending on infrastructure by 2025 – a generational change in the level of spending on public infrastructure.

The announcements raise the stakes on the previous Chancellor’s promise to deliver an “infrastructure revolution”, which was a prominent feature of the Conservative Party’s election campaign last year. The Budget was full of bold spending promises, by a Government that seems hell-bent on doing things differently and “getting it done”. “Getting it done” was the Chancellor’s rallying call for his first Budget and the headline-grabbing spending plans certainly suggest that we have a Government that is serious about doing just that.

Under Theresa May, previous Chancellor Philip Hammond had planned to spend £600bn on public and private infrastructure over a 10-year period, so the latest plans not only involve spending more money overall, but also spending it more quickly than the previous Government had planned to.

While much of the important detail has yet to be confirmed, and the publication of the long-awaited national infrastructure strategy has been delayed, the Chancellor’s spending announcements are likely to be well received by business, especially those in the community of infrastructure developers and investors. After Prime Minister Boris Johnson’s announcement last month that the controversial HS2 high-speed rail link will go ahead, the Budget is a further positive sign that this Government is prepared to make use of historically low interest rates to end the tendency of previous Governments to talk a lot about infrastructure investment, but to deliver very little.

The current Chancellor seems to be of the view that the very low interest rates that we have seen since the financial crisis will continue for some time, so has rejected assertions that his aggressive borrowing plans are irresponsible. His argument is that while overall Government borrowing may be higher than it has been in previous times, the cost of servicing the Government debt is actually lower.

While some in the industry will remain sceptical about how real, or new, some of the announcements are likely to be in practice, others will see the latest plans as being just what the industry has been waiting for.

As expected, many of the plans unveiled in the Budget are measures designed to rebalance opportunities in all parts of the UK and to lay the foundations for what the Chancellor has promised to be “a decade of growth for everybody”. The massive boost in infrastructure spending apparently includes:

  • £27 billion of strategic investment in roads and motorways;
  • £5 billion for new gigabit-capable broadband in the hardest to reach parts of the country;
  • £800 million for new carbon capture and storage clusters in the English regions and Scotland;
  • £500 million for the deployment of rapid charging hubs for electric vehicles; and
  • £12 billion of extra funding for building affordable homes.

Looking at these plans from a broader policy perspective, it is undoubtedly the case that infrastructure spending by Government serves many policy objectives (such as increasing prosperity, delivering visual regional investment, enabling other sectors), but for this Government right now, it can also be seen as supporting the investment case in global Britain and showing that Britain is thriving post-Brexit. The timing of this is obvious, but with pressure on infrastructure in the South East and a shortage of new mega projects that are already in development, it seems that the Government is keen to show the strength of UK engineering and innovation to the world, as well as to bulking up the engineering sector for activation by inward investors.

A question that has been raised by a number of industry-insiders is how the Government actually plans to deliver and fund the huge expansion in infrastructure spending that it has announced. The Chancellor made no mention of the potential use of private infrastructure finance models, so there is a concern among many that private sector investors may have a limited role in delivering the pipeline of new work.

Further concerns have been raised about the lack of specific measures designed to deliver on the Governments commitments to reduce carbon emissions and to reach net zero greenhouse gas emissions by 2050. The UK was the first major economy to legislate for net zero greenhouse gas emissions by this date and has since launched a Net Zero Review to help determine how the UK can maximise economic growth opportunities as it transforms into a green economy. Perhaps understandably at this stage (when you consider the other critical issues that the Government has to deal with at the moment), there was almost nothing in the Budget to indicate how real that commitment is and how the Government intends to achieve it.

We’re looking forward to learning more about precisely how the Chancellor’s spending promises will be delivered, and what other projects the Government plans to prioritise, when the national infrastructure strategy is published later in the spring.

It remains to be seen as to whether the Chancellor, and the Government, will deliver on its promises to “get it done” and deliver an “infrastructure revolution”, but this Budget certainly shows ambition.

Hogan Lovells: at the intersection of Government and business

Our Infrastructure, Energy, Resources and Projects practice is one of the largest and most diverse in the world. Since 2014 our global practice of over 160 lawyers have advised on more than US$200 billion of closed infrastructure deals.

We operate in all key markets, regularly representing financial institutions, project sponsors, investors, contractors, private equity funds, governments and parastatal bodies, international financial institutions, and export credit agencies on some of the world’s largest and most challenging infrastructure projects. The firm’s infrastructure practice is recognised in the market as one of the strongest globally.

In the new and ever-changing political environment, it’s vital to have a team with the right relationships with key politicians, policy-makers, parliamentarians, civil servants and regulators.

Working at the intersection of Law, Government and business, our Public Law and Policy team offers a bespoke policy and political approach to identifying emerging risks and opportunities, providing insight into relevant Government departments and helping you influence and shape legislation, policy and government decisions to drive your business objectives.

With close cooperation between these two teams, we offer a unique service.

When Should You Expand Your Business?

Global expansion is when a fast-growing business takes its operations into lucrative overseas markets. These businesses are looking to reach the next level of growth and they can do this by establishing a presence in new countries across the globe.

Expanding your business Internationally is a monumental task but, if done right, can be a significant driver of growth.

We are proud to say that we now have coverage in 190 countries, with a small team and no outside funding.

Invest in a scalable infrastructure

Build a platform that is designed to scale from day one.

For example, we made sure that Advisory Excellence was set up with infrastructure where it was easy to add new countries, and track KPIs globally.

A focus on marketing channels that can scale, such as Google, YouTube, Pinterest and LinkedIn, can also prove useful in building a strong foundation for future growth. Whatever your budget, these platforms allow you to test the waters as knowledge of your market increases.

As campaign metrics demonstrate positive growth, your company can expand budgets to grow reach Internationally.

Think globally, act globally

Being in hypergrowth mode is exhilarating but there are plenty of opportunities to learn from mistakes. When you scale very quickly, there is no time to micromanage locally.

Only tailor locally what has been proven to make a significant impact.

Build a small but mighty team

Crafting a small but mighty team is key to moving forward in a positive direction.

Even if there are only a small number of individuals, a dynamic team can move mountains when the focus is right.

Create a high passion and energetic team which is invested in the future of the business.

If you instil one motto in your team, it should be: fail fast, learn and improve. We love trying new ideas and encourage the whole team to continuously test, especially when it’s outside their comfort zone.

The only requirement we set is to approach it methodically, to document the results and to share learnings with the team.

Stay community-focused

Nurture your brand ambassadors; your first and most loyal members or customers will be your strongest voices if they can be involved. We’ve been around since 2013 and have built a community that continuously stays engaged.

Listen to your members or customers, speak with them every week and make changes based on your insights. As a result of listening to our members, we decided to start hosting events.

There is nothing stronger than a real-life experience and it really makes us stand out from the crowd in a competitive market.

Getting more feedback from your audience can push your business to new heights. We collaborate with our members, so a lot of our content is member-generated.

Work smart

Automate time-consuming tasks.

We believe we have a strong proposition for individuals around the world and expanding into new markets has been one of the most rewarding things we have done.

Industry predictions: Engineering, Construction and Infrastructure

2019 will see a digital leap forward as many construction companies explore implementing integrated business software into projects for the very first time.

Tighter margins, global skills shortages and new industry entrants are all ramping up the pressure on traditional construction businesses to deliver greater productivity and more integrated, cost-efficient projects, on time, every time.

1. Prediction

50% of all construction projects worldwide will include modular content by 2022, driven by the growing global skills shortage.

In March 2018, a new factory opened outside Liverpool, England employing 150 people 24 hours a day. What does it manufacture? Homes—starting with a first order of 81 homes and 58 apartments, as part of a first-year target of 450 homes. And it’s just one among many. At IFS, in 2018 we had four times greater customer activity around modular construction than in any previous year.

From schools in Ireland to prisons and hospitals in the United States; from sustainable luxury apartments to vast workers’ dormitories, 2018 has seen modular construction go well beyond hype. In 2019 it will get even stronger, with housing shortages a key driver. The UN estimates that over 2 billion new homes will need to be built over the next two years. Modular manufacturing enables affordable houses to be built faster and at higher volume. Driven by a worldwide shortage in skills and housing, increased modular construction will impact the construction industry massively in 2019.

New entrants will make agility even more essential.

For a start, we’re already seeing a wave of new entrants coming into the industry. Take that modular housing factory in Liverpool. Neither of the two founders came from the construction industry. One, Luke Barnes, was a design engineer, his partner a software engineer. Barnes told reporters: “I found there was a big gap in the market as there were no constructors that offered the quality, deliverability and competitive pricing I was searching for.”

2019 will see growing numbers of traditional construction companies begin opening modular factories to stay competitive. And more new players enter the industry—from manufacturing, supply chain and logistics, to local governments, banks and insurance companies. Many will be able to offer flexible finance and service packages too.

The pressure on incumbent building firms to adapt will be huge. They’ll need tighter control and more adaptability over every aspect of their projects. Proving they can, if necessary, partner up with larger networks of suppliers, offer services and maintenance on assets once built, include equipment hire, and yes, even offer or manufacture some modular units or components. It all adds up to an urgent need for better, more integrated digital management of complex, demanding projects. That need is driving my second industry prediction.

2. Prediction

In 2019 more construction companies than ever before will start trying out integrated business software – for the very first time.

10% of traditional construction firms could go out of business over the next 5 years. Competition around delivery and productivity will be fierce. Many companies will find themselves balanced on a knife-edge of opportunity: On the one hand growing urban populations and housing shortages will mean more demand and higher order intake. On the other, shrinking profit margins and increased competition will mean unprecedented pressure on productivity and delivery.

As a result, 2019 will see more firms moving from being document-driven to data-driven. Many will take their first steps into digital and make their first investments in integrated business systems like Enterprise Resource Planning, or ERP. Two main drivers will turn integrated business systems like ERP from a nice-to-have into a need-to-have.

When less is more: Growing pressure on margins.

With profit margins as tight as they are, many construction firms feel as if the more business they bring in—the less money they make. A recent Deloitte report found that construction companies’ profit margins are under pressure in several European submarkets, with Western Europe particularly vulnerable. In the UK, Belgium, the Netherlands and Ireland profit margins are so narrow they may not even be offset by higher order intake. 31% of the UK’s largest contractors reported a fall in margins in November 2017, with the country’s largest 10 contractors having a negative average margin of -0.5%.

New entrants: China, Korea… and Amazon?

Global competition is growing powerfully, impacting European construction companies hard. The Engineering News Record’s Top 100 Global Contractors In for 2017 found that European firms made up only 23% of the world’s Top 100 Global Contractors in 2017.

In 2010, 44% had been European. Compare that to Asia, which rose from 41% in 2010 to 51% in 2017, and the big picture is clear. Most analysts predict that China, India and the US will all be winners in the forecasted 8 trillion USD growth expected in construction by 2030—but not Europe.

Companies like China Communications Construction, Hyundai Engineering & Construction and Samsung C&T represent a serious threat to large European incumbents. Taken by revenue alone, even by 2017 the Top Four and seven out of the world’s Top Ten largest construction companies were all Chinese.

With many able to offer highly competitive and flexible financing packages. As we’ve seen, the rise in modular is bringing in new entrants from the manufacturing, supply chain and software engineering sectors. And given all this, who knows, could even digital giants like Amazon or Uber one day see construction as a sector ripe for disruption? If so, who’d put money on the industry in its present state surviving the challenge?

The bottom line is that many construction companies are highly exposed. In 2018, we saw huge ongoing efforts to drive efficiencies, increase productivity and establish repeatable delivery. In 2019, the pressure will be even more intense. The need for adaptability has never been more urgent. 2019 will be the year when many companies finally start considering systems like ERP not as isolated back-office finance functions essential, joined-up systems that provide urgent coherence, speed and efficiency throughout a project or business. 2019 could be the year when construction takes a giant leap forward, embracing digital adoption.

3. Prediction

Digital asset life cycle management, integrating both BIM and ERP, will emerge as a future need-to-have.

The collapse of Carillion, one of the UK’s largest construction giants, sent shockwaves through the construction industry. The company built and maintained major assets such as schools, prisons, hospitals and power stations across the UK—before collapsing 1.7 billion euros in debt, overnight, in January 2018. While analysts have endlessly debated how and why, insiders point to many systemic faults.

Certainly, in a company that size, spread over that many projects, it seems fair to say that without a central, integrated business system it would be all too easy for senior management to get a full picture of the truth. For the truth to be hidden. And for projects to be kept separate and siloed, financially and operationally.

Central to ERP’s power for construction companies is its ability to connect and integrate all functions in a project—from finance to operations to design—enabling maximum adaptability. I’ve always argued that Building Information Modelling (BIM) will be a driver of digital asset life cycle management and integration. BIM is an integral part of moving from a document-driven to data-driven world. In 2019, I believe we’ll see the first construction companies take their first steps into discussing how to merge and build on the strengths of combining the two systems: BIM and ERP.

Many firms have now started to integrate BIM models into their business. But building BIM on its own without an integrated business system, is only a small part of the picture. As a business system, ERP takes all the functions of the business and provides it with one set of data, enabling it to flow through a project’s life cycle all the way from inception to disposal, and enabling any combination of service or asset management in between.

For manufacturers, integrating ERP as a whole business system, rather than a single financial tool, is old news. They’ve been successfully integrating CAD with ERP for years. However, for many companies in the construction industry, that journey remains to be made. But 2019 will see many taking their first, vital steps.