Tender for Financial and Investment Advice
Thames Tideway Tunnel – Financial / Investment Advice in relation to the Procurement of an Infrastructure Provider.
UK-Reading: banking and investment services
Contract notice – utilities
Section I: Contracting entity
Thames Water Utilities Limited
Procurement Support Centre – 3rd Floor East, C/O Mail Room, Rose Kiln Court
RG2 0BY Reading
Further information can be obtained from: The above mentioned contact point(s)
Specifications and additional documents (including documents for a dynamic purchasing system) can be obtained from: The above mentioned contact point(s)
Tenders or requests to participate must be sent to: The above mentioned contact point(s)
Section II: Object of the contract
Service category No 6: Financial servicesa)Insurances services b)Banking and investment services
Main site or location of works, place of delivery or of performance: Whole of Thames Water region.
Thames Tideway Tunnel is a significant infrastructure asset that Thames Water Utilities Limited (“TWUL”) intends to procure (as agent) via a Regulated Infrastructure Provider (“IP”). The IP will be a standalone entity with its own licence from Ofwat.
It is anticipated that the IP’s debt will be capable of being rated at least Baa1 and sourced from a combination of bank facilities and the debt capital markets. The IP itself (including the required equity) will be procured by TWUL through a competitive OJEU process.
TWUL is seeking to appoint a Financial / Investment adviser to assist in the final stages of the development of the financing proposition for the Infrastructure Provider (IP), especially in relation to the market for the equity investment in the IP, the rating of its debt by Credit Rating Agencies (“CRA”s), and to ensure that the Thames Tideway Tunnel does not impact the credit rating of TWUL.
Further information relating to the project can be found at www.thamestunnelconsultation.co.uk.
— Proposed Scope of Work.
The successful tenderer (Adviser) will be mandated by TWUL and will have a duty of care to TWUL.
For the avoidance of doubt, the Adviser will be expressly prohibited from talking to debt or equity providers or other financial market participants on the subject of the Thames Tideway Tunnel Project unless expressly permitted to do so by the Thames Water Chief Financial Officer.
The Adviser will work with TWUL’s retained financial and legal advisers to provide written and verbal advice to TWUL and to other key stakeholders (Government and Ofwat) via the Thames Tideway Tunnel Senior Reference Group on financial structuring of the IP including: i) bank market and debt capital market arrangements (and associated ratings advice) and; ii) the market for equity including infrastructure funds, pension funds, sovereign wealth funds and project equity. It is absolutely essential that the advice provided is co-ordinated across both debt and equity markets so that wholly consistent advice is provided to TWUL as well as other stakeholders. The Adviser will be expected to provide a lead senior individual who will be actively engaged in the mandate and who will be the key contact for TWUL.
The Services to be provided by the Adviser will be separated into 2 phases as described below:
The scope does not include the building and running of a financial model for the IP, which is being carried out by TWUL’s retained financial adviser, although the Adviser may be asked to help develop and confirm various modelling assumptions.
Rating and debt.
i) Review of the Project Information Memorandum (the “PIM”) and the Government Support Package (the “GSP”) prior to release to CRAs credit rating agencies (the “CRAs”) (including a view on rating methodology and likely rating);
ii) Advice on potential debt investors for the IP and the process for accessing the investor market and issuing debt;
iii) Advice on structuring including the detail on appropriate covenant packages (financial and otherwise);
iv) Advice on engagement with, and preparation for, the CRAs around the provision of private ratings in respect of both the IP and TWUL;
v) Assisting in discussions with Government and Ofwat on aspects of GSP and regulatory framework, prior, or subsequent to, CRA feedback;
vi) Advice on the capabilities (i.e. treasury team) and strategy the IP will require to access this market and the evaluation thereof;
vii) Advice on likely requirements of investors for due diligence and associated recommendations;
viii) Advice on IP hedging strategy;
ix) Quantification of the exposure of government to break costs on debt and hedging during the construction period;
i) Review of the PIM and GSP prior to soft market testing;
ii) Advise on appropriate regulatory equity incentives in conjunction with the underlying contractual and programme management incentives, e.g. alliancing framework;
iii) Review of market liquidity and potential equity investors for the IP;
iv) Assisting in discussions with Government and Ofwat on aspects of GSP and regulatory framework relating to equity protections, either prior to, or subsequent to, soft market testing;
v) Strategy and preparation for soft market testing and associated process (soft market testing to be led my TWUL with the Adviser);
vi) Indicative pricing of the equity proposition;
vii) Review of the process for procurement of IP;
viii) Strategy and preparation for bidder road shows and associated process;
ix) On likely requirements of investors for due diligence and associated; recommendations
Given that the IP is a unique and novel entity it is expected that the Adviser will need to have significant infrastructure equity market capability with a proven track record of raising (i.e. selling) equity for utilities as well as projects. Advisers will need to demonstrate their experience of working with, and access to, key investors including, infrastructure funds, pension funds, sovereign wealth funds and other utility investors and a deep understanding of the investment requirements for each class of investor.
Further advice of the same nature and scope is likely to be required during the tendering process for the IP and TWUL expects to retain the Adviser during this tender period to advise on associated issues as appropriate.
Description of these options: Any agreement awarded would be for the completion of initial milestones (described in II.1.5 as Phase 1 scope) expected to have an initial duration of up to 1 year, with options to extend annually up to a maximum overall term of 4 years, or other appropriate period depending on the procurement of the IP.
Section III: Legal, economic, financial and technical information
Reference to the relevant law, regulation or administrative provision: Applicants must be registered by the Financial Services Authority to provide financial advice in the United Kingdom of the type being procured in relation to the subject of this notice.
Section IV: Procedure
Some candidates have already been selected (if appropriate under certain types of negotiated procedures): no
Section VI: Complementary information
Responses to the Notice should consist of a maximum of 20 pages (40 sides) of A4 paper. Accounts and copies of certificates may be appended to the main body of the response. Applicants should submit one paper copy in a flat or spiral binder and one copy on CD Rom/USB stick. The envelope must be clearly marked with project number (1133).
Storage is limited, and Applicants are requested not to use lever arch folders or other bulky bindings, or to submit more than one copy. Applicants should not include non-requested sales literature with their applications. Packages weighing more than 10kgs cannot be accepted. Companies who are invited to negotiate may be required to demonstrate their services in practical trials or presentations at no cost to Thames Water Utilities Limited. Applicants who fail to supply all of the information requested in response to this Notice risk elimination. The contents of this Notice are sufficient for submissions of pre-qualification data; all other communications are discouraged.
Format of Response.
Applicants must provide clear and concise responses to all questions and requirements below. Responses must be in English and contain all the information requested in this notice. The format of the Applicant’s responses must be such that each question/point below is restated (together with the reference number in square brackets) and immediately followed by the Applicant’s answer. Responses must be ordered as sections A, B and C as described below.
TWUL intends to invite the top scoring 3-5 eligible and suitably experienced Applicants to negotiate as described below. Expressions of interest will be assessed and Applicants will be selected as follows:
1. Successful Applicants must first pass Section A (General Information) including certifying that they are not ineligible for selection pursuant to Regulation 26 of the Utilities Contracts Regulations 2006, and providing details of insurance cover and financial information.
2. Applicants who pass Section A will then be assessed and scored on the basis of their responses to Section B. Each question in Section B is weighted equally and responses will be scored on a scale of 0-10 as indicated in the table below. TWUL is looking for evidence of experience in providing similar Services of a nature and scale to this Project. Scores will be added together to enable TWUL to rank the Applicants and the top scoring 3-5 Applicants will be invited to negotiate as described below.
A response containing insufficient information to make a judgment would be judged as wholly unsatisfactory and be given a score of 0.
A response containing significant omissions, weaknesses or concerns would be judged as cause for concern and be given a score ranging from 1 to 2.
A response containing some omissions, weaknesses or concerns but otherwise satisfactory experience and ability would be judged as satisfactory and be given a score ranging from 3 to 4.
A response indicating acceptable confirmation, experience and/or credibility would be judged as acceptable and be given a score ranging from 5 to 6.
A response indicating significant and appropriate experience and/or credibility would be judged as very good and be given a score ranging from 7 to 8.
A response indicating significant and appropriate experience or credibility and where appropriate, excellent evidence of past performance in relation to similar Services would be judged as outstanding and be given a score ranging from 9 to 10.
Please note that an asterik denotes a requirement to provide evidence (i.e. a document such as a certificate/policy etc).
Section A, General Information.
(Section A will be assessed on a pass / fail basis. If any element is not answered or failed (without satisfactory explanation) then TWUL reserves the right to exclude the Applicant from the bidding process.).
Identity and Contact Details.
[A1] Name of contracting entity.*.
[A2] Contact Name and Position of interested party.
[A3] Registered Office Address of contracting entity.*.
[A4] Date of registration.*.
[A5] Company Registration Number.*.
[A6] List the names and responsibilities of executive Directors/Partners of the contracting entity.*.
[A7] Address for correspondence.
[A8] Telephone number.
[A9] Fax number.
[A10] E-mail address.
[A11] Website address.
[A12] Address of the contracting entity if different from the above.*.
[A13] State legal status of contracting entity, e.g. sole trader, partnership, limited company or joint venture.*.
[A14] VAT registration number of contracting entity.*.
[A15] Name and address of any Parent or Holding Company of contracting entity.*.
[A16] Name, address and telephone / facsimile numbers of the contracting entity’s bank.*.
Ineligibility, Prosecutions and Convictions.
[A17] Applicants are required to certify that none of the circumstances specified in Regulations 26(1) and 26(5) of the Utilities Contracts Regulations 2006 applies to the Applicant.
[A18] Applicants are required to provide details of any court judgments and prosecutions within the last 3 years.
[A19] Refer to Regulation 26 of The Utilities Contracts Regulations 2006 and give details if any of the following apply to the contracting entity or its directors or any other person who has powers of representation, decision or control*.
a. has been convicted of any offences relating to:
v. money laundering
vi. any other offence within the meaning of Article 45(1) of the Public Sector Directive
i. is bankrupt or subject to a winding up order or in receivership;
ii. has been convicted of a criminal offence in relation to the conduct of business;
iii. has committed an act of grave misconduct in the course of business;
iv. has not fulfilled obligations relating to the payment of social security contributions;
v. has not fulfilled obligations relating to the payment of taxes; or
vi. is guilty of serious misrepresentation in providing information required under this regulation.*
[A20] Provide details of all prosecutions brought against the contracting entity under any legislation in any part of the world relating to equal opportunities or discrimination in employment during the last 5 years. Details must include the name of the country, nature of the project or work, the date, the applicable law and the outcome of the prosecution.*.
Personal Interest and Conflicts of Interest.
[A21] Give details of any officer of the contracting entity who is a relative of or has a close relationship with anyone who is employed by Thames Water at a senior level.*.
[A22] State if the contracting entity, or sub-contractors have any real or potential conflicts of interest with either existing contracts with Thames Water [, Kemble Water, Kemble Water’s shareholders, the UK Government] or with third parties having or in the process of agreeing contracts with Thames Water which could compromise Thames Water’s duty to manage an open, fair, non-discriminatory and competitive procurement process or Thames Water’s interests generally. In an appendix please provide a copy of any policy covering this issue or explain how conflicts of interest arising in the future will be dealt with.*.
[A23] If the contracting entity is a panel, consortium or joint venture, provide a summary of the proposed organisation and management arrangements.
Authorisation to provide financial advice.
[A22] Please confirm you are authorised [by the Financial Services Authority] to provide financial advice in the United Kingdom of the type being procured in relation to the subject of this Notice.
Banking, Insurance and Guarantees.
[A23] Advise the amount of insurance cover held for all insurance policies held and the expiry dates of the policies. Applicants are required to hold professional indemnity insurance cover in the amount of at least ten million GBP.
Submit (as an appendix) copies of all relevant insurance certificates.*.
Financial Information (For Applicants to pass this element, the financial information must demonstrate at least 3 years of clean audit reports.).
[A24] Provide a summary of audited accounts for the contracting entity for the last three years of trading or for the full period of trading if less than three years. Where the contracting entity is a subsidiary of a group of companies, this information is required for the subsidiary, all intermediate holding companies, if applicable, and the ultimate holding company.*.
Section B, Relevant Experience.
(Section B – All questions in Section B are equally weighted and will be qualitatively evaluated as described above particulaly when considering the relevance and complexity of the transactions and the innovative nature of the solutions advised upon previously.).
[B1] Provide details of relevant experience of 5 transactions in the last 3 years dealing with large scale construction projects (greater than £1bn of capital expenditure) in a complex multi-stakeholder environment;
[B2] Provide details of recent relevant experience working with the UK Government (or similar) in large scale infrastructure projects;
[B3] Provide details of relevant experience of 5 transactions in the last 3 years dealing with utility or economic infrastructure companies in the UK regulated environment;
[B4] Provide details of recent relevant experience in dealing with multi-national construction companies and programme management companies;
[B5] Provide details of relevant experience of 5 transactions in the last 3 years in structuring transactions and dealing with the providers of equity finance for large scale infrastructure investments including infrastructure funds, sovereign wealth funds and construction companies;
[B6] Provide details of relevant experience of 5 transactions in the last 3 years in dealing with the providers of debt finance for large scale infrastructure investments including bank and bond debt. Please also provide recent relevant experience in capital structuring and running processes with rating agencies including Moody’s and Standard and Poor’s.
Invitation to Negotiate (“ITN”).
Number of Tenderers.
Provided always that there are sufficient Applicants passing TWUL’s eligibility criteria as described above, TWUL intends to invite a minimum of 3 Applicants to negotiate and no more than 5. TWUL may invite less than 5 Applicants if, for example, there is a gap between the third and the fourth and fifth scoring Applicants. In these circumstances, the Authority is not bound to invite all 5 Applicants to negotiate and reserves the right to only invite the top 3 scoring Applicants but will make its assessment depending on the scores to ensure adequate competition.
TWUL aims to issue the ITN on 11.9.2012. Given the importance of obtaining swift advice and finalising the procurement for the IP, in accordance with Regulation 22, TWUL will require tenderers to agree a response return time for tenders of 19 days from issue of the ITN. This is a reasonable period given the requirements of the ITN response. Part of the tender process will involve a tender interview (on or around 25 September 2012) at which tenderers shall explain their proposals to TWUL.
Variants will be accepted, if submitted in addition to a compliant bid. Further details will be included in the Invitation to Negotiate (ITN).
Contracts will be under English law.
TWUL may provide the IP Procurement Adviser access to commercially sensitive and confidential information on the Project. Accordingly, upon successful prequalification and as a condition of being invited to negotiate, Applicant’s will be asked to sign and return a Confidentiality Agreement before proceeding any further.
TWUL operates an ongoing risk management approach with regard to the economic and financial capacity of its suppliers. Information will be obtained either from the supplier or an externally recognized provider. Information will be gathered upon commencement of the process and over the duration of the contract period.
Applicants should note that this process might require references to be provided and verified, attendances at meetings, talks and presentations at no cost to Thames Water.
TWUL reserves the right to award no contract(s) as a result of this award procedure. Except for the framework agreement(s), if any, concluded with successful tenderer(s), nothing in the procurement process shall create a contract, whether express or implied, between TWUL and any applicant.
Any agreement resulting from this contract notice may be modified to include further similar requirements at any site under the management of TWUL or its associated companies.
This contract notice does not preclude TWUL or its associated companies from issuing other contract notices for specific requirements from time to time.
TWUL (including its employees and advisors) does not make any representations, warranties or other commitments, whether express or implied, in relation to the accuracy, adequacy or completeness of the information provided to applicants in this Contract Notice or otherwise in connection with this tender, except as may be specifically agreed in any contract concluded at the end of this tender process.
The Utilities Contracts Regulations (SI 2006 No 6) provide for aggrieved parties who have been harmed or are at risk of harm by a breach of the rules to take action in the High Court (England, Wales and Northern Ireland).
VI.5)Date of dispatch of this notice:20.8.2012