The successful delivery of a private placement transaction by a social housing provider requires a lot of effort and ball juggling. Here are 10 pointers for first time participants in the process.
- Do not under-estimate the benefit of early engagement with arrangers, even whilst still at the early stages of considering a potential PP. Often a good starting point will be your lenders who can introduce their debt capital market colleagues.
- Your selection of financial advisers is key. Track record and experience in the housing sector is very important. Cost alone should not be the defining factor in deciding who to appoint.
- Taking into account costs and investor appetite, the minimum PP fund raising is probably about £20m, although ideally one is looking at £35m upwards. Above £100m, the option of a public bond is worth considering as is the obtaining of a credit rating to open up a wider pool of investors.
- The schedule for completing a PP is fluid but the minimum realistic is probably about 10-12 weeks.
- The factor that generally leads to most delay in timetable is property due diligence. This needs to be prioritised and started as early as possible, with stock selection important (for example if share ownership units are to be included) to ensure that investor requirements can be met.
- Due diligence relies on certificates of title. Therefore your legal advisers need to hold adequate professional indemnity (PI) cover and have sufficient resource to be capable of handling the title certification exercise. The issuer’s lawyers will also require to provide a formal legal opinion. Again, therefore adequate PI (ideally at the level of the PP) will be important.
- The investor road-show provides your opportunity to shine and to sell your organisation to the investors. Nobody knows more about your organisation then you do. Embrace the process..
- Investors have an increasing focus on stock management and use of IT. Expect to be questioned on this. They are not just focused on the housing.
- That there is currently a lot of investor appetite from UK pension funds etc. so now is a good time to engage with the market.
- Lastly, there is a huge track record of successful PPs so lots of experience from advisers and investors which can be relied on and brought to bear to ensure successful delivery.
6 February 2018
On February 6, 2018