Investor Ready Business Plan
The client operates and maintains a pig fattening unit in Derbyshire and is in a contractual agreement with British Quality Pigs, which
Case Study
Alpha Financials in conjunction with our partner Hazrem Ltd developed a £23m waste treatment plant at the Nine Mile Industrial Estate near Newport. The strength of the partnership consisted of Hazrem’s detailed knowledge of the waste market combined with Alpha-Financials’ financial, banking, project management and environmental expertise.
The 50:50 joint venture put together a technical proposal for a plant which converts Commercial and Industrial Waste into an environmentally more friendly fuel particularly targeting the cement industry, and thereby contributing to its decarbonisation. That was the relatively easy part with the real challenge consisting of raising the necessary £23m funding required to turn the project into reality.
In Alpha Financials’ history, undertaking the project management and completing this financing – which took five years from the gem of an idea to an operational plant – is our proudest moment to-date.
The technical solution
The overall purposes of the plant are:
– minimise the residual, inert waste stream for land fill
SRF which constitutes a low cost and high calorific value fuel makes an excellent, environmentally friendly solution for high-energy production facilities, Energy-from-Waste plants and Urban Heat Networks. Its use is well established both in the UK and various countries in continental Europe.
The plant has the capacity to process 25 tonnes per hour of C&I waste streams.
Alpha-Financials and Hazrem project managed a large range of process and civil engineers, feed stock suppliers and off-take potentials as well as insurance companies with expert fire prevention personnel so as to produce a credible and robust technical solution.
Having secured planning, it required a lengthy and costly appeal to successfully overturn the initially refused permit.
Such preparation and rigour is absolutely essential before approaching potential financiers.
Contrary to most industries where the feedstock into a plant is a cost and the output delivers an income, the waste industry is characterised by the reverse of this model. Obtaining the feedstock, i.e. the waste, creates an income whilst the output produced, i.e. the SRF, is a cost as it remains legally classified as a waste.
The financial aims are thus to:
Demonstrating economic viability requires gaining high confidence levels in all capital and operating cost items and revenue streams. This necessitated high levels of market research, drafting contracts and obtaining detailed quotes from suppliers and customers.
Our in-house developed discounted cash-flow model (“I@Am” – Investment Appraisal Model) was invaluable in bringing all this data together and appraising many different options and configurations. It also enabled us to automate up-to a dozen different sensitivities based on varying confidence levels associated with the key assumptions.
During the course of the project, we went through more than 70 different iterations of the financial model, each with its own range of scenarios and sensitivities. This indicates the huge importance of having a fully flexible financial model that can deal with these ever-changing requirements and underlying assumptions.
Probably the most important document produced by the project team, the business plan brought together the story on the one hand with all the underlying key assumptions of the financial analysis on the other. Simple as it may sound, these two parts need to fully match each other.
In line with the ever-changing financial model, the business plan went through numerous iterations during the life of the project.
This document became the project bible and helped establish our credibility each time we met a new and potential financier.
Despite our considerable finance raising and city banking experience, even we were surprised as to quite how challenging the funding phase became. If we had to identify just a few key attributes necessary for success they would consist of resilience, determination and the ability to commit to significant legal costs without any guarantee of cost recovery let alone ultimate profitability and success.
From our large database of hundreds of potential funders, we naturally focussed on those experienced in environmental projects. Funders typically receive a large range of potential projects and often its difficult just to get an opportunity to pitch. Even identifying the best funder won’t necessarily work if the timing doesn’t suit and they’re at full capacity with their pipeline of potential projects. Alpha-Financials adopted a very targeted approach to investors and undertook significant prior research to achieve the best chance of success.
At all stages we had to demonstrate our confidence in, and detailed knowledge of, the project. The objective is simply to continuously check on the interest level and changing requirements of the ultimate sources of funds First impressions count and once you’ve lost credibility, you can’t get it back.
This strategy resulted in a focus on three particular funders whom we were in detailed discussions with for many months. Subsequently, this narrowed down to two where heads of terms were agreed.
In Q4 2020, we signed a revised Heads Of Terms agreement with Foresight Capital Partners, a well-known city financier, specialising in environmental projects. Independent financial and technical due diligence then followed in Q1 2021.
Following a last-minute legal challenge to the project, construction commenced in Q2 2021 and completed 12 months later. In Q1 2023, Alpha-Financials received our final success fee for the project financing.
By SME standards, this £23m finance raising constitutes a large and complex project, not for the faint hearted. Even though we identified the right funder early on, Foresight rejected us several times at first because the timing wasn’t right for them.
Whilst our persistence paid off, we later learned that Foresight proceeds with less than 5% of the projects brough to them. It’s doubtful if this figure differs significantly with the other city financiers.
That’s why success only comes from resilience, determination and commitment!
Contact us to discuss how we can be of assistance to you – we’re very flexible in our approach to working together.
The client operates and maintains a pig fattening unit in Derbyshire and is in a contractual agreement with British Quality Pigs, which
The client operates and maintains a pig fattening unit in Derbyshire and is in a contractual agreement with British Quality Pigs, which
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