Investment Structure

 

Silverstone's investment focus is on secure, long-term equity investments in major assets. The key to any Silverstone's investment is ensuring that the return on the equity that Silverstone's Investor Committee funds have contributed is secure, date-certain and sum-certain for the full investment term, and that the payer is ‘investment grade’.

 

Investment Philosophy

The key elements of Silverstone’s investment strategy are: 

• Investing in assets with a purchase price typically greater than Euros 100 million. Lower assets can be considered but not less than 50m Euros;or alternatively less than 50m assets may apply only with a minimum equity of 5m.
  
• Assets leased by a strong entity for the investment term, normally 20 years or longer. Shorter terms are possible but require a higher yield; and
• No coupon or capital repayment;
• Promoter capital contribution is limited to 10% of the investment volume but not contributed in the investment.
  

            

Reducing Investment Risk

Silverstone adopts a suite of risk management strategies to ensure the security of an investment. This includes ensuring: 

• Strong entities as counter-parties;
• Where assets are to be constructed, substantial builders with performance guarantees and/or a completion bond, who are engaged under a fixed-priced turn-key engineering, procurement and construction (EPC) contracts;
• Substantial operators and managers that are prepared to provide operations and maintenance agreements for the investment term and/or a maintenance contract for the same term with an annual non-use fee, where appropriate. Alternatively, any off-taker would need to accept contractual step-in rights in the event there is a serious break in production; and
• Any feedstock risk is managed through agreed feedstock quantum and base price contracts with a strong supplier for the same term as the off-take, with a floor and/or collar price to the feedstock to ensure its affordability throughout the term; and
• Synchronicity of the key contractual arrangements for a project.
  

 

Silverstone defines a “strong entity” as being rated as investment grade by Standard & Poor’s (minimum BBB rating) or Moody’s (minimum Baa rating). Where a potential counter-party is not investment grade or not rated at all, Silverstone may deal with that company provided it sells its product or service to an investment grade off-take party. Agreements to buy or supply the product/resource/service over the investment term are then required to secure revenues.

 

Silverstone has no expertise in asset management. It therefore has no interest in this activity during the term of its investment.  All maintenance issues and daily operations are managed and paid for by an asset’s tenant, lessee or charterer.