Evo Infra: Refocusing on new sectors

“We have ambitions to grow the company,” begins Daniel Tyerman, the new managing partner of Evolution Infrastructure (Evo Infra), the project finance advisory firm previously known as DWPF.

“There is longer term thinking for us as a business now,” he continues, “we are focusing on up and coming sectors.”

Tyerman points to energy and digital infrastructure - the two markets growing at probably the fastest rate in the UK, in terms of infrastructure investment opportunities. With the firm’s strong background in UK PFI and PPP projects, he feels it is well-placed to support the delivery of a range of new projects in these areas, where deals may not be referred to as PPP, but share many of the same concepts.

Tyerman is talking just days after he and his colleagues, Hamish Tulloch and Simon Johnson, completed the management buyout of DWPF. The move was precipitated by the retirement of industry stalwart David Wylde, and Tyerman believes the change allows the company to expand into new areas and take the experience that remains within the business into new markets. The name change seeks to reflect this, while also underlining the importance of those sectors that DWPF made its name in serving.

Indeed, the organisation continues to support the legacy PFI sector in the UK, particularly in the secondary market, where deals continue to get done. Tyerman says the firm has closed two streetlighting PFI deals in recent months and is targeting a further two PFI refinancings before the end of the year, with three already lined up for 2023.

However, that is a finite market, and as Tyerman explains, the current economic context makes refinancing a more difficult proposition. “A lot of low-hanging fruit has been done, so we are getting to the tail-end of the UK PPP projects that can be refinanced. Any tightening from banks makes the prospects of more refinancings less likely, and so current market volatility is unhelpful in this context, notwithstanding the insulation provided by existing
interest rate hedges in place.”

Student accommodation is also an area that Evo Infra has plenty of experience in - and this is one that looks set to remain a staple for both the firm and the market as a whole. “Student accommodation still has a big part to play,” says Tyerman. “There are still some big projects that had been put off by the pandemic, but these are now coming through.”

He warns, though, that the current economic circumstances may also impact these deals, as the gap widens between what universities (and students) consider to be ‘affordable’ in terms of rent and what developers are able to provide as material and labour prices continue to soar, on top of increases in underlying interest rates.

One area of the PFI market in which Tyerman sees less opportunity, however, is handback. While he accepts that public authorities will need financial advice and support when deciding what to do with their assets post contract-expiry, he believes there will be less need for such advice to the private sector (where Evo Infra have traditionally played). For a start, the decisions over what comes next won’t be up to the private partner, and where there may be decisions to be made, he argues that most private sector firms holding PFI contracts will have the in-house expertise to be able to manage this. It is the technical and legal advisors where the private sector will most likely turn for assistance.

As a result, it makes sense to refocus the business into newer areas. Not that the energy and digital sectors are completely new to Evo Infra’s team. The firm worked on the €1bn capital raise by Echelon data centres for the development of two data centres in Ireland, and has also worked in the energy market on a variety of deals, often on the model audit side.

That experience could provide Evo Infra with a way into some of these different markets. “We have the skillset from doing PPPs, and understanding the risk dynamics, so it is not a huge translation into the energy and digital markets in terms of understanding and being able to build the tools for decision-making,” Tyerman explains. “For us it is about adding detailed sector knowledge in these areas.”

While Tyerman recognises the potential of establishing the firm’s advisory credentials in North America to take advantage of the growing PPP market in that part of the world, following success in the region of the company’s model audit and modelling service lines, he suggests that this is a medium-term aspiration.

The incremental building of capability and capacity is instead how Tyerman and the Evo Infra team see their business developing and growing.

He and his colleagues are focused on building the existing business and establishing Evo Infra in new sectors, with a strong history and background that gives it the base from which to grow.