Strategic risk

Heavy rail Heavy rail

Description (What is the Risk)

Change in shareholding of Private Partner.
Conflicts of interest between shareholders of Private Partner.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The importance of these risks varies from transaction to transaction. In a highly regulated market like UK the participants are major corporates not SPVs so there is less of a focus on change in control.

Mitigation Measures (What can be done to minimize the risk)

Varied.

Government Support Arrangements (What other government measures may be needed to be taken)

Varied.

Comparison with Emerging Market

Varied.

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Description (What is the Risk)

Change in shareholding of Private Partner.
Conflicts of interest between shareholders of Private Partner.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

Contracting Authority wants to ensure that the Private Partner to whom the project is and has the specialist input needed to make the project a success.

Bid awarded on basis of Private Partner's technical expertise and financial resources therefore sponsors should remain involved.

Mitigation Measures (What can be done to minimize the risk)

Contracting Authority will limit Private Partner's ability to change shareholding for a period (i.e. lock-in for initial concession period).

Pre-tender proposal should set out proposals for governance of Private Partner.

Comparison with Developed Market

Contracting Authority in emerging markets is not likely to be more restrictive.

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