Operis completed a formal model audit, along with providing tax and accounting advice, for the consortium consisting of BBGI, Acciona, Jones Bros and Aberdeen Standard Investments in support of their final bid for the A465 Mutual Investment Model (MIM) project.  This £500 million scheme includes upgrading a 17.7 km stretch of road between Dowlais Top and Hirwaun (Sections 5 and 6) in Wales from a three-lane single carriageway to a two-lane dual carriageway, with an extra 2.2 km of new road to be constructed.

The South Wales project is the first PPP to be procured by the Welsh government under MIM.  MIM gives the Welsh government the ability to invest up to 20% of the project’s equity in return for up to 20% of the profits, and to have more control over key decisions made on the project by nominating one director to sit on the board. Other projects utilising MIM include the redevelopment of Velindre Cancer Centre in Cardiff and a number of Welsh schools projects.

The A465, located in the Heads of the Valley area, was originally built in the 1960s and has been identified as one in need of improvement due to its width, restricting traffic flow and poor visibility in many areas. The scheme will contribute to a number of key areas for long-term improvement such as integrating local transport, improving access between settlements, enhancing international connectivity and increasing safety and security.

The timing of the project required the Operis tax and accounting team needed to consider whether composite trader tax treatment or the newer structures and buildings allowance applied to construction expenditure and assess the impact of the VAT Domestic Reverse Charge which is due to be introduced in the UK from 1 October 2020, and which could have an impact on a number of UK infrastructure projects.

Two remaining consortiums are in this final round of bidding, with the preferred bidder expected to be announced in May 2020. Following this, the financial close is expected to be in September 2020, with construction to be completed in 2026.

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Erwan Fournis
Global Head of Financial Advisory

+44 207 562 0444

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Carmen Wade
Financial Advisory, Head of North America

+1 647 243 3840

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Jun Tao
Global Head of Model Audit & Financial Modelling

+44 207 562 0428

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Mark Southall
Associate Director - Model Audit & Financial Modelling

+1 647 846 7384

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Philip Allen
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Operis Europe

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+44 207 562 0400
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Operis North America

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+1 647 846 7382
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Erwan Fournis
Global Head of Financial Advisory

+44 207 562 0444

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Chris Aldred
Director

+44 207 562 0433

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