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Investment portfolio review for DIT
Review of the criteria against which the £24Bn worth portfolio of land development deals of the DIT were prioritised, to enhance foreign equity rising. Review of the Portfolio optimisation process, to prioritise the most attractive deals, divest the least
Our Consultant who worked on this project: Cristina
Following the Government increased commitment to regenerate the Midlands Engine - to deliver a vision of a thriving socio-economic environment, and high accessibility and connectivity to other regions and to the world - a core team of EY consultants, including our resource, Cristina, received the mandate to streamline the Northern Powerhouse pilot processes in order to learn from it, and optimise it to roll-out the same initiative in the Midlands Engine region:
1. shortlist the Midlands’ best R.E. deals from the former-RIO portfolio, prioritising those with the highest potential of attracting foreign investment
2. publish a pitch book for the Midlands Investment Portfolio, with the shortlisted real estate and capital projects development opportunities to present at R.E. global events
3. organise and deliver initiatives to identify investors, record their contact details and interact with them to promote the Midlands deals.
The mandate also asked to ensure that the available capital investment opportunities across the Midlands were presented in a way that was clear to investors, with relevant data for their decision making.
The new pitch book was paramount for the marketing and promotional efforts to present the Midlands Engine Investment Portfolio in real estate, which had to be launched at the 2017 MIPIM global event for R.E. and land development investment, where a Midlands pavilion will have been presented for the first time, and then re-proposed in 2018 and 2019.
This initiative to promote the Midlands investment deals in real estate was part of a much wider effort of the DIT to propose various opportunities for foreign investment in the same region, to drive inward investment also in other sectors, and to attract capital investment for the region regeneration. (The activities - which aimed at contacting foreign investors, and rise equity - comprised of International Trade Summits, a Midlands’ Export Champions programme, Trade & Investment Conferences, and other events and trade missions in target markets, to show the Midlands openness for business).
Our Evolution’s resource Cristina was tasked with the assignment of:
1. mapping the processes which was followed the previous year to shortlist the deals for the Northern Powerhouse in the pilot version for the former-RIO portfolio, also interviewing its stakeholders and sponsors to understand what the pain points were, which parts of the process they felt were not working well and why, and what were the aspirations for its improvement;
2. analysing the Northern Powerhouse pilot process step by step, to understand if the same objectives and requirements could be met with less resource intensive activities, and if there were duplicate efforts for the same objectives that could be avoided;
3. redesigning the Northern Powerhouse process to streamline it when rolling it out for the Midlands Engine, to save time and cut cost in its implementation, which on the pilot project in the Northern Powerhouse proved too lengthy and inefficient, due to the fact that it involved duplicate steps and too many in-person meetings requiring high participant numbers.
The first contribution of our resource was to map out the pilot process flows that were followed, in order to shortlist and promote the former-RIO portfolio of opportunities in the Northern Powerhouse. She did this by interviewing stakeholders and then breaking down the operations to be carried out into a series of process steps, visualising them in a process map with swimlanes that identified the ownership of each step (which was most often a shared ownership).
She identified, in the overall efforts that were described to her, 3 main processes associated with 3 change projects, which impacted multiple dimensions of the DIT business-as-usual activities, as that involved the participation of several teams and departments at the national and regional level:
1. the process for minimum criteria assessment: to decide which new deals were to be taken into consideration to evaluate their inclusion in the portfolio, shortlisting those that met the requirement. Plus, the prioritisation process: to shorten the list of already included projects, and divest those with lowest priority ranking.
2. the process to produce a new pitch book: to present the selected shortlist of prioritised deals, showcased with standardised and investor-relevant data.
3. the process to mobilise the equity brokers: to coordinate the teams tasked with the promotion of deals to foreign investors to raise equity. This included all promotional efforts: from the identification of investors to contact, to the organisation of meetings, participation at relevant investor events and the remote interactions for deals initiation and closure.
There were several changes in the implementation pilot that deviated the process from the portfolio prioritisation strategy that was proposed by her team the previous year: for example, the only minimum criteria - to select the deals to be included in the prioritisation efforts - were the requirement of a minimum £100m expected GDV, and to be investment ready, having a planning permit.
The processes were not technically complex, however, when first implemented the pilot project included avoidable bottlenecks, such as a significant number of in-person meetings, and a high number of stakeholders who were responsible for deciding whether to include some lower ranking deals in the portfolio, once they passed the minimum criteria threshold (in the first pilot roll-out in the Northern Powerhouse - in which Cristina was not involved operatively - the possible investment deals to evaluate for inclusion at the end were prioritised by assigning a colour-coded status).
These change projects for the pilot roll-out were therefore to re-plan, and Cristina had to propose how to streamline the processes and map the new one to deliver the same operations in the Midlands Engine.
Another bottleneck was the extremely high number of stakeholders involved in all the meetings to decide or validate which deals to include in the portfolio (the Midlands Engine Partnership, the West Midlands Combined Authority, Local Enterprise Partnerships, Local Authorities, education establishments, businesses and other stakeholders who were invited to the meetings in order to be able to understand and better advice in regard to the opportunities and challenges the Midlands region faced, and what will have been more viable and impactful to deliver growth and productivity across the region). This also was an aspect that needed to be simplified in the re-design and optimisation process.
After a careful analysis of each step in the process - evaluating costs in term of time and resources against the scope they were meant to achieve, and the dependencies among the steps - which made some actions essential for others - our resource, Cristina, could propose a streamlined process flow for the future state:
Cristina's new process map succeeded in facilitating the understanding of the actions of each participating entity that was involved in the process, in order to allow each entity’s stakeholder to identify their tasks and block time for each into their schedules, once they were all made aware of what they needed to be doing.
Thanks to the implementation of this optimised process for the DIT - which in its streamlined version permitted savings of circa 40% in completion time - it was possible to shortlist from the former-RIO portfolio 19 investment-ready real estate development opportunities with high likelihood of attracting foreign investment. These prioritised Midlands deals were worth £7Bn in total.
The prioritised investment deal proposals were showcased at the Midlands Pavilion at the global real estate MIPIM event in March 2017 in Cannes:
by presenting them to investors with the new pitch book - which contained information to accelerate investment decision making - and by hosting more than 50 events, such as panels and presentations, as part of the efforts to promote the opportunities to invest in real estate projects in the region. This effort generated more than 30K visits to the Midlands pavilion.
The pitch book - for the former-RIO’s portfolio of Midlands’ land regeneration investment opportunities - was published as planned in its printed version, whereas the proposed interactive live digital tool to enable the portfolio exploratory activities by each investor - thanks to the use of filters to source deals - was not implemented with the initially-advised Excel database solution to access data, as Cristina had proposed the previous year:
the new exploratory tool for the portfolio was built with the same logic as Cristina initially proposed Excel tool, but using a different technology. It was in fact delivered in a live online version only, where it was possible to filter real estate deals from the former-RIO portfolio among other DIT investment opportunities on the same platform, which included also sectors other than R.E. and land regeneration.
The filters to select deals from the former-RIO portfolio on the web version provided to the investors an array of opportunities that were searchable from a continuously updatable source, delivering the benefit of optimised access to current information and data for each deal. This solution enabled the prospective foreign investors to model predictive business outcomes in order to assess the potential returns and risks for each proposed R.E. deal.
With regard to the interactive pitch book web version - to source investment proposals in real estate from the former-RIO portfolio - in the end the only filters for the investors were ‘region’ and ‘scale’ (meaning here: level of achievable GDV). The information provided consistently to investors for each project were 1. Location, 2. Project promoter, 3. Scale, 4. Sector (meaning here: proposed R.E. developments typology mix: e.g. Commercial, such as Offices, Retail and Hospitality; Residential and Mixed Use; Manufacturing and Logistics).
The current pitch book of Real Estate deals for all the UK, produced also thanks to the new process to shortlist Midlands land development deals, then applied UK wide:
The current web version of the DIT Portfolio of multi sector opportunities for foreign investment, where also the shortlisted former-RIO real estate development deals for land regeneration can be found, and filtered by GDV and by Region:
The MIPID 2017 event, where the newly prioritised former-RIO portfolio of land development deals for the Midlands were presented, as part of the DIT efforts to showcase opportunities to foreign investors in this sector:
The pitch book and events for the Midlands land development deals were presented for the first time at the MIPIM real estate and land development investment event in Cannes in 2017, which was repeated in 2018 and 2019:
Deals value in Northern Powerhouse
Value of EY sales to implement the prioritisation
Minimum expected value of deals to assess for inclusion
Abstract from Cristina's review of a Senior Manager document called "Northern Powerhouse Prioritisation Pilot” – Draft Criteria For Peer Review Post Workshop
The prioritization criteria in this online publication (in the public domain) are only some highlights of the EY advisory about them
CLICK ON THE IMAGE FOR MORE INFO AND SLIDE SHOW
What People Say
All 30 written comments regarding Cristina's work are evidenced in writing by their original MS Outlook files and a S.A.R. received via email, archived in its original delivery email.
“As a project manager Cristina has consistently worked at Senior Consultant level.
She has managed the rollout of our biggest process improvement project.
The training guide she produced for the process improvement project was excellent and will be a key enabler for the transition phase.
I have been particularly impressed with her analytical skills and her ability to break problems down into key components and identify workable solutions.
Her briefings have been well researched and to a very high standard.”
— Stuart Bourn, Managing Director at Ernst & Young LLP
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