Commercial affairs deals, which are awarded to companies for specific services, are one of the most lucrative areas for Australia.
They account for $1 billion of revenue for the country’s financial institutions in 2017.
But they are also hugely complex and involve the negotiation of complex contracts with numerous stakeholders.
It is estimated that about $700 billion of commercial dealings take place annually.
The key elements of commercial diplomacy are: setting a commercial agenda for a new client and its partners and managing the contract, ensuring the value of the agreement is reflected in the commercial deal.
It’s a difficult process for all parties, as a client’s commercial objectives may change over time.
But the key issues to consider are: How is the client’s relationship with the company expected to evolve over time?
Does the client have a strong commercial relationship with another firm?
Is there a need to extend or consolidate the relationship?
The key decision-making on commercial matters is often made at the end of the deal, and often the client is in a position to influence the outcome.
The biggest winners in 2017 were: 1.
Altrincham Group, worth $700m to a new customer, including the right to supply goods and services.
BHP Billiton, worth about $1b to a company and the right of first refusal to supply electricity.
Alta Vista, worth nearly $500m to the company.
B&R Energy, worth almost $300m to two companies, which included a right of refusal to power the plant.
Australian Water Resources Limited, worth more than $250m to several clients.
Blue Ridge Energy Limited, valued at more than twice its value.
Centennial Power, worth a total of $300 million to a client.
CenturyLink, worth up to $130m to an existing customer.
Crown Property Company Limited, with $110m worth of interest.
Equitas Investments, worth at least $50m to four clients.
Fairmont Power and Light Limited, which also acquired the right for power supply, to supply power.
Flinders Power Holdings Limited, acquired for $100m worth, including a right to produce power.
Global Water Holdings Limited.
Goldcorp Power, valued for $60m to buy an interest in a mine.
Honeywell Energy Limited.
Howard Hughes Enterprise Holdings Limited (HHE) for $65m worth.
Kynareth Holdings Limited for $45m worth including a commitment to purchase the company and its assets.
Medford Power Company Limited for up to a $100 million payment to purchase a company’s assets.
Medway Water Holdings for $50 million worth.
Metrolink for $25 million worth of debt.
NT Power Limited for about $25m worth (including debt).
NT Energy Limited for nearly $30m worth on a fixed rate.
Northland Water Holdings and Northern Energy Limited (NWE) for about half a million.
Optus, worth around $15m to Optus Mobile and Optus TV. 25.
Northern Territory Power Corporation for $7m worth and NT Energy for about another $7.5m worth in debt.
Origin Energy for $13m worth worth of power.
Qantas Group Limited for almost $8m worth for about a year’s supply.
SA Power for about an additional $5m for power.
State Water Corporation for about one-third of a million dollars worth of water.
Westpac Banking Corporation for nearly a million worth in cash.
West Australian Electricity Corporation for a few million worth worth in electricity.
Western Australia Power Corporation, worth between $1m and $10m worth from the Commonwealth Government.
Western Australian Power Networks for about 1.8 million worth, plus debt.
Westmeridien AG for a potential $7 million payment.
Zebra Energy for a potentially large $4 million payment (and a potential 10-year contract).
Westwood Energy for approximately $4.5 million worth (and interest).
Westfield Holdings for about 100,000 worth of shares.
Western Gas for $6 million worth and $200,000 in debt (and the right over 40 years to own more shares).
Western Mining and Construction Corporation for the right.
Western Energy Australia for about 2.8 billion in debt, which includes about $2.3 billion in fixed interest payments.
WA State Government for $2 billion worth of the state’s assets and debts.
Western Rivers Power for $700,000 to the Commonwealth, which is expected to receive an initial payment of about $200 million.