💡 Introduction: Why This Topic Matters
Post-acquisition, capex is where a lot of the value thesis for unlisted assets actually lives. You’ve acquired an asset based on future upgrades, expansions, or compliance programs – but cash still leaves the door first. Without a structured way to convert capex schedules into cash flows, teams are left guessing when the value story shows up in the bank account. This cluster article zooms into a single part of unlisted asset management: turning capex programs into a clear, auditable cash profile. It sits alongside your 90‑day post‑acquisition cash plan, working capital initiatives, and exit readiness work. Together, they give sponsors, operators, and any financial adviser a consistent way of understanding unlisted assets in cash terms, not just IRR slides.
🧩 A Simple Framework You Can Use
Use a four‑layer framework: scope → phases → timing → payback. First, capture scope as simple, named components (e.g., “plant upgrade,” “network extension”) with amounts and currencies. Second, group those components into phases with start/end windows and dependencies. Third, map timing by applying rules for deposits, progress draws, retainages, and release conditions – this is where you convert engineering or vendor language into a clean cash view. Finally, layer in payback: when incremental revenue, cost savings, or regulatory risk reduction actually arrive as cash. This framework plugs directly into your broader post‑acquisition model, letting you show stakeholders how capex interacts with working capital, covenants, and budget vs actuals for the asset. It’s simple enough for operators to own, but rigorous enough for IC memos and buyers later on.
🛠️ Step-by-Step Implementation
Step 1: Define the Capex Program in Plain Language
Start by stripping the project back to a small list of clearly named capex items. Avoid jumping straight into spreadsheets; instead, create a short narrative: why the program exists, which unlisted infrastructure asset it relates to, what business metric it moves, and any hard timing constraints. Then translate that into a structured list: item name, vendor (if known), high‑level budget, and the driver of payback (revenue, savings, risk). At this stage, you’re still pre‑model, but you’re clarifying the commercial logic, so anyone involved in unlisted asset management can understand it quickly. This upfront clarity also lets you spot dependencies on assets with high customer concentration, where delays could compound customer concentration risk later on. Once the list is stable enough, you’re ready to convert narrative into phases and timing rules rather than ad hoc line items.
Step 2: Turn Vendor Schedules Into Phase-based Cash Flows
Next, take vendor quotes, construction schedules, or internal plans and translate them into phases that actually drive cash. Instead of dozens of rows like “Invoice #27 – crane hire,” define phases such as “design,” “site works,” “equipment install,” “commissioning,” each with a total amount and date range. For each phase, set default timing rules: deposit percentage, progress billing cadence, and retainers. This is where a capex template – for example, the dedicated Capex Program Modelling use case [249] – is invaluable, because the same structure can be reused across multiple unlisted assets. Keep stakeholders focused on the big picture: how much cash leaves per month or quarter, and how sensitive those dates are to slippage. The goal is a model that mirrors contractual reality without drowning people in line‑level noise.
Step 3: Model Multi-phase Draws, Retentions, and Releases
With phases defined, you can now convert them into time‑series cash. Apply timing rules directly in your model: deposits in month one, progress draws based on milestones, retainers released after completion or defect periods. If the program spans multiple entities or projects, lean on multi‑phase project cash flow components [250] to avoid reinventing logic. This is the point where understanding unlisted assets in detail really matters: for regulated unlisted infrastructure, you may need to model approval delays or staged commissioning before any revenue flows. Tie each phase’s completion to a clear status flag, so finance, operations, and your financial adviser have one shared view of where cash is truly committed vs optional. The output should be a single, consolidated “capex cash” line feeding your group cash waterfall.
Step 4: Connect Capex to Working Capital and Performance Tracking
Capex never lives in isolation. Once you have a clean capex‑to‑cash profile, connect it to your working capital assumptions: inventory build, pre‑operating expenses, and the timing of customer receipts. This is where you can apply best practices from capex schedule modelling and from working capital improvement playbooks. For example, if commissioning is delayed, does that extend negative cash cycles or breach any facility headroom limits? Build simple flags for key thresholds: minimum cash, covenant ratios, or lender reporting triggers. You also want to prepare for the budget vs actuals review: tie each phase back to a budget ID so that when actual invoices arrive, you can quickly see where unlisted assets over‑ or underspent versus plan.
Step 5: Link Payback to Cash and Surface Decision-ready Views
Finally, layer expected payback onto your capex cash curve. For each phase or bundle of spend, define when incremental cash shows up: new revenues, lower maintenance, reduced outages, or regulatory penalties avoided. Use a simple schematic: capex spend → operational go‑live → stabilised run‑rate → cash uplift realised. This makes it much easier to explain the investment case in board packs or exit materials. Where appropriate, surface this via dynamic dashboards and scenario views powered by modern modelling features. Make it trivial to run “defer phase 3 by 12 months” or “cut scope by 20%” and see the cash implications instantly. A good model doesn’t just record capex – it lets sponsors and operators re‑sequence programs with confidence, across portfolios of unlisted assets.
📈 Real-World Examples
Consider a fund that acquires a mid‑sized unlisted infrastructure asset with a three‑year, $50m upgrade program. Initially, finance only had a static slide deck with annual totals. By rebuilding the program in a capex‑to‑cash model, they broke spend into six phases, each with deposits, draws, and retainers. Cash outflows were then linked to a 90‑day post‑acquisition cash plan and ongoing working capital improvements. The team discovered that pushing one non‑critical phase back by nine months freed sufficient headroom to avoid a covenant waiver request. Later, when reviewing budget vs actuals in cash, they could explain variances clearly: scope changes vs timing shifts, and savings. The result: better IC conversations, fewer surprises for lenders, and a cleaner story for future buyers assessing unlisted asset management discipline.
⚠️ Common Mistakes to Avoid
One common mistake is modelling capex on a straight‑line basis over time, ignoring real payment terms. That hides periods of peak cash strain and can mask upcoming breaches of facility headroom. Another is failing to tie capex programs back to counterparties, especially where customer concentration or revenue dependence is high, leaving customer concentration risk out of the model. Teams also often separate capex models from budget vs actuals reporting, so no one can see whether overruns are spending more cash, bringing payback forward, or both. Finally, many investors under‑document the rationale and assumptions for their unlisted asset management decisions, making future re‑forecasts hard. The fix: keep timing rules explicit, link capex to operational KPIs, and treat documentation as part of the model, not an afterthought.
🚀 Next Steps
Start by picking one live or recent capex program on an acquired asset and rebuilding it using the four‑layer framework above. Align it with your broader post‑acquisition cash model and 90‑day cash plan, then connect phases into working capital and headroom views. If you already run other capex evaluations, such as corporate capex & project evaluation work, consider standardising templates so the same approach applies across the portfolio. From there, extend the method into related areas like funding and drawdown structures [251] and multi‑phase project cash flows [250].
The goal is simple: every major capex decision on your unlisted assets should be explainable in one clear cash chart and a short narrative that any stakeholder can trust.
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