We help trustees to identify and manage covenant risk, however it may arise, as part of an integrated approach to managing risk in their scheme.

We help sponsors to understand the issues facing trustees and to anticipate their needs, with a view to finding solutions.

The Penfida approach to covenant

The Penfida approach to covenant evaluation involves a robust assessment of the sponsor’s likely future profitability and cash flow, taking account of the outlook for the business, the market in which it operates, the position of the scheme relative to other stakeholders, as well as ESG-related risks and opportunities.

Our analysis provides trustees with a transparent way of assessing the value of the covenant today relative to the scheme and its ability to fund any shortfall, and monitoring that relationship into the future.

Our approach also provides a comprehensive framework for integrated risk management, enabling trustees to assess the impact of covenant funding and investment decisions over the life of the scheme.

What sets us apart:


Our independence ensures that our clients are our only focus


Our partners have extensive experience as senior covenant and corporate finance advisers


We have developed an integrated and risk-based approach to covenant assessment


We provide our clients with clear advice and recommendations

Independence: Our independence and lack of conflicts ensures that our clients are our sole focus

Experience: Our collegiate approach ensures that clients benefit from our partners’ many years of corporate finance experience, enabling them to provide high quality and innovative advice

Expertise: We have significant experience and have advised on the pensions implications of over 50 corporate transactions over the past decade

Approach: Our integrated and risk-based approach to covenant assessment enables us to provide “best in class” advice to our clients

Forward thinking: We are proactive on our clients’ behalf, anticipating and preparing for events that may impact the scheme and the security of members’ benefits over time

Clarity : Covenant can be a complex area overlaid with competing interests – we break this down into clear advice and recommendations for our clients

We advise over 100 pension clients ranging from < £50m schemes to some of the largest in the country, representing collectively over £300bn in assets.

Penfida has established a successful track record as covenant adviser to many of the UK’s major pension schemes, often advising against the background of the most complex recent corporate transactions.

We have wide industry sector experience across most sectors, including the industrial, consumer & retail, construction, real estate, support services, oil & gas, TMT, travel & leisure, utilities, financial services and pharmaceutical sectors

Case Study 1
Unilateral public bid and subsequent takeover of aerospace and automotive company

Case Study1

Assisted the trustees with planning and preparation for potential corporate events in the 2 years prior to the bid.  Following an approach by the bidder in early 2018, advised the trustees in relation to the covenant impact of both the bid lapsing and succeeding.  Assisted the trustees in their tactics, response and negotiations with both parties and helped them secure appropriate mitigation with both sides within the confines of the bid timetable

Case Study 2
Leveraged buy-out by private equity owners and subsequent disposals / restructuring

Case Study2

As part of the initial acquisition of a specialist software and outsourcing provider by a private equity firm, Penfida helped its trustees to negotiate a package of protections and mitigation, including security.  This package provided the trustees with the ability to secure adequate funding and further renewed protection and mitigation as the covenant evolved over time.  This has been particularly the case as the underlying performance of the covenant led to restructuring and two subsequent disposals.  On both these transactions, an adequate package was re-negotiated to protect the members transferring as well as the members remaining attached to the relevant residual businesses.

How we can help you

Penfida provides a full range of covenant advisory services from regular evaluation, affordability assessment and monitoring to advice in specific situations, such as corporate transactions, restructurings, refinancings, contingent asset arrangements and scheme events.