Business Opportunities for Estonia s Private Sector

Transcription

1 IFC in the Infrastructure Sector Business Opportunities for Estonia s Private Sector Tallinn, Estonia February 8, 2013 Rimas Puskorius, Chief Credit Officer

2 Overview IFC s Infrastructure and Natural Resources business Selected case studies from the region and around the world AkEnerji (Power), Turkey Snowman (Logistics), India Veolia Voda (Utilities), Czech Republic Izgaz (Oil, Gas and Mining), Turkey Trivon (Telecom, Media & Technology), Russia Emergia (Technology Services), Colombia & Chile IFC products and financing terms Focus on Telecom, Media & Technology Annex: Key issues in an IFC financing the example of wind energy 2

3 IFC s Infrastructure and Natural Resources Business Power Utilities Transport Infrastructure Transport Services Natural Resources Telecom, Media, Tech Generation, thermal and renewable Transmission Distribution Integrated Utilities Water, Waste Privatized Public Services Airports Ports Roads Railroads Logistics Shipping Airlines Rolling Stock Oil & Gas Gas Distribution Mining Pipelines LNG Broadband Mobile Data Centers E-banking 3

4 IFC s Infrastructure and Natural Resources Business Current portfolio (December 2012): US$13.24 bn committed; 28% of IFC s global portfolio FY12 investments: $3.05 bn, including $865 mn in B loans, in 103 projects Europe and Central Asia accounts for 17% of IFC s infrastructure portfolio IFC global infrastructure portfolio by region (total = US$13.24 bn) Europe and Central Asia, portfolio by sector (total = US$2.25 bn) 4

5 Project Description Case Studies Power: Akenerji Owned jointly by Akkok Group of Turkey and CEZ Group of Czech Republic 570 MW of generation capacity as of December 2010 Project consists of five small scale hydropower projects (Feke I 30MW, Feke II 70MW and Himmetli and Gokkaya 27MW and 30MW respectively in Adana) Closing Date: June 2010 Financing Aspects Tranche Product Amount Tenor IFC A Loan Senior Debt US$65 million 8 years IFC C Loan Subordinated Loan US$10million 8 years 5

6 Case Studies Transport & Logistics: Snowman Project Description Repeat investment (US$6.5 million long term loan) in Snowman, a company providing Temperature Controlled Logistics (TLC) solutions, including storage and transportation and supply chain services (e.g., inventory management, order collection) in India. Project to expand storage facilities in new and existing locations over the medium terms. The major costs of expansion are civil work, lease costs, refrigeration systems, material handling equipments, electrification, fleet and IT augmentation, furniture and fixtures. IFC Role: providing the first round of debt capital, which will help in future fund raising, and send a signal of IFC s confidence in the viability of the agri-infrastructure sector in India IFC s first project with Snowman in 2009 encouraged the company to adopt a structured framework to manage its social and environmental systems, thereby acting as a benchmark for the TCL sector. IFC's repeat investment and continued involvement will allow it to further strengthen and continue to maintain the existing E&S framework in place. Total project cost: US$28 million Closing:

7 Case Studies Utilities: Veolia Voda Project Description Equity Veolia Voda ( VV ) is a Veolia Eau vehicle for E. Europe with balance sheet of ~ 1 billion Based in Prague, providing water & sanitation services for ~ 6m people in central Europe Czech Republic represents 83% of VV s existing business, and the company has operations also in Slovakia, Hungary and Poland IFC made a EUR100 million equity investment in Veolia Voda IFC supported the Company s entry into riskier markets: Russia, Ukraine, Balkans Closing Date: 2010 Investment Aspects Tranche Product Amount Tenor IFC Equity EUR100 million - 7

8 Case Studies Oil, Gas and Mining: Izgaz Project Description Privatization of gas distribution in the city of Izmir awarded to GdF SUEZ in Mid-sized gas distribution company in Turkey with 180,000 customers, 297 employees and 2,525 km of distribution pipes. One of the leading energy providers in the world, GdF SUEZ achieved revenues of 83.1 billion in IFC s first local currency financing in Turkey Total project cost: EUR556 million Closing: June 2009 Financing Aspects Tranche Product Amount Tenor IFC Senior Debt USD50 million 9 years European Bank for Reconstruction and Development Senior Debt USD60 million 9 years 8

9 Case Studies Telecom, Media & Technology: Trivon Project Description US$25 million equity in Trivon AG, a broadband service provider headquartered in Switzerland with operations in fifteen regions in Russia. Trivon provides broadband services to both business and residential customers through a combination of wireless and fiber-optic solutions and has acquired both regional operating licenses and regional frequencies. The project consisted of the expansion of the company s services through investment in network optimization followed by the acquisition and integration of small broadband operators in Russia and growing them organically through the company s operating skills and expertise. IFC's role: IFC financing helped plug the funding gap of the company, enabling it to complete its financial plan in an environment where financial institutions were scaling back. IFC's investment and continued involvement is helping Trivon improve its corporate governance in line with international standards and has provided comfort to the other investors. Total project cost: US$131 million Closing:

10 Case Studies Telecom, Media & Technology: Emergia Project Description US$10 million C loan with income participation feature to Emergia Contact Center, a well established Business Process Outsourcing and Contact Center outsourcing company operating in Latin America, to finance its expansion. The company started its operations in 2005 in Spain and is in the process of ramping up its operations in Latin America over the next 3 years by expanding its capacity in Colombia and launching two new contact centers in Peru and Nicaragua in the period Positive social effects of Emergia are largely tied to increased employment opportunities, particularly in smaller university towns and for women, who represent 67% of Emergia's workforce. It is estimated that 4 indirect jobs are created from each direct job in the contact center industry. IFC's role: IFC provided long term funding otherwise unavailable for the technology service sector in Latin America due to the lack of collateral assets and the banking community's limited knowledge of the industry segment. IFC has accumulated considerable expertise on IT services and Business Process Outsourcing as a result of a number of investments it has made in the sector in recent years, an expertise that is unmatched in emerging markets. Total project cost: US$28.5 million Closing:

11 IFC products and financing terms Equity Corporate JV (early equity investments, Infraventures) Typically up to 20% shareholding Long-term investor, typically 6-8 year holding period Mezzanine / Subordinated Debt Senior Debt Any number of structures/flavors of subordination Subordinated loans, income participating loans, convertible loans Senior Debt (corporate finance, project finance) Fixed/floating rates, USD, EUR and local currencies available Long maturities: 8-20 years, appropriate grace periods Range of security packages suited to project/country Mobilization of funds from other lenders and investors 11

12 IFC Project Exposure guidelines IFC s investment size on its own account is set by the following criteria: Greenfield with total cost >= $50 million Up to 25% of project cost Greenfield with total cost < $50 million Up to 35% of project cost Expansion or rehabilitation Up to 50% of project cost IFC can deliver the following complements to its own debt investment B loans Syndicated loans where IFC is lender of record, typically with funds provided by international commercial bank. Parallel loans IFC can mobilize parallel lenders, typically DFI or local lender IFC is able to work alongside co-lenders as part of lender group IFC s equity investment typically cannot exceed 20% of total share capital 12

13 Focus on Telecom, Media & Technology Sector (TMT) 13

14 The World Bank and IFC Work Together World Bank TMT Policy Team IFC TMT Team Works with Governments to facilitate: Investment climate policies Legal and regulatory policies Media best practice guidelines Selective PPPs Works with Private Companies to ensure: Sound Economic fundamentals Sufficient Financial Strength Sensitivity to the Community Profitable Investments 14

15 IFC Financing in TMT Telecoms Media Technology Satellite Infrastructure Data Centers Submarine Cable Applications e/m Payment Systems Wireless/Cellular Content Information Security Fiber Backbones Incubators IT Services Broadband Hardware/Devices Managed Services Towers MVNO's Cross Cutting Venture Investments Greenfield Projects to Corporate Expansions 15

16 IFC Investments Across TMT Retail Payment Points 2% IT Services 20% Satellite Telecommunicat ions, Radio and Television Broadcasting Online payments, ecommerce payments 1% Switching, switches 1% Funds 5% Cable and Broadband 7% Commitments by Sub-Sector Content 4% Engineering Services 5% Mobile Telephony 27% E-wallets, virtual banks 3% Fixed Telephony 5% ISPs & Datacenters 4% 16% IFC Highlights Total Invested Committed in FY2012 o/w Mobilized $8.2 billion $337.5 million $90 million 16

17 Supporting Development Through TMT Investments IFC s support of the Telecoms, Media and Tech industry helps raise living standards for people throughout the developing world O3B- IFC led a group of development institutions in providing $260 million in financing to help O3b Networks Ltd complete a satellite system that will provide affordable broadband access to developing countries near the equator. Zain Iraq- IFC supported economic growth and expanded access to telecommunications services in Iraq through a landmark $400 million facility for Zain Iraq, the country s largest mobile phone operator, providing mobile telecoms to people of Iraq for the first time in history of the country. Vodafone Ghana IFC led a group of development institutions and commercial banks in providing $215 million in financing to a mobile operator in Ghana. Through the project, IFC is supporting the successful privatization of the incumbent telecommunication company in Ghana, thereby helping to liberalize the market and promote the much needed competition that would help extend services to the bottom of the pyramid. IHS Towers- IFC provided $39 million in equity financing to a tower company in Nigeria. Through the project, IFC helped the development of low-cost models for accelerating the extension of telecommunications services to previously underserved areas and for the roll out of affordable broadband wireless services. 17

18 Award Winning Recognition from the Marketplace Altobridge : World Economic Forum Technology Pioneer; WSJ Technology Innovation Award hisoft: In 2011 hisoft was ranked 2nd in China and 4th in Japan by the IAOP for outstanding service quality Fino : 2011 Young Global Leader Award by World Economic Forum; 2011 Skoch Financial Inclusion Award; 2011 Sankalp Awards; 2011 CFO 100 Roll of Honor By CFO India magazine; 2010 Manthan South Asia Award for Best Project in the category e-inclusion: Financial Inclusion at the Bottom of the Pyramid through use of Technology; 2010 Asia Insurance Review Awards: Technology Initiative of the Year; e-india 2010 Awards recognizing excellence in ICT; 2009 Financial Times Sustainable Banking international award Voxiva: 2011 Department of Health and Human Services (HHS) Innovation Award; 2011 Public Relations Society of America Silver Anvil: text4baby; 2011 Fast Company Magazine: #40 Most Innovative Company in the world; 2011 #3 Most Innovative in Mobile and Healthcare; 2008 Technology in Government in Africa (TIGA) award; 2007 Legatum FORTUNE Technology Prize: Finalist and Technology in Government in Africa (TIGA) award Yellow Pepper: Short-listed for the 2011 Achievement in Basic Needs Financing Category at Financial Times' and IFC Sustainable Banking Awards; 2010 The Inter-American Development Bank (IDB) Utilizing new information and communication technologies - connect Banking award; 2010 "CP Capital Inflection Venture Prize" during the Americas Venture Capital Conference Suvidhaa: 2011 Inclusive Business Leader Award; 2011 SKOCH Financial Inclusion Award; 2010 Skoch Virtual Corporation Award; 2010 Red Herring 100 Asia Award; 2009 ICAI Business Achiever award; 2008 Kutch Shakti National Award ; 2007 Girnar Award O3B: 2010 African Infra deal of the year by Project Finance magazine Project Finance International Avea: 2008 Trade Finance Magazine Deal of the Year 18

19 Global Expertise 19

20 How We Finance TMT Projects Investment Type IFC Investment Greenfield, total cost less than $50 million Greenfield, total cost more than $50 million Expansion or Rehabilitation Ability to mobilize funding from Banks, DFIs and PE funds Up to 50% of incremental investment Up to 25% of incremental investment cost for IFC s account Up to 50% of incremental investment cost Mobilization of 3 rd financing Total funding for own account cannot exceed 35% of total capitalization (debt & equity) Umbrella for participants in IFC s syndication program: IFC lender of record, immunity from taxation and provisioning requirements. 20

21 Financial Products - Equity to Debt Equity Private Equity (including Venture Capital) Typically 5-20% shareholding Long-term investor, typically 4-8 year holding period Not just financial investor, adding to shareholder value Board position on case by case basis Subordinated loans Income participating loans Convertibles Other hybrid instruments Mezzanine/Quasi Equity Subordinated loans Income participating loans Convertibles Other hybrid instruments 21

22 Financial Products - From Equity to Debt Senior Debt & Equivalents Senior Debt: Project Finance or Corporate Finance Fixed/floating rates, US$, Euro and some local currencies Commercial rates, repayment tailored to project/company needs Long maturities: up to 15 years, appropriate grace periods Range of security packages suited to project/country Islamic Financing alternatives available Mobilization of funds from other lenders and investors; 1. through IFC s B loan Syndication Program loan arranger role, 2. arranging parallel financing from other banks and Development Finance Institutions Currency & Interest Rate Swaps Caps, Collars, and Currency Derivatives Commodity Derivatives Risk Management 22

23 Investments in TMT Sector Europe & Central Asia, Middle East, Africa Russia Ukraine Russia Russia Russia Asteros Group DeNovo Russian Towers IXcellerate Virgin Connect $22,500,000 Equity, Loan $3,500,000 Equity $20,000,000 Equity $2,600,000 Equity $25,000,000 Equity Warrants for $10.6 million Investor and Lender Data Center Investor Data Center Investor Towers Investor Data Center Investor Cable & Broadband Lebanon Burkina Faso Nigeria South Africa Ghana Mobinets $2,000,000 Equity Onatel IPO $20,220,000 Loan & Equity Interswitch $10,500,000 Equity Teraco $4,980,000 Equity, Mezzanine Loan Esoko $1,250,000 Equity Investor Telecom Mobile Lender Fixed Telephony Investor E-Payments Investor and Lender Data Center Investor IT Services 23

24 Asia, Latin America, Global Investments in TMT Sector YellowPepper $3,000,000 Equity Latin America DineroMail $5,000,000 Equity Latin America Softwell $4,800,000 Equity Brazil Lead Investor E-payments Investor E-payments Investor Software India India China World Suvidhaa FINO GDS Voxiva $5,000,000 Equity $7,300,000 Equity, Quasi-Equity and Follow-on equity $5,714,000 Equity, Follow-On Equity $2,500,000 Equity Investor E-payments Founding Investor E-payments Investor Data Center Investor Health Information Services 24

25 Annex: Key issues in an IFC infrastructure financing The example of wind energy 25

26 IFC s wind energy practice IFC has made 15 wind investments in more than 1,200 MW of capacity In Europe and Central Asia: Rotor Elektrik, Turkey: 135 MW, EUR220 million AES Kavarna, Bulgaria: 156 MW, EUR305 million Cernavoda and Pestera, Romania: 228 MW, EUR 299 million Pipeline in Poland, Croatia, Romania Other key transactions in Chile, Mexico, China, Sri Lanka, and India Experience with both equity and debt financing Can mobilize donor financing where appropriate IFC leverages its strong expertise to appraise/support wind projects Relationships with top technical consultants Experience with a wide range of turbine manufacturers/models Innovative structuring to optimize leverage, eg. flexible subordinated tranches that can absorb wind variability Understanding of regulatory support mechanisms 26

27 Key issues in an IFC financing Sector sustainability Technical viability Sponsor Environmental and social analysis 27

28 Key issues in an IFC financing: wind energy Sector sustainability Technical viability Sponsor Environmental and social analysis A range of viable RE frameworks / support mechanisms: feed-in tariffs GC market accelerated depreciation tax benefits grants tenders negotiated bid open market sales Legislative framework (secondary legislation, regulatory discretion) Off-taker credit-worthiness Sector sustainability 28

29 Key issues in an IFC financing: wind energy Sector sustainability Technical viability Sponsor Environmental and social analysis Resource measurement Land and permitting Equipment selection; construction strategy; O&M strategy Grid capacity 29

30 Key issues in an IFC financing: wind energy Sector sustainability Technical viability Sponsor Environmental and social analysis Integrity Experience Sponsor support - including share retention 30

31 Key issues in an IFC financing: wind energy Sector sustainability Technical viability Sponsor Environmental and social analysis Consultation Land: Willing sellers / willing buyers Impact on people: Noise and shadow flicker Impact on the environment: Birds 31