Project Finance in Saudi Arabia

Transcription

1 Project Finance in Saudi Arabia October 2010

2 in the Middle East and Saudi Arabia Basic Facts employs approximately 200 people in MENA region, having full branch licenses in Saudi Arabia, UAE and Qatar and offering the full range of services including investment banking, private wealth management, asset management and Islamic banking A further representative office is located in Bahrain Approximately 40 people are employed at, Saudi Arabia was the first international bank with a universal banking license in Saudi Arabia Furthermore, a dedicated project finance team of 10 people is located in Dubai, covering the Middle East including Saudi Arabia 1 10/12/2010 3:33:46 PM 2010 DB Blue template

3 Project Finance in Saudi compared to other countries Small number of Mega deals driving significant PF volumes Total PF volume per country Source: in US$ billions 0 Dealogic * Germany Spain UK Qatar UAE Saudi Arabia Total number of PF deals per country Number of projects * Germany Spain UK Qatar UAE Saudi Arabia average deal size Spain = US$ 0.2bn average deal size Saudi = US$ 2.5bn *until 30. Sept /12/2010 3:33:46 PM 2010 DB Blue template

4 Size of PF transactions in Saudi Largest Project Finance transactions closed Project name Jubail 2 Export Refinery (SATORP) Riyadh PP11 IPP Project Project value (in US$ billions) Financial close 14.2 June June 2010 Rabigh IPP Project 2.4 July 2009 Maaden-Sabic Fertilizer Complex Project Saudi Kayan Petrochemical Complex Saudi Polymers Petrochemical Project 5.6 June May April 2008 Marafiq IWPP 3.5 May 2007 Sector Oil Refinery Power Power Petrochemical Petrochemical Petrochemical Power Projects with funding requirements >US$ 5bn get successfully funded Ability of the market to fund mega projects has not been impacted by the crisis 3 10/12/2010 3:33:46 PM 2010 DB Blue template

5 Saudi Arabia s Project Finance by sector PF volume per sector in US$ billions The oil and petrochemical sector represents the vast majority in PF volume Since 2004 investments in the power sector increased to cover Saudi s soared energy needs Investments in other sectors come with a rise in the respective sector demands Source: Dealogic Power Oil/Petrochemical Rest* *includes Sewage, Telecom, Airports, Ports, Steel mills and other infrastructure projects 4 10/12/2010 3:33:46 PM 2010 DB Blue template

6 Saudi Arabia s project locations High concentration on the coast close to industrial centers Projects during the last 4 years Saudi s petrochemical centre near Jubail is represented by a large number of investments into related plants and facilities Other large projects tend to be developed in proximity to big cities where ports guarantee the transport to and from production sites 5 10/12/2010 3:33:47 PM 2010 DB Blue template

7 General financing structure Local banks are flushed with historically high levels of equity Source of funding of Saudi PF loans Local loans 34% Islamic 3% Equity 28% Saudi banks represent a completely alternative liquidity source by lending in local currency and concentrating on local deals Further, equity plays an important role in Saudi Arabia's Project Finance sector International loans 29% ECA 5% Multilaterals 1% 6 10/12/2010 3:33:47 PM 2010 DB Blue template

8 Major players Few large investors have majority of market share Top 15 lenders to Saudi PF market in US$ millions (last 18 months) /12/2010 3:33:47 PM 2010 DB Blue template

9 Future of Project Finance in Saudi Arabia Requirement for more diversified funding sources Project pipeline identified for Saudi Arabia accounts for US$ 107bn The average deal size of pipeline projects will increase to US$ 3.3bn compared to historic average deal size of US$ 2.5bn Oil and Petrochemical projects continue to dominate the market with a volume share of 34% and an average deal size reaching US$9bn Power and transport infrastructure expected to gain importance Effects of financial crisis and future regulations (Basel III) will lead to increasing restrictions of the commercial bank loan market This will require an increasing use of the bond market in order to fully fund large scale projects 8 10/12/2010 3:33:47 PM 2010 DB Blue template