Financing and Investment Group

Transcription

1 Financing and Investment Group Presentation for Trade Commissioners Robert Pelletier, Chief Representative, Asia Adam Smith, Senior Associate, International Financing Team April 28, 2015

2 OBJECTIVE Objective of today s session: is to arm the TCS with knowledge of how EDC s financing services can help their clients and contacts Session is intended to be interactive and allow for questions throughout 2

3 OUTLINE Financing Deal flow Financing and Investing Group EDC Mindset Scenario #1: Bilateral term loan Scenario #2: CDIA loan Scenario #3: Corporate Syndication Key financing considerations 3

4 FINANCING DEAL FLOW How Do Financing Opportunities Flow Into EDC? Conversations with the TCS s clients in-market uncover a need for financing support. TCS then contacts EDC s relevant international business development group ( IBDG ) contact to move it forward. EDC has a broad network of bank contacts, whereby the bank may have had inquiries to provide financing to their clients whereby EDC may co-lend, insure, or guarantee, and they contact IBDG. EDC s network of account managers across Canada are alerted to opportunities that require financing from their exporters. EDC s network through the IBDG group and relationships with strategic accounts identify financing needs. 4 4

5 FINANCING AND INVESTMENT GROUP As deals flow into EDC, they are triaged as follows: Small Business Financing and Guarantees Focused on domestic working capital for Canadian exporters Partnership with Canadian banks through guarantees Equity Investments in funds to help develop Canadian exporters Investments in foreign funds to help promote Canadian trade Structured Finance Debt financing part of broader financing package to support stand-alone projects Examples include mining projects, oil and gas 5 5

6 FINANCING AND INVESTMENT GROUP International Financing ( IF ) Targeting medium sized Canadian companies ( mln) Focus on Canadian Direct Investment Abroad Corporate and Asset Backed Lending ( CABL ) Targeting larger Canadian companies selling to foreign buyers Also provide domestic financing to Canadian companies 6 6

7 EDC MINDSET EDC broadly categorizes its financing support in two categories: Trade Facilitation: financing supporting Canadian firm s present export sales, investments, or perhaps the firms global expansion; Trade Diversification: financing support which will help Canadian companies create future trade and win contracts with key foreign buyers. 7

8 SCENARIO #1: BILATERAL LOAN TCS representative meets a Canadian automotive supply company at a trade show in Guadalajara, Mexico. Company is large (USD 500 mln annual sales) and makes tools for parts suppliers. Canadian company through the trade show has just secured a USD 10 mln contract with a Tier 1 Mexican supplier, however contract is contingent on financing. Mexican supplier is based in Monterrey, they are a public company, well known, significant presence in Mexico. What happens next? 8 8

9 SCENARIO #1: BILATERAL LOAN TCS rep refers the opportunity to the local engaged EDC regional manager in Monterrey; Regional manager is put in contact with the Exporter, who then puts them in touch with the Monterrey based Buyer to discuss financing; Regional manager discusses the financing needs of the Buyer and decides that a bilateral loan is the best way forward, deal is too small to share with a local bank and EDC will move it forward on its own; EDC CABL automotive team analyzes the Buyer s ability to repay this loan based on a forward looking financial analysis. Also determines if security is necessary given the credit strength of the Buyer, and prices and structures the deal in a similar fashion as a commercial bank. EDC would view this support as Trade Facilitation. 9 9

10 SCENARIO #2: CDIA LOAN In-bound mission lands a Canadian company a plastics and packaging networking function in Mumbai, India; Medium size Canadian firm discovers there is an Indian firm of equal size offering complimentary service and if they acquire them it would give them presence in India; Canadian company engages TCS and asks how to go about market entry What happens next? 10 10

11 SCENARIO #2: CDIA LOAN TCS provides the Canadian firm with knowledge on doing business in India, regulatory challenges etc; Transaction is referred by TCS to Chief Rep in Mumbai who in-turn discusses opportunity with the Canadian companies account manager; Deal moves forward to the IF team, who works with the Canadian company s house bank to structure a loan to purchase the Indian firm. Bank and EDC will ultimately share all security and rights on an equal basis and each contribute 50% of debt to the new loan; EDC IF deal team analyzes the combined company s ability to repay this loan based on a forward looking financial analysis. EDC would view this support as Trade Facilitation

12 CASE STUDY #3: CORPORATE SYNDICATION TCS rep meets with Africa s largest Telecom company in South Africa; Company is very large (ZAR 20 bln or USD 2 bln in sales) and is a key player in the local industry. Canadian companies, many small businesses, have long sought to develop contracts with them; Company accesses the capital market to raise debt with bank financing and also bond financing, thus small financings of contracts with Canadian firms will not be of interest What happens next? 12 12

13 CASE STUDY #3: CORPORATE SYNDICATION TCS and Chief Rep for Africa discuss the company and strategy; Chief rep does some research and learns the company needs to refinance a USD 500 mln equivalent bank financing maturing this year led by Standard Chartered bank; Chief Rep calls SC and discovers the company wants a new three year facility, upsized by USD 200 mln and wants a Rand tranche; Working with EDC s Telecom sector team, we learn of significant opportunities for Canadian firms, after due diligence in CABL, EDC joins the at the level of USD 25 mln, in the Rand tranche supportable by potential future purchases from Canada and filling financing gaps the upsize caused; TCS and Chief Rep work together to match the foreign company with potential Canadian suppliers over the facility term; This arrangement is known as Trade Diversification 13 13

14 KEY FINANCING CONSIDERATIONS Structure: EDC is market follower giving other lenders opportunity to participate in the case of co-lending Appropriate balance of risk and return If it s a traditional export credit transaction, willing to consider terms that do not impair an exporter s competitiveness Credit Tenor should match lifecycle of asset financed If cash flow is weak, EDC will consider taking security Pricing Return commensurate to compensate EDC for its risk Pricing reflects market considerations 14 14

15 QUESTIONS 15 15