Introduction to Infrastructure Finance and Current Trends in the GCC

Transcription

1 Introduction to Infrastructure Finance and Current Trends in the GCC Suresh Vasan GE Energy Financial Services December 14 th 2009

2 GCC opportunity Financing opportunity over the next 5 years In $ Billions** UAE Saudi Arabia Qatar Rest of GCC Power * 10-15** Water Healthcare Aviation Vendor Financing Total opportunity $53-$76BN $39-$55BN $20-$25BN $10-$20BN * Mainly power & gas ** Power generation and IWPP Power & water projects Source: GE capital; & McKinsey analysis

3 What is Project Financing? GE + Partners BOO or BOOT Structure Equity 25% Debt 75% Lenders Offtake Guarantor Site/Concession Agreement Gov t or Company IWPP SPC PWPA Utility Co O&M EPC FSA Fuel Supply Co. O&M Co EPC 3

4 Typical Project Financing Elements Strong regulatory framework for projects laid out by government or companies Financial wherewithal Long term offtake agreements (credit quality) Sound legal framework (security, enforcement, sanctity of contracts) Fuel arrangements (credit quality and reliability) Strong Sponsors Track record (technical know how, execution capability, and operational excellence) Strong balance sheet Good relationship with banks, gov t, concessionaires, EPCs Strong EPC Competitive, track record, execution capability, financial wherewithal Overall, all stakeholders involved should have a balanced risk/reward sharing in a given project in order for long term sustainability of the project and its structure 4

5 YTD Market Summary Al Dur IWPP (1200 MW + 50 MIGD) reached financial close in July Suez/GIC as sponsors - Debt terms: $1.7 bn 8 year door to door mini perm; L+250 bps during construction; L bps (step up) thereafter with 100% sweep in the last 3 years; upfront fee: 275bps Rabigh IPP (1200 MW) reached financial close in late July 2009; ACWA/Kepco as sponsors - $1.9 bn, 16 year tenor at L+300 during construction; L+275 bps thereafter; large portion is SAR funded; SIBOR only hedge able up to 3 years. Swheihaat IWPP (1600 MW MIGD) refinancing reached financial close in October Suez/Marubeni as sponsors - 77/23 debt:equity; 22- year $1.2 bn term loan; 260 bps raising to 350 bps; up front fee of ~300 bps. Salalah IWPP (445 MW + 15 MIGD) reached financial closes in November Sembcorp/OIC as sponsors - $750 MM in three tranches for 17 year tenor: 1) $350 mm Chinese Commercial tranche 2) $270 mm international tranche and 3) $130 OMR tranche; L+300 bps during construction; bps thereafter (step ups); upfront fee: 350 bps Al Qatrana 400 MW IPP in Jordan; reached financial close in November Kepco/Xenel as sponsors. - $335 mm in several tranches: KEXIM, which is also covering a commercial tranche provided by the sponsors' financial advisor BNP Paribas, and KfW. Further debt is provided by French development bank Proparco, and the Islamic Development Bank. - Tenor and terms have been undisclosed Debt pricing highest in several years.longer tenors coming back! 5

6 Causes of these Trends Liquidity shock in capital markets Weaker banking balance sheets; high leverage to lower leverage Stricter adherence to Basel II Reduction in velocity of capital Higher cost of capital for financial institutions (Libor became irrelevant) Banks pricing for risk and liquidity to ensure adequate returns Project finance market maybe less affected due to quality of financing structure in the region.. 6

7 Current Trends in the Region # of lenders have decreased; larger deals will be hard to do without creativity and multiple tranches Multiple tranches (Islamic, ECA, conventional, mixed currencies) Increased government involvement (sometimes cheaper to do EPC basis); SWFs Higher Fees on project finance loans (margin + upfront fees); difficult to have exclusive discussions with banks Tenors seems have come back full circle; has to be well structured projects Banks only underwriting to hold.requires forming a club. Syndication market is still closed Back to basic structures plain vanilla Difficult to submit bids with fully committed financings cycle time to financial close longer 7

8 GE Capital & Infrastructure Finance 8

9 GE: Where Energy Financial Services fits Energy Infrastructure Technology Infrastructure GE Capital NBC Universal Treasury GE Money Energy Financial Services Commercial Finance Aviation Financial Services 9

10 GE Energy Financial Services strengths ~$22B Assets 25+ Years in Energy Finance Deals $25M-$1B GE s 100+ Years in Energy Investing globally, long-term view, across capital spectrum and energy and water industries, to help our customers and GE grow 300 Energy Experts 10 Commercial Teams 10 Double-Digit Growth GE s AA+ Rating - Funding Cost Advantage

11 Investing globally ~$22 billion portfolio $.81B $17.58B $1.64B $0.3B $0.79B $0.03B $0.46B $0.39B 11

12 Full range of financial products Equity - Development capital - Construction financing - Single investor and leveraged lease - Preferred - LP/GP common equity - Tax equity Debt - Working capital facilities - Project finance - Acquisition finance - CAPEX lines - Securitization facilities - Interest rate management Oil & Gas 21% Diversification in energy Loans 35% Leases 12% Pipelines/ T&D 10% Generation 69% and in products Equity 53% 12

13 Investing in what we know Oil & Gas Reserves (Land & Marine); Coal Reserves Oilfield Services, Mining Equipment, Gathering Systems and Processing Transportation and Handling Systems (Pipelines, Compression/Pumping) Conversion Facilities (Refineries, Thermal and Renewable Power Plants) Transmission & Distribution (Fuel Oils & Gasoline; Electric Wires; District Water Cooling/Heating) (treatment, desalination, wastewater treatment, water transmission, industrial water processing) 13

14 EFS Global Equity Transactions Renewable Energy Trust Asia (RETA) S$300MM Renewable Energy Investment Fund with EPURON Equity Cogeneration Australia Power Generation Philippines 460 MW Coal-fired Power Plant Equity Power and Water Turkey Power Generation India KSK Power Venture plc Purchase of 26% share of cogeneration power developer Equity Offshore Drillship Brazil 100 MW greenfield coal-fired cogeneration plant Preferred Equity Acquisition of 50% of power and water developer GAMA Energy AS Equity Peregrine I Deepwater Drillship contracted with Petrobras Pref. Equity 14

15 EFS Global Debt Transactions Power Generation Oil Drilling Platform Wind Power Generation First Gas Santa Rita (Philippines) $544 MM Project Financing GE Lender November 2008 PV Solar Generation Sevan Marine ASA (Norway) $400 MM Project Financing GE Lead Arranger July 2007 Oilfield Services Theolia (France) 90 MM Project Financing GE Lead Arranger June 2007 Oil Drillship Luzentia (Spain) 180 MM Project Financing GE Lender May 2007 Production Services Network (UK) $342 MM MBO Financing GE Lender July 2006 Peregrine LLC (Brazil) $259 MM Project Financing GE Lead Arranger November