Private Infrastructure in the MENA Region. Adil Marghub May 2011

Transcription

1 Private Infrastructure in the MENA Region Adil Marghub May 2011

2 IFC is a Member of the World Bank Group IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation MIGA Multilateral Investment and Guarantee Agency Est Est Est Est Role: To promote institutional, legal and regulatory reform To promote institutional, legal and regulatory reform To promote private sector development To reduce political investment risk Clients: Governments of member countries with per capita income between $1,025 and $6,055 Governments of poorest countries with per capita income of less than $1,025 Private companies in 182 member countries Foreign investors in member countries Products: - Technical assistance - Loans - Policy Advice - Technical assistance - Interest Free Loans - Policy Advice - Equity/Quasi-Equity - Long-term Loans - Risk Management - Advisory Services - Political Risk Insurance Shared Mission: To Promote Economic Development and Reduce Poverty 2

3 $39 Billion Investment Portfolio in Emerging Markets S&P, Moody s AAA Investments $39 billion # of companies 1,656 # of countries 120 Investment Services Advisory Services Asset Management Provide Debt, Equity and Mezzanine financing Syndications/Mobilization Long Term Tenors for Debt Minority Equity Stakes Infrastructure Transaction Advisory Access to Finance Investment Climate Private Equity Fund Structure US$ 4 billion under management from third party investors US$ 1 billion global infrastructure fund (in process) 3

4 Over US$1 billion invested in MENA infrastructure (07-11) Selected Transactions with Regional Clients 2007/2010 MENA Region 2007 Jordan 2008 Jordan 2008 Tunisia 2009 Jordan US$20,000,000 Loan US$20,000,000 Mezzanine US$11,100,000 Common Equity Queen Alia Intl. Airport US$230,000,000 Senior Loan US$50 million Subordinated Loan Project Financing US$11,000,000 Term Loan US$5,000,000 Convertible Ship Financing TAV Tunisia EUR 395,000,000 Senior Loan EUR 30,000,000 Subordinated Loan Project Financing US$40,000,000 Term Loan Financing 2009/2010 West Bank 2010 Iraq 2010 Jordan/Kuwait 2010 MENA Region 2011 Iraq $30,000,000 Senior Loan US$3,000,000 Equity Project Financing Gulftainer US$45,000,000 Senior Loan US$30,000,000 Term Loan Financing US$35,000,000 Ship Financing $400,000,000 Senior Loan Project Financing 4

5 Investment in global private infrastructure Transaction volumes declined from a high of $250 billion in 2008 to $140 billion in 2009 flight to quality, higher pricing, and more conservative structures. a number of banks exited the market in the first quarter of 2009 US$5.4 billion of project financed debt was lent globally as compared to $50 billion in the same period in Global Project Finance Infrastructure Transactions US$ million 300, , , , ,000 50,000 Equity IFI Debt year Source: Infrastructure Journal Recent Improvement in conditions: $200 billion in infrastructure investments in 2010 Infrastructure lending from non commercial institutions ( IFI ) has increased from less than 5% of total debt in 2007 to over 17% in Project bonds have not recovered to pre crisis levels (issues with Monolines). 5

6 MENA private infrastructure after the financial crisis $17.4 billion in private infrastructure transactions have closed since early 2009 $15 billion in GCC, $2.4 billion in non GCC countries Energy/Power account for over 85% of the transaction volume Nine transactions ($10 billion) closed in 2009 impacted by the crisis Pricing and tenor improved from 2009 levels but are not back to pre 2008 levels Multiple banks and smaller ticket sizes 2011 expected to exceed 2010 levels but impacted from the political events in the region MENA Project Finance Infrastructure Transactions US$ million 12,000 10,000 8,000 6,000 4,000 2,000 Source: Infrastructure Journal month 2011 Source: Infrastructure Journal Equity Debt MENA Infrastructure financing levels have not picked up as much as other regions 6

7 Funding mix Breakdown of Debt Funding IFI 44% Cross Border Commercial Lenders 33% Local Banks 23% Increased reliance on IFIs (JBIC, Korea EXIM, USEXIM) 44% of debt capital New sources of financing: Chinese Banks Sinosure In non GCC countries IFIs make up about 80% of the lending Local banks include Islamic funding (Saudi Arabia) Level of local funding could be higher (as an example BNDES in Brazil invested $30 billion in infrastructure in 2009 alone) Source: Infrastructure Journal MENA Infrastructure financing is dependent on global capital inflows even in the GCC countries that are net exporters of capital 7

8 MENA private infrastructure GCC and Energy focus MENA Infrastructure Transactions ( ) Telecoms Transport 5% 3% Other 3% Power 16% Mining & Metals 12% United Arab Emirates 16% Other 11% Egypt 7% Oman 12% Qatar 20% Oil & Gas 61% Saudi Arabia 34% Source: Infrastructure Journal Market dominated by GCC countries Saudi Arabia (S&P AA-), Abu Dhabi (S&P AA), Qatar (S&P AA-) Oman (S&P A) Energy (oil/gas and power) accounts for the largest share of transactions Since 2009 new PPPs have been launched in Saudi Arabia, Bahrain, Oman, UAE, Jordan, Iraq and Egypt 8

9 Non GCC MENA countries face funding challenges 450 Private Infrastructure in Developing Countries (billion US$) 400 Non GCC 16% GCC 84% Axis Title East Asia and Pacific Latin America and the Caribbean Europe and Central South Asia Asia Sub-Saharn Africa MENA (excl. GCC) Source: Infrastructure Journal Source: World Bank PPI GCC accounts for about 10% of MENA s population and 50% of GDP but over 80% of in private infrastructure investment Low and middle income MENA share of private sector investment in infrastructure has been lower than other developing regions such as Sub-Saharan Africa 9

10 Market Outlook Selected Upcoming MENA Infrastructure Transactions Transaction Sector Country Stage Muharraq Wastewater Bahrain Post Bid Qurrayah Power Saudi Arabia Post Bid Djerba Water Desal Tunisia Post Bid Safi Power Morocco Post Bid Iraq IPPs Power Iraq Post Bid Ouarzazate Power Morocco Pre Bid Medina Airport Transport Saudi Arabia Pre Bid IPP3 Power Jordan Pre Bid 3 rd License Telecom Syria Pre Bid Sur Power Oman Pre Bid Dairut Power Egypt Pre Bid Hussayn Power Dubai Pre Bid Yanbu 3 Power/Desal Saudi Arabia Pre Bid Nassirayah Power Syria Prequal Prior to the turmoil in the region, more than US$15 billion in transactions have been launched in Egypt, Morocco, Tunisia, Iraq, Oman and Saudi Arabia. 10

11 Some Challenges Ahead Increased political risk (leads to investor uncertainty and higher pricing) Lack of suitable regulatory/contractual frameworks in non GCC markets (Iraq, Syria, Egypt) Worsening government financials - energy importers facing steep power tariffs increases and increased subsidies Reduced pool of liquidity and tenors (impact of Basel III on banks) Fewer PPPs in transport and other non power infrastructure? Abu Dhabi road, Saudi Landbridge, Aqaba Port? But MENA Region leading the world in project financings (strong government guarantees) Appetite for well structured deals Multiple sources of funding including Islamic banks, ECA and development banks (sourcing equipment is part of the funding strategy) New pools of capital: Arab Facility For Infrastructure (IFC/World Bank and Islamic Development Bank), EBRD (North Africa) Underlying demand remains strong 11

12 MENA Infrastructure: Investment Drivers Drive for Economic Growth And Job Creation Demographics Young population Shift to Private Sector Participation in Infrastructure Historical Underinvestment Large Supply Gaps 12