Renewable Energy. IFC s Approach. September 2011

Transcription

1 Renewable Energy IFC s Approach September 2011

2 Table of Contents IFC Who We Are, What We Do IFC and Renewable Energy Investment Experience and Deal Criteria Other IFC Products and Services 2

3 IFC Who We Are, What We Do Deep industry experience 3

4 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 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 4

5 IFC s Global Reach 100+ country and regional advisory services offices worldwide Moscow Almaty Washington Istanbul New Delhi Cairo Mexico City Hong Kong Dakar Port-of-Spain Bogota Nairobi São Paulo Johannesburg Buenos Aires IFC HQ/Hub Offices IFC Operational Centers IFC Country Offices 5

6 IFC s Three Main Business Lines IFC Investment Services IFC Advisory Services Loans/ Equity Syndications Trade finance/ Securitized finance Client risk management services Treasury services Liquidity management Access to finance Sustainable Business Investment Climate Public-Private Partnerships IFC Asset Management Company Wholly owned subsidiary of IFC that invests third-party capital alongside IFC, with approximately US$4 billion under management as of June 30,

7 Financial Products - From Equity to Debt Equity Corporate and JV Typically 5-15% shareholding (not to exceed 20% of total equity) Long-term investor, typically 6-8 year holding period Not just financial investor, adding to shareholder value Usually no seat on board Infraventures (early equity investments) Mezzanine / Quasi Equity Subordinated loans Income participating loans Convertibles Other hybrid instruments Senior Debt & Equivalents Senior Debt (corporate finance, project finance) Fixed/floating rates, US$, Euro and local currencies available Commercial rates, repayment tailored to project/company needs Long maturities: 8-20 years, appropriate grace periods Range of security packages suited to project/country Mobilization of funds from other lenders and investors, through cofinancings, syndications, underwritings and guarantees 7

8 How We Finance Projects Project Type Greenfield, total cost less than $50 million Greenfield, total cost more than $50 million Expansion or rehabilitation IFC Investment Up to 35% of project cost for IFC s account Up to 25% of project cost for IFC s account Up to 50% of project cost Umbrella for participants in IFC s syndication program: IFC lender of record, immunity from taxation and provisioning requirements. IFC s total financing (for its own account) must be less than 25% of total company capitalization, and IFC does not manage or have largest stake. 8

9 What makes IFC unique Clients Value IFC s Global Expertise Knowledge of global industries and local markets Financial sector influence Long-term partnerships; countercyclical role Sustainable investments Leadership on corporate governance Value-adding expertise along the entire value chain IFC Unique Offering Includes: Emphasis on development impact World Bank affiliation Market discipline Risk-taking and risk management Preferred creditor status Political risk cover Environment and social & insurance value-addition 9

10 Fiscal Year 2010 Highlights Investments: $18 billion in total financing: $12.7 billion for IFC s own account in 528 new projects in 103 countries; $5.3 billion mobilized Portfolio: $48.8 billion portfolio, representing investments in 1,656 firms Investments by Industry and Region, FY10 Commitments for IFC s Account: $12.7 Billion 10

11 IFC and Renewable Energy 11

12 Why Renewables: Fueling Growth and Combating Climate Change Developing countries have a clear need to power economic growth and to improve the quality of life of their citizens (e.g. access to lighting and communications) Need to diversify generating sources and where possible, deploy indigenous power rather than using foreign exchange to import fuel Climate change and environmental concerns given diminishing resources or reserves of coal, gas and even water Solar, wind and other forms of renewable energy pose great opportunities for private investors in emerging markets if capital can be raised and risks overcome. In 2010, IFC invested $1.6 billion in climate change business, which is a 60 percent increase from the previous year. By 2013, IFC aims to increase its climate change business to at least 20% of its total annual commitments 12

13 US$mn 1,400 IFC Investments to Date in Renewables 1,200 1, RE Supply Chain Manufacturing Financial Intermediaries Project Use, incl captive power (mostly MAS) Large Hydro Power (Infra) RE Generation (Infra) - FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 13

14 Working Across the Energy Power Value Chain IFC finances projects across the energy value chain from upstream equipment manufacturers to downstream power projects (example with wind energy below) COMPONENT & SERVICE SUPPLIERS (e.g. suppliers of blades, towers, transformers, controller software, etc.) TURBINE MANUFACTURERS WIND FARMS (captive, IPPs or utilities) Deep industry experience in clean tech, manufacturing, services and power investments In-house investment, environmental and social, legal and product expertise 14

15 Strategy IFC s approach is to invest in technology and scale, so as to bring down the cost of renewable energy to grid parity so that it is a widely used source of electricity generation in the emerging markets. To achieve this, IFC will invest in: Global renewables companies expanding their manufacturing footprint in emerging markets Leading local players that are cost competitive and can play an important role in (i) deepening the adoption of renewable power and (ii) lower the cost of renewables energy Both global and local component suppliers (e.g. blade, gearbox, towers, bearings, generators) with a manufacturing presence in the emerging markets Technology leaders building new, innovative solutions IFC is supporting private sector companies that are cost competitive and / or technology leaders in renewable energy, to combat pollution, environmental degradation and the negative impacts of climate change and to create or sustain employment in poor countries. 15

16 IFC Investment Case Study and Deal Criteria 16

17 Goldwind Case Study Investment Summary: Timing: Why Goldwind: IFC Value Added: US$75 million equity investment as part of the company s Hong Kong IPO to fund capital expenditure and R&D in China Due diligence in the third week of July; documents signed and funds disbursed in September Headquartered in and strong manufacturing presence in Xinjiang in western China; largest private sector Chinese wind company with strong technology (direct drive turbines), manufacturing experience and downstream operations; strong growth potential Compliance with IFC / World Bank environmental and social guidelines 17

18 Gamesa Case Study Investment Summary: Proposed Euro 11 million loan to help finance Gamesa s new wind turbine manufacturing facility in Chennai, India Why Gamesa: Global wind turbine manufacturer with the goal of expanding its operations in the emerging markets and developing a local supply chain. IFC Value Added: Compliance with IFC / World Bank environmental and social guidelines; guidance on local financing and currency requirements; ability to work with IFC (on both manufacturing and wind farm projects) in other emerging markets. 18

19 IFC Investments in Wind Power AES GEO Energy (Bulgaria, 2008): EUR 40 million IFC A loan and EUR 32 million B loans for 156 MW St. Nikola Wind Farm near Kavarna using Vestas V90 3 MW turbines; AES is IFC s largest utility client in wind energy and power sectors China Windpower Group (China, 2010): US$10 million in equity along with US$45 million A loan and US$95 million in B loans to construct a US 150 million 201 MW greenfield wind farm in Gansu using Sinovel 1.5 MW turbines EDF-EN La Ventosa/La Mata (Mexico, 2010): 310 million Mexican Pesos investment to finance the 67.5 MW greenfield wind project in Oaxaca using 2.5 MW Clipper turbines; CTF concessional loan of US$15 million Acciona Eurus (Mexico, 2010): US$71 million in senior and mezzanine debt to finance US$560 million 250 MW wind farm using Acciona 1.5 MW turbines ; CTF concessional loan of US$30 million Zorlu Enerji Rotor (Turkey, 2010): EUR55 million in long term debt to finance 135 MW greenfield wind project using GE 2.5 MW turbines 19

20 Norvind S.A. Case Study Investment Summary: Timing: Why Norvind: IFC Value Added: US$30.75 million senior A loan and arranged US$30.75 million B loan package among colenders to fund US$140 million 46 MW project Nine months from mandate letter to first funds disbursement for Totoral wind farm in Chile SN Power is highly experienced and efficient hydro utility with some wind experience in Norway; Vestas V90 turbine technology (2 MW geared turbines, Class III wind) and 3 year services agreement; Centinela was strong local development partner Experience with Chilean power sector; Very long loan maturities (18 years); First merchant wind project with very limited recourse; Creative financial structuring of debt package with B loan fully subscribed by DnB Nor 20

21 IFC Deal Criteria in Renewable Energy Projects Sponsor Project Financing Technology Market Strong sponsor, with a track record in sector Good reputation Financial strength and technical experience Long term commitment to success of the project Potential to add scale and support Cost competitive in sector without considering an existing/ anticipated incentive structure with solid project fundamentals Experienced project development team Sales potential Solid equity contribution Sustainable debt: equity ratio Financing structure aligned with investment needs/ project outlook Technology leaders with tested technology Providing innovative solutions that improve the quality of products Existing or anticipated demand for product 21