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Oesterreichische Entwicklungsbank AG –OeEBDevelopment Bank of Austria
October 2013
27. Alpbacher Finanzsymposium 2013
Michael Wancata
Set up in March 2008
Mandated by the Austrian Government as the official Development Bank of Austria
Each project has to fulfil or at least contribute to development policy criteria
NOT tied to Austrian investments and/or supplies and services
100 % private - wholly owned subsidiary of Austria’s ECA (OeKB)
S&P Rating: AA+ (January 2012)
2
Basics & Mandate
Mandate
Ownership100 %
3
OeEB – A member of EDFIEuropean Development Finance Institutions
A group of 15 bilateral institutions, operating in Developing Countries and Emerging Markets, mandated by their governments to
• foster growth in sustainable businesses
• help reduce poverty and improve people's lives
• contribute to achieving the Millennium Development Goals
by promoting economically, environmentally and socially sustainable development through financing and investing in profitable Private Sector enterprises
4
EDFI - members
A network of 15 members across Europe
Institution Country EstablishedCDC UK 1948DEG Germany 1962IFU Denmark 1967FMO Netherlands 1970SBI Belgium 1971PROPARCO France 1977SWEDFUND Sweden 1979FINNFUND Finland 1980COFIDES Spain 1990SIMEST Italy 1991NORFUND Norway 1997BIO Belgium 2001SIFEM Switzerland 2005OeEB Austria 2007SOFID Portugal 2007
5
The „third pillar“ in Development Cooperation The DFI plays a complementary role in International Development
Policyand investing in profitable Private Sector enterprises
• Donations, public sector and civil society
• Humanitarian and development assistance
• Loan, grant and guarantee financing
• Public sector, mostly large scale
• Equity, loans andguarantee, politicalrisk insurance
• Private sector• Catalysing co-investment and expertise
AID Development Bank (public sector arms)
DFI’s and private sector arms of development
banks
• Equity, loans & guarantee, political risk insurance
• Private sector• Catalysing co-investment and expertise
The EDFI members represent a “third pillar” alongside traditional aid instruments and development banks dedicated to the public sector
In principle OeEB provides financing to projects in all developing and transition countries on the OECD-Development Assistance Committee list
Planned portfolio breakdown by committed project volume by 2015:
6
OeEB‘s Strategy: Regions
30% Asia 15% South Caucasus and Central Asia15% Other
25% Europe 15% Western Balkans/Eastern Europe10% Russia*
15% Latin America 8% Central America7% South America and the Caribbean
20% Africa 18% Sub-Saharan Africa (incl. South Africa)2% North Africa
10% Supra-regional
* Involvement of an Austrian company required
Planned portfolio breakdown by committed project volume by 2015:
60 % Financial Sector: Credit lines to financial institutions as intermediaries (e.g. micro-finance institutions, banks, etc.) to realize projects in the real sector, e.g. for MSMEs financing, energy efficiency or infrastructure projects.
40 % Real Sector: Credit lines to corporates or project companies to realize projects, thereof:
25 % in the infrastructure sector (including energy sector)10 % in the manufacturing/industry sector 5 % in other sectors
7
OeEB‘s Strategy: Sectors
A potential project shall
meet development policy criteria (sustainability e.g.: poverty reduction, employment, gender equality and the empowerment of women, transfer of know-how, etc.)
be commercially self-supporting (profitable)
be predominately in the private sector (PPP possible)
be located in a developing country.
8
OeEB Financing Criteria
OeEB generally provides the following products:
1. Long-term financing (Investment Finance)
2. Advisory Programmes
3. Equity
9
Products in general
Currencies: EUR or USD
Products: senior loans, subordinated loans, risk participations
Amounts: up to EUR 25 million per transaction
Tenors: up to 15 years incl. grace periods, if required
Collateral: Adequate to the respective project
Conditions: i.e.
Solid track-record of the sponsor
Interest and fees close to market rates (no interest subsidies)
Compliance with environmental and social standards.
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Long-term financing
11
OeEB – Scope of Support
Austrian investor with OeKB coverage
Commercial bank with OeKB covering the Austrian export share
Equity30 – 40 %
Equity30 – 40 %
Debt Financing60 – 70 %
30 -35 %
30 -35 %
OeEB for financing the not-OeKB-covered position (e.g. local cost)
of that max. 25 % OeEB as equity co-investor
Advisory ProgrammesStudies, project-preparing, -accompanying measures
OeEB project-preparing or accompanying financing
Ove
rall
Fina
ncin
gC
osts
Consultancy
gEconomic Partnership
Program OeEB and ADA
AWO / Advantage Austria
Environmental and Social (E&S) Standards in the OeEB project cycle
Screen for Knock Out criteria - Exclusion List*
• Assess potential negative E&S impacts of project (potentially with the help of independent experts)
• Assess client‘s willingness and capacity to mitigate these impacts
• Identify concrete steps to bring project into compliance with relevant E&S Standards
• Environmental and Social Action Plan (compliance not at project start, but during project implementation)
Agree E&S requirements (incl. final Environmental and Social Action Plan) and put them in contract
Implementation, Reporting and Monitoring
Classify transaction according to E&S riskEarly stage
Due Diligence
Approval
Financial close
Go/no go
Imple-mentation
* http://www.oe-eb.at/de/osn/DownloadCenter/richtlinien/OeEB-Sektorenausschlussliste.pdf
Low Risk High Risk
Environmental and Social (E&S) Standards used in OeEB projects
13
OeEB‘s approach based on: EDFI Principles for ResponsibleFinancing
E&S requirements depend on E&S risk of transaction
Use of already established internationally recognized E&S standards(also used by: Equator Principle Financial Institutions; Export CreditAgencies etc.)
Compliance with E&S requirements from national and local legislation
Compliance with ILO Core Labour Standards
Compliance with:• IFC Performance Standards*• World Bank Environmental, Health and
Safety Guidelines*• E&S management systems according
to international standards
* www.ifc.org/sustainability
HPP project Lengarica/Albania Austrian investor: Enso
Austrian distributor: Global Hydro Energy, Strabag
Total investment: ~ EUR 23 Mio.
OeEB share of financing: EUR 5 Mio.
Green for Growth share of financing: EUR 9 Mio.
Selected Reference Projects
Selected Reference Projects
Equity Shareholder:Enso Hydro Energji
sh.p.k.
Borrower:Lengarica & Energji
sh.p.k.
Hasi:Hasi Energji sh.p.k.
Parent:Enso Hydro GmbH
80%
100%
99,99% 0,01%
HPP project Lengarica/Albania
La VegonaHydropower plant in HondurasSenior loan
Total Investement Amount: USD 98 million
To reduce the dependence on fossil fuel and to improve the competitiveness and sustainability of Honduras’ exporters the Honduran government promotes investments in renewable energy.
IFC and OeEB are providing USD 98 million in financing for CompañíaHondureña de Energiá Removable S.A. (COHERSA) to construct a private hydropower project with a capacity of 38.5 megawatt
Selected Reference Projects
Total Investment Amount: USD 157 million
Nicaragua has some of the most abundant geothermal resources of any country worldwide. Aside from their great economic importance, these resources have special significance against the backdrop of climate change. Geothermal power is a clean and reliable form of renewable energy.
OeEB is supporting this project which will be built by an experienced project company, PENSA (Polaris Energy Nicagagua S.A.) with an investment amount of USD 15.1 million, together with IFC and eight other development institutions.
Selected Reference Projects
San Jacinto,Geothermal power plant in NicaraguaSenior loan
Joint Credit Line: EUR 20 million
OeEB and KfW Entwicklungsbank have provided support to Turkish Sekerbank with a joint credit line of EUR 20 million for the provision of energy efficiency loans to its clients. OeEB Investment EUR 10.8 million.
Sekerbank specialises in the financing of micro-, small and medium enterprises (micro- and SMEs), and can now expand its portfolio of loans in the area of energy efficiency due to the cooperation with OeEB and KfW Entwicklungsbank.
Selected Reference Projects
Sekerbank, TurkeySpecial loans for energy efficiency investments
Aim of project:
Sekerbank is one of the most important private banks in Turkey with 250 branches. In the forefront of an earmarked credit line to refinance energy efficiency loans, OeEB and KfW have provided technical assistance to Sekerbank to improve thecapacity of the employees at Sekerbank and its clients regarding energy efficiency.
Main activities of the project included:
Integrating energy efficency as a new product at Sekerbank
Capacity training for employees and clients
Performance of an impact measurement of the credit product.
Selected Reference Projects -Continued
Sekerbank, TurkeyEstablishing a new bank product for energy efficiency financing toSME‘s and households
Advisory Programmes (AP) can be used to enhance the developmental impact of projects.
The allocation of these AP funds shall be linked to projects that offer financing opportunities now or in the near future.
The financial support provided through AP can be in the field of
identifying, preparing and implementing projects or their assessment and monitoring.
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Advisory Programmes
Project related Advisory Programmes might be:
• Training for local staff, management assistance
• Studies (sector, market or feasibility studies, ESIA)
• Technical experts during project preparation, implementation and monitoring
• Project related measures regarding environment or healthcare
• Measures in the context of privatisations or restructurings which alleviate negative social effects.
21
Advisory Programmes II
Conditions for equity participation in companies (incl. banks):
Minority shareholder, max. 25% share
Investment volume: EUR 2-5 million
Pre-defined exit strategy
Conditions for participation in funds:
Total Fund volume: Max. EUR 150 million
Investment volume: Max. 10% of fund volume (up to 5 million)
No “start-up”
22
Equity
Shore Cap II, Mauritius Private Equity Fund Microfinance Sector
Fund Size: USD 80 million
Total Investment OeEB: USD 4.1 million
Aim of project:
Shore Cap II is a Private Equity Fund with the target to support MFIs and SBBs in Asia and Sub Sahara Africa via equity contribution to enable stable growth in theportfolio companies. Beside the equity injection the fund implemets capacitybuilding measures to improve governance structures and staff trainings in theinvestee companies.
With its first equity project OeEB was able to produce a link between an AP Project and an Equity investment.
Selected Equity Project
Commitments signed ˜ EUR 500 million
Total assets ˜ EUR 347 million
Operating profit for the year ˜ EUR 2 million
Profit for the year ˜ EUR 902.000
Staff 25
24
Key Figures 2012