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EBRD and the Infrastructure Financing. Agnieszka Szymczyk Tel Aviv , 1 4 June 201 2. Section 1 Who we are. What is EBRD?. The European Bank for Reconstruction and Development: - PowerPoint PPT Presentation
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EBRD EBRD and the and the Infrastructure Infrastructure Financing Financing
Agnieszka SzymczykTel Aviv, 14 June 2012
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Section 1Section 1
Who we are Who we are
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What is EBRD?What is EBRD?
The European Bank for Reconstruction and Development:
International financial institution dedicated to promote transition to market economies by investing mainly in the private sector development and entrepreneurship.
Established in 1991. Headquartered in London, the Bank has 36 regional offices.
Owned by 63 countries and two intergovernmental institutions (AAA rated)
Largest single investor in the region (30 countries from Central Europe to Central Asia): €71.2bn in more than 3,389 projects since 1991
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Mission and VisionMission and Vision
EBRD’s operations are based on three principlesEBRD’s operations are based on three principles
Promotes transition to market
economies, private ownership and
good governance with respect for
people and environment
Promotes transition to market
economies, private ownership and
good governance with respect for
people and environment
Supports, but does not
replace, private investment.
Provides financing at
reasonable terms, otherwise
not available
Supports, but does not
replace, private investment.
Provides financing at
reasonable terms, otherwise
not availableInvests in
financially viable
projects, together
with the private
sector
Invests in
financially viable
projects, together
with the private
sector Focusing on the triple-
bottom line benefits:
Economic, Social and
Environmental
Focusing on the triple-
bottom line benefits:
Economic, Social and
Environmental
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5Monday, February 27, 2012
Founded in 1991 after the disintegration of the Soviet Union, EBRD’s region of operations covers most countries in Eastern Europe, Central Asia and Turkey.The Bank now intends to extends its mandate to SEMED (Morocco, Tunisia, Jordan, Egypt)
Founded in 1991 after the disintegration of the Soviet Union, EBRD’s region of operations covers most countries in Eastern Europe, Central Asia and Turkey.The Bank now intends to extends its mandate to SEMED (Morocco, Tunisia, Jordan, Egypt)
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EBRD projects span every business sectorEBRD projects span every business sector
Transport
Industry, Commerce& Agribusiness
Financial Institutions
Manufacturing & Services
Municipal & Environmental Infrastructure
Power & Energy
Natural Resources
Property & Tourism
Telecommunications, Informatics & Media
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Strong, internationally recognized partner with long term perspective
Higher risk appetite than other lenders.
Long established policy dialogue with Government and Regulators
Unparalleled presence in the region provides mitigation of political and regulatory risks
Preferred creditor status in all countries of operations
Catalysts to access additional finance (every € 1 financed by EBRD leads to mobilize € 3 from other sources2)
Flexible deal structure and product matching services
Dedicated team with expertise in a variety of sectors and countries
Donor funded Technical assistance available for economically viable sustainable development projects
Benefits of Working with Us
EBRD’s Value-Added: a unique offering
2. EBRD Annual Report 2010
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Section Section 22
Partnering for Partnering for infrastructure infrastructure developmentdevelopment
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The The Infrastructure Business Group Infrastructure Business Group at EBRDat EBRD
EBRD Infrastructure Business Group covers Transport and Municipal and Environmental Infrastructure
More than 60 banking and sector professionals.
Headquartered in London, with dedicated sector coverage bankers in regional offices
Dedicated in-team specialists to support project needs including procurement, sustainable strategies and monitoring
EBRD offers banking services (debt and equity) to clients across every infrastructure mode: railways, maritime, aviation, roads, water and waste water, district heating, solid waste and urban transport.
More info at…
www.ebrd.com
1- Data at end 2011
Infrastructure at a glance1
• € 14.2 billion invested
• Total project value: € 50 billion
• Over 500 projects
Infrastructure at a glance1
• € 14.2 billion invested
• Total project value: € 50 billion
• Over 500 projects
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Extensive offer of tailored financial productsExtensive offer of tailored financial products
DebtDebt EquityEquity
Loans to the private sector (up to 35%, syndicating the rest)
Debt co-financing, working with commercial banks and IFIs
Project finance loans (incl. PPP)
Hard/local currency. Fixed/floating rates
Syndication under preferred creditor status
Access to capital markets
Investing with majority sponsor to reduce equity burden and add partnership value. No more than 25%
Common or preferred stock
Privatization and initial public offering (IPO)
Mezzanine equity and subordinated debt
Infrastructure funds
PPP
Technical CooperationAs a Multilateral Development Bank, EBRD brings in additional financial capital and technical assistance (TC) to economically viable projects
Technical CooperationAs a Multilateral Development Bank, EBRD brings in additional financial capital and technical assistance (TC) to economically viable projects
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Section Section 33
Financing infrastructure projectsFinancing infrastructure projects
EBRD promotes decentralized EBRD promotes decentralized decision-making and financingdecision-making and financing
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The trend in The trend in infrastructure infrastructure finance in finance in CEECEE
Sovereign-backed loans– Cheap but politicised
Municipality / central government loans– Self-financing independence for cities
– Higher cost and burden on city debt book
Utility loans supported by cities– Off-balance sheet borrowing for the city
– Need to be backed by PSC + MSA
Utility corporate loans or bonds– Self-financing independence for utilities
– Entirely based on company creditworthiness / PSC
PPP/concessionaire loans– Private sector indebtedness
DE
CE
NT
RA
LIS
AT
ION
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EBRD EBRD infrastructure infrastructure financing guidelinesfinancing guidelines
Minimum size EUR 10 million
Maximum size
– Up to 100% for small public sector infrastructure projects
– Up to 35% for large infrastructure projects (public or PPP)
Maturities between 10 to 20 years
EBRD procurement rules for public sector and competitive selection for PPP partners
Market pricing linked to risk level
Security linked to creditworthiness
Local currency, where possible
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What makes PPPs successful? What makes PPPs successful?
An adequate legal framework Political will to champion the PPP process Reliable revenue streams
– Contractual payments
– Tariff methodology + competent regulator
Sponsors’ interest ensuring competition– Need the right risk allocation
Sufficient loan or capital market development – Long term money
– Local currency available
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EBRD support to PPPsEBRD support to PPPs
With public authorities
– General advice on acceptable process
– EBRD Policy for Concessions
– Grant funded technical assistance
– General letter of interest to finance
With bidders
– Pre-bidding dialogue with interested players
– Review of financing instruments (equity, debt) and indicative financing terms
– EBRD cannot commit to exclusivity (‘open support’)
– After award, negotiation of detailed terms and conditions with the preferred bidder
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Section Section 44
The case of PolandThe case of Poland
An sophisticated and diverse An sophisticated and diverse financing marketfinancing market
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Selected EBRD projectsSelected EBRD projects
Gliwice Sewerage ProgrammeEBRD loan 15 m Eur, signed 2002Key features: City loan transferable to MPWiK City CEP
•Sopot•Gdansk
•Warszawa
••Rybnik
•Wrocław
•Poznań
•Bydgoszcz
Bydgoszcz Water/Sewerage
EBRD loan PLN 108m, 1999Key features:• First ISPA co-financing• First local currency loan• First MSA backed utility loan• Water company corporate development programme
Gdansk-Sopot Transport
EBRD Loan €12 m, 2001Key features:• Non-sovereign City loan• City creditworthiness Programme• Transport Policy Development
Metro Warszawskie
EBRD loan PLN322m, 2011• Loan for Transport comp. w/o recourse• Financing of a rolling stock acquisition for Metro lines I & II• Carbon monetisation mechanism
Kraków Urban Transport
EBRD loan €45m, 1998-2002Key features:• First City rating supported by EBRD• City creditworthiness Programme• City transport policy development• One of first syndicated muni loans
Kraków Płaszów Wastewater
EBRD loan €20m, 2000-2010Key features:• MSA structure • corporate governance/cost recovery• Utility corporate development• Dual currency loan
Rybnik Sewerage Programme
EBRD loan €17m, 2001Key features:• City partial guarantee & water loan• Corporate development programme• Model financing for Slask region
Poznan District Heating
EBRD equity €35m, 2002Key features:• One of the first privatisations
Wrocław Flood Damage Repair Project
EBRD loan €16m, 1998Key features:• First IFI muni loan• Creditworthiness Enhancement Programme
Wroclaw Parking PPP
EBRD loans PLN31m, 2011Key features:• First parking PPP• Project finance loan• Non-recourse post completion
Wrocław Water Project
EBRD loan €18m, 2003Key features:• MSA cost recovery, corporate governance aspects• First utility syndicated loan• Outsourcing programme
Wrocław Multi-Sector
EBRD loan €33m, 2000Key features:• 1 loan for 2 sectors/ISPA applications• One of first ISPA co-financings• Waste sector institutional reform
• Kraków
Tramwaje Warszawskie
EBRD loan PLN200m, 2010Key featrures:• non recourse loan to company•Financing of the rolling stock, and rails infrastructure modernization•Carbon monetisation mechanism
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Poland and Poland and infrastructure infrastructure finance (1)finance (1)
1. Projects implemented and financed on the municipal budgets (loans and municipal bonds): Cheapest form of financing, competitive offers from commercial
banks, attractive funding from EIB (or financing on Euro markets)
2. Projects implemented and financed by municipal utility companies (off-budget financing, financing on the balance sheet of the companies) Reliance on the PSC and a municipal support agreement
more and more often utilised by public transport companies, municipal sewerage companies, local district heating companies
Often combined with EU grant funds
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Poland and Poland and infrastructureinfrastructure finance (2) finance (2)
3. Revenue bonds (off-balance) Revenue bonds are still rarely utilised due to the requirement
of the proper scale and rating of the project involved.
Due to the specific structure (security over revenues), lack of possibility of incurring additional debt, revenue bonds require long-term planning of financial needs.
Revenue bonds are addressed to municipalities/companies with large investment needs and a higher level of risk involved (requirement of maintaining a debt service reserve account).
Structuring of transactions, where many sources of revenues are involved, is more difficult – hence the preference of the market to change from revenue bonds to municipal bonds.
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Poland and Poland and infrastructure infrastructure finance (3)finance (3)
4. PPP (depending on the structure, possibility of classifying off municipal/national budget) PPP has been to date rarely utilised, however the interest in this
form of financing is growing. It requires a thoroughly thought through structuring, balanced division of risks and long-term planning as well as implementation.
Hybrid PPP (involving EU grant funds) is a challenge of the new financing perspective.
5. Privatisation (mostly district heating sector) Successful wave of privatisations in late 1990s/early 2000s
Second wave in 2011 with SPEC
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Section Section 55
Case StudiesCase Studies
Poland and CEE countries
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Dalkia Polska – debt / equityDalkia Polska – debt / equity
EUR 70 million invested alongside Dalkia Group for a series of investments in Poland over the 1998-2004 timeframe.
EBRD held a 35% stake in Dalkia Polska
where Dalkia International remained the
controlling partner with a 65% stake. EBRD’s funds allowed Dalkia Polska to
invest throughout the region in ESCO type projects as well as district heating opportunities (privatisations, concessions, lease contracts).
EBRD exit in mid 2010 by selling shares back to Dalkia• EBRD’s involvement has enabled increased private sector participation,
as well as improved energy efficiency and cost effectiveness at operating companies.
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Sofia & Tallinn Water – debt / equitySofia & Tallinn Water – debt / equity
Loan and equity investments in two water concessions established by United Utilities
Sofia
– 2000 – EBRD loan to Sofia W to finance capex
– 2003 – EBRD becomes 19% shareholder
– 2008 – Revised Concession Agreement signed
– 2010 – EBRD sells to Veolia alongside UU
Tallinn
– 2002 – EBRD loan to newly privatised Tallinn W
– 2003 – EBRD becomes 12.6% shareholder
– 2005 – EBRD helps initiate IPO of Company
– 2010 – EBRD sells shares back to UU
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Warsaw Tramways – company loanWarsaw Tramways – company loan
Modernisation of tram tracks and acquisition of 186 new articulated low-floor trams
PLN 1.9bn project, financed by EU grants, EIB and EBRD loans and company funds
EBRD PLN 200m loan to Warsaw Tram company
– Signed April 2010
– Backed by public service contract and municipal support agreement
– 15 years tenor with 3 years grace
– Methodological support to monetise carbon credits from modal switch from car transport to electric transport
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Wrocław Parking PPP Wrocław Parking PPP – concessionaire loan– concessionaire loan
Design, construction and operation of an underground parking facilities of 331 places in close proximity to the historical centre of Wroclaw – Ease traffic congestion caused by drivers
searching for scarce parking
– Enforcement of traffic laws and restrictions
SPV supervised by Mota-Engil Group Tenor of the concession – 40 years EBRD Loan signed in 2011
– PLN 31.3m (equivalent to EUR 8m)
– Tenor – 15 years, including a 3 year grace period
– Pledge of selected assets
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Thank youThank you
Agnieszka SzymczykSenior Banker
Tel: +48 22 520 57 00Fax: +48 22 520 58 00 [email protected]
European Bank for Reconstruction and Development