Upload
rkoshik
View
247
Download
2
Embed Size (px)
Citation preview
InfraCo Asia
Creating Infrastructure for Developing Asia
InfraCo Asia’s mandate
2
• InfraCo Asia aims to stimulate greater private investment in Asian infrastructure by acting as a principal to develop primarily greenfield projects and bring them to a stage that they can attract domestic and international debt and equity finance
• Mandate covers the poorer regions of South and South East Asia
• Projects must satisfy three criteria: Additional – projects where private sector developers are unwilling or unable to
take on the upfront costs and risks on their own Development impact – projects must deliver development benefits for the poor
and meet social and environmental best practice Commercial viability – projects must be commercially viable (to attract private
investment and ensure a return on the sale of InfraCo Asia’s ownership rights)
• “Balanced portfolio” approach - InfraCo Asia pursues a mix of larger, more commercial projects (e.g. power plants) and some smaller, more directly “pro-poor” projects (e.g. agriculture-supporting infrastructure)
3
Supported by PIDG• InfraCo Asia is backed by the Private Infrastructure Development Group
(PIDG) a multi-donor organisation that promotes private infrastructure investment in developing countries through a range of specialised financing and project development facilities and programmes
DGIS &FMO DFAT
UK
UKAid KfW
Private Infrastructure Development Group (PIDG)
GuarantCoGreen Africa
PowerDevCoTAFEAIF
ICF
Debt Pool
InfraCo Asia
DevelopmentInfraCo Africa
SECO
InfraCo Asia
Investments
SIDA NORAD
4
ApproachCombining donor capital and private sector expertise, InfraCo Asia:• Develops infrastructure projects as a principal
– Project development leadership and commitment as Joint Owner & Sponsor– Participates in full development cycle to bring projects to financial close– Works with local governments and development partners– Provides development capital and expertise– Invests in equity ownership– NOT a consultant
• Acts commercially– Seeks market based risk adjusted returns– Development timeline is a priority – seeks to close projects expeditiously
• Actively participates in project development– NOT a passive funding source for development expenses
• Puts development capital at risk– Takes on risk and loss associated with unsuccessful projects
• Offers a world class team of developers– Partners with experienced developer teams– Developers worked in leading infrastructure development companies
InfraCo Asia fills a critical gap in the market
by funding high risk development costs
Stages of
Infrastructure
Project
Development
Most institutional investors
focus on Stage 3 and Stage 4
projects as a way to diversify
their portfolios
• Investment at this stage only
$2 to $3 Million (2 to 10% of
the total cost depending on
project size)
• However, riskiest stage of
investment
• Lack of sources of early
stage financing in industry
InfraCo
Asia plays a
key role in
attracting
more private
sector
investment
but very few
peers exist
• IFC Infra Ventures
• Global Infrastructure Facility • Recent World Bank initiative
• Supported by Australian government,
European institutions and Swiss firms
• Commercial Banks
• Multi-laterals
• Private Equity
• Pension Funds
• Sovereign Wealth Funds
• Infrastructure focused
government sponsored
funds such as AIF, AIIB
5
How InfraCo Asia operates
5
• Identifies and screens infrastructure opportunities
• Creates a local subsidiary company to act as an ‘organising entity’ on the ground
• Develops projects to financial close at own cost and risk
• Secures debt financing and sells majority stake in local company to (domestic and foreign) equity investors
• Reinvests proceeds from successful sales in more development activity
• Works in partnership with local and foreign partners when appropriate
• Access to credit enhancement facilities and output based aid can help make projects bankable and politically acceptable
InfraCo Asia makes infrastructure projects happen in
situations where the private sector would otherwise be
unwilling or unable to invest
Consistent with
InfraCo Asia Mandate
Reduce poverty and
provide social benefits
Complement, not
compete with, the Private
Sector
Commercially viable
InfraCo Asia applies a consistent and disciplined approach to project screening
Development Partner
Commitment to project
Acceptance of InfraCo Asia
role
Government Commitment
Understanding of InfraCo
Asia’s objectives
Acceptance of economic user
charges
Implementation support
Amenable regulatory
environment
Visible path to closing
Commercial tariff
Technically feasible
Sustainable development
Development Path
Understands potential private
sector equity co-investors’
considerations
Flexibility to invest a minority
portion of the equity capital
beyond financial close
Equity Investment
Considerations
Project selection
6
Sector Coverage
7
Indonesia
Vietnam
Philippines
Bangladesh
India
Sri Lanka
Nepal
Laos
Pakistan
Snapshot of Key Projects
9
37.6MW Kabeli A Hydro Power, Nepal
Integrated Grain Mandi(2 projects), India
29.7MW Coc San Hydro Power, Vietnam
10 MW Kotte Waste to Energy, Sri Lanka
30MW Nyadi Hydro Power, Nepal
InfraCo Asia Office
50MW Gul Ahmed Wind Power, Pakistan
50MW Metro Wind Power, Pakistan
Cambodia
InfraCo Asia: a unique position
• Bridges a critical gap in Asian infrastructure development: Early stagedevelopment expertise complemented by development capital
• Complements efforts of host governments: Seeks to identify and developcommercially viable infrastructure projects in host government priority areas
• Balances the interests of host governments, private sector investors andfinanciers
• Complements and does not compete with local or international developers forprojects: Additionality is a core principle
• Focuses on commercially viable and attainable projects that produce socialbenefits (improved services, jobs and environment) and help to alleviatepoverty
• Aims to exit the investment at or near financial close: Draws in new privatesector investment once the project is prepared and structured
10
Co-Development Program overview (1/2)
11
Concept
• Invest in 3rd party developer projects before and up to financial close
• Limit investment to no more than 50%
• Project development lead is with the 3rd party developer
• InfraCo Asia in “Supervisory Management role”
• Oversight by InfraCo Asia Corporate Governance etc. by Board of Directors
Context
• Complementary to developer model and consistent with mandate
• Criteria of additionality, development impact and viability apply
• Can be used to address region and sector gaps in developer coverage
• Potentially higher and faster returns than developing projects at origin
Screening
Process
1.Preliminary Exchange of information
2. NDA & Q&A and exchange of
project details
3. Fill project proposal template
with financials
4. Review proposal and determine next
steps
Key
Factors
• Sector/Type/Size
• Location
• Developer detail
• Consultant (if any)
• Project Status
• Project Cost
• Development cost
• Production Cost
• Loan Terms
• IRR
• Development impact
• Key Risks
Co-Development Program overview (2/2)
12
Approval
process
Term
Sheet
SHA
JIDA
•Budget approval for site visit and compliance check
•Budget approval for financial, technical & legal due diligence
•Term sheet approval in line with investment guidelines
•Sign JIDA with local partner
•Agree on budget
•Sign SHA
•Funds drawdown
Action
Result
• Drafted based on Board approved Investment Guidelines (July 2015)
• Contains key terms of investment and scope of IAD involvement
• Focus on investment amount, return thresholds, duration and exit for IAD
• Joint Investment & Development Agreement with details on scope, investment
amounts, investment structure, board positions, board reserved matters
• Detailed budget for which IAD investment will be used and project milestones
• Binding Shareholders Agreement committing IAD funding & investment terms
• Other documents also possible if investment instrument is not equity (e.g.
Convertible Loan Agreement)
1. Present to Investment
Committee (IC) and IAD Board
2. Present results of compliance checks & site
visits
3. Present results of financial, legal &
technical due diligence
4. Draft JIDA; present for approval
5. Draft SHA; present for approval
InfraCo Asia Investments - Overview
13
Concept
Eligibility
• Provides capital to viable infrastructure projects to assist in financial close
and completion of projects
• Assists projects to get access to capital in cases where market is unable to
supply all capital needed
• Project at late stage of development
• Completed feasibilities studies along with demonstration of anticipated
financial returns on incremental capital investment
• Gap in equity or debt needed for financial close which would delay
construction of the project
Form of
Investment
• Investment capped at US$ 10 Million per project
• Participates as Co-Investor alongside private sector; will only take
minority stake
• Flexible range of instruments: Common Equity, Preference shares,
Subordinated Debt, Shareholder Loans
Key Factors • Sector
• Location
• Key Risks
• Commercial Returns
• Development Impact
• Other Pvt. Investments
Thank you
For further information please visit:
www.infracoasia.com
InfraCo Asia Development Pte. Ltd.
Level 18 Republic Plaza II
9 Raffles Place
Singapore 048619
14