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PRIVATISATION: LESSONS LEARNT FROM · PDF file 2013-03-22 · PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES Ports . Agenda . 1. ... • Market leadership • Modern terminals

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  • www.pwc.com

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES Ports

    22 March 2013

  • Agenda

    1. Port of Lübeck Case Study

    2. Reasons for Privatisations

    3. Privatisation Process

    4. Preconditions for Port Privatisations

    5. Recent Transactions in the Port Sector

    6. Factors of Success

  • PwC 22 March 2013

    German Case Study: Lübeck

    • Lübeck is the largest German port in the Baltic Sea

    • Over 130 departures per week to 25 destinations including Scandinavia, Russia and the Baltic states

    • More than 150 transport and logistics companies shipped over 23 million tons of goods and 160,000 containers (TEU) in the Lübeck port in 2012

    • Port is operated by Lübecker Hafen-Gesellschaft (LHG)

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    150 23

    130

    25

    160,000

  • PwC 22 March 2013

    German Case Study: Lübeck

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    -

    50.000

    100.000

    150.000

    200.000

    250.000

    300.000

    350.000

    400.000

    450.000

    2004 2005 2006 2007 2008 2009 2010 2011 2012

    Lübeck Port: Passengers (2004-2012)

    Total throughput 23.9 Mio. t

    Container 160,000 TEU

    Vehicles 89,000 Units

    Passengers 406,000 -

    5.000.000

    10.000.000

    15.000.000

    20.000.000

    25.000.000

    30.000.000

    1975 1980 1985 1990 1995 2000 2005 2010 2011 2012

    Lübeck Port: Annual cargo tonnage (1975-2012)

    • Market leadership • Modern terminals • Holistic service portfolio • High quality and environmental standards • Significant logistics location • Ideal hinterland accessibility and

    infrastructure per road and inland waterway

    • All terminals have direct rail connection

  • PwC 22 March 2013

    History of the Lübeck Transaction

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    1934 Founding of LHG GmbH

    1962 Opening of Skandiviakai – To date largest ferry terminal in Baltic Sea

    1971 Opening of freight rail connection

    1998 Hanseatic City of Lübeck becomes major shareholder of LHG

    2006 Opening of Seelandkai – Terminal for ConRo and RoRo-Ferries

    2007 Initiation of the process of privatisation

    2008 RREEF purchases 25.1% of LHG for approx. 30 Mio. EUR

    2012 RREEF acquires additional 12.4% of LHG

  • PwC 22 March 2013

    Motivation for Privatisations

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    Privatisation proceeds

    Insufficient ability to finance necessary expansion investments

    Acquisition of private know-how

    Additional traffic volume through private networks

    1 2 3 4

  • PwC 22 March 2013

    Port Object Chain

    1

    Water Infra Infra+ Supra Cargo handling Modal Connec-

    tions

    • Access Channel

    • Nautical infra

    • Break water

    • Environ- mental compen- sation

    • Quay • Land

    • Pavement • Rail quay • Utilities • Light • Parking

    • Ship to shore equipment

    • Terminal handling equipment: • Straddle carriers • Van carriers • Tractors, Forklifts • Chassis • Other

    •Facilities: • Gate complex • Maintenance

    facilities, tool shop • Inspection facilities • Reefer facilities • Offices, open

    storage, shed

    • Manpower • Insurance • Rent/lease • Main-

    tenance • Utilities • Cleaning • Overhead

    • Road • Rail • Barge • Feeder

    • Internal Port Connec- tions

    • Sea-leg • Land-leg

    Port Hinterland

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

  • PwC 22 March 2013

    Privatisation Process

    EU-wide bidding process based on Openness Transparency Non-discrimination

    2 PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    Phase I: Preparing & Structuring • Formulating objectives • Developing different transaction structures and

    formulating a transaction option • Identification of suitable investors • Value determination • Draft contract

    Phase II: Tendering & Negotiating • Announcement • Contact potential investors • Offer evaluation (short list) • Negotiations

    Phase III: Deciding • Submissions to facilitate the decision-making process • Communication

    August 2006

    November 2007

    February 2008

  • PwC 22 March 2013

    Landlord Model to Facilitate the Transaction

    3

    STATUS QUO

    GOAL Landlord-

    Model

    Port Authority

    Port Authority Supervisory Authority

    Owner of port

    Private Operator Operation of shipping activities

    Owner and investor of port

    Suprastructure Infrastructure

    Lease

    Provision of infrastructure

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

  • PwC 22 March 2013

    Novoroslesekport, Russia

    Heysham Port, UK Forth Ports Plc, UK

    Global Ports Investments Plc, UK

    Associated British Ports Holdings Limited, UK

    PD Ports Limited, UK

    Mersey Docks & Harbour Company (MDHC), UK

    RMS Europe Limited, UK

    PD Ports Group Ltd., UK

    Peel Ports Ltd, UK

    Port of Brisbane Pty Ltd., Australia

    Lübecker Hafengesellschaft mbH, Germany

    5

    10

    15

    20

    25

    1998 2000 2002 2004 2006 2008 2010 2012 2014

    EB IT

    D A

    - M ul

    tip le

    Year

    EBITDA-Multiples for recent port transactions

    Recent Port Transactions

    4 PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    Transaction size € 2.5bn € 1.5bn € 1bn

  • PwC 22 March 2013

    5 PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    TURKEY

    SYRIA

    GREECE

    MALTA

    CYPRUS

    ITALY

    Mersin Iskenderun

    Bandırma

    Samsun

    Izmir, Derince

    Private Ports in the Region

    privatised

    in progress

    Piraeus

    Malta Freeport

    Bari

  • PwC 22 March 2013

    Factors of Success

    1. Create transparency

    2. Activate management

    3. Improve seller’s security

    4. Expand corporate scope of action

    5. Involve shareholders

    6. Special consideration of the port infrastructure

    6 PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

  • PwC 22 March 2013

    Hansjörg Arnold PwC Germany Tel.: +49 69 9585 5611 Fax: +49 69 9585 921044 hansjoerg.arnold@de.pwc.com

    Contact Details

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

  • PwC 22 March 2013

    Funding for Transport Projects: EU-Connecting Europe Facility

    8 PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    • Budget of €29.3 billion between 2014 and 2020

    • €23 billion for transport • Key instrument to promote

    growth, jobs and competitiveness through targeted infrastructure investment at European level

    • CEF investments are intended to act as a catalyst to attract further funding from the private sector and other public sector actors

    TEN-T Core network & core network corridors

    Backup

  • PwC 22 March 2013

    9 PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES • Ports

    The CEF is designed to attract private sector investment to infrastructure through a number of financial risk-sharing instruments, including special lending, guarantees and equity investments

    Connecting Europe Facility – EU / EIB Project Bonds

    Project Costs

    Project Bonds (rating

    based on market

    conditions)

    Project Bonds

    Investor

    Equity

    EIB sub- debt

    Project Sponsor

    Funded Project Bond Credit Enhancement

    Project Costs

    Project Bonds

    Investor

    Project Bonds (rating

    based on market

    conditions)

    Equity Project

    Sponsor

    Funded Project Bond Credit Enhancement

    Costs overruns

    EIB guarantee

    &

    Backup

    http://www.eib.org/index.htm http://www.eib.org/index.htm

    PRIVATISATION: LESSONS LEARNT FROM EUROPEAN EXPERIENCES Slide Number 2 German Case Study: Lübeck German Case Study: Lübeck History of the Lübeck Transaction Motivation for Privatisations Port Object Chain Privatisation Process Landlord Model to Facilitate the Transaction Recent Port Transactions Private Ports in the Region Factors of Success Contact Details Funding for Transport Projects:�EU-Connecting Europe Facility�� ���

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