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
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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
EBIT
DA
- Mul
tiple
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 [email protected]
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
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