financing power and energy ebrd perspective · (€, us$, rub, pln, ron etc.) •support of...
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What is the EBRD?
International financial institution, promotes transition to market economies in 36 countries from central Europe to central Asia and the Southern and Eastern Mediterranean – SEMED region
In 2014 and 2015, the EBRD welcomed Cyprus and Greece as recipient countries.
• Owned by 65 countries and two inter-governmental institutions.
• Capital base of €30 billion.
As at end December 2015:
• Invested €107 billion in c.4,500 projects
• In 2015 only, €9.4 billion invested in 381 projects
• Private sector accounted for 70% share
• Debt 82%, Equity 14% & Guarantee 4%
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Net
cum
ulat
ive
busi
ness
vol
ume
Annu
al b
usin
ess
inve
stm
ent (
ABI)
Equity ABIDebt ABI Net Cumulative Business Investments
€ billion
The EBRD and its objectives
Objectives: • To promote transition to market economies by investing mainly in the private
sector • To mobilise significant foreign direct investment and facilitate inward and cross
border investments in the region • To support market focused reforms, privatizations • Promotes policy dialogue with regards to investment climate, business and
policy matter • To encourage environmentally sound and financially sustainable development
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Benefits of working with the EBRD
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• Flexible deal structure • Debt finance to both public
and private sector • Syndication under preferred
creditor status • Catalyst to access
additional debt • LT (up to 10y or more) or
ST revolving • Floating/ Fixed rates • Choice of currencies
(€, US$, RUB, PLN, RON etc.)
• Support of strategic investors • Perception of quality investment • Sector expertise through
Board of Directors • Good corporate governance • Catalyst to access additional
equity • Positioning as neutral party • Common stock, preferred,
mezzanine • Minority position only (up to 35%)
• Strong, internationally recognized partner with long term perspective
• AAA rated, commercially focused • Mitigation of political and regulatory risks • Policy dialogue with government and regulators • Grant-funded technical assistance • Finance and operations monitoring
Shareholder ’ s Value
EBRD value - added
Equity Financing
LT Debt Financing
Shareholder Value
-
EBRD Value-added
Equity Debt
Power and Energy Utilities Team – Financing by sub-sector
• In 2015 EBRD invested €1.2bn in 15 projects in the power & energy sector.
• In 2015 the EBRD signed € 591m of financing for 13 renewables deals with a total gross project value of €2.2bn.
• In each of the last six years, annual power & energy investments exceeded €1bn and at least 20% of those funds went towards renewable energy generation projects.
Updated as of 31 December, 2015. Source: EBRD data
Electric Power Generation
40%
Electric Power Transmission
6%
Electric Power Distribution
11%
Renewable Power 29%
Large Hydro 13%
Natural Gas Distribution
1%
Financing by Sector (2011–2015)
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Debt projects financing guidelines
• EBRD can do both Project Finance as well as Corporate Loans with specified use of proceeds
• Maturities between 10 to 15 years
• Flexibility on commitment amounts (but up to 35% for Project Financing)
• Market pricing and security structures (no soft loans or grants)
• Local currency, where possible (PLN, RON, TRY, etc.)
• EBRD arranges the entire debt package and syndicated to B Lenders or is a parallel financier alongside other IFIs (EIB, IFC, etc.)
• EBRD needs to be additional, not crowding-out private money
• EBRD’s public procurement rules (PPR) for works, goods and services and competitive procurement for private partners of PPP arrangements
• EBRD’s Environmental policy vs EU standards
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Technical
• Feasibility study • Completion risk • Production capacity •Management
Environ. & Social
• EIA •Natura 2000 •Health & Safety • Expropriations/Resettle
ments •Management systems • ESAP / Gap Analysis
Market • Supply-demand • Competitors • Price projections • FX exposure
Legal & Contracts
• Security • Charter / Incorporation •Ownership and title • Licenses, permits • Legal agreements • Insurance
EBRD Due Diligence
Process
Concept Review
Structure Review
Final Review
Board Approval
Signing
Due Diligence Term Sheet
KYC
Final Documentation
Our a
ppro
val p
roce
ss
EBRD Internal Approval Process
•Historical financials • Projections • Financial Model • Credit Ratios
Financial
Due Diligence Required
• Technical due diligence – EBRD needs to hire an independent advisor to review the Feasibility Study, wind study, etc. BOP, Grid Connection are important aspects as well.
• Financial due diligence will decide final leverage (for Project Finance) or the appropriate mix of Corporate Debt and Grant (if necessary). EBRD build its own financial models from scratch.
• Environmental due diligence - as most transmission lines and wind farms are falling under EBRD’s A category due to their size, they require 120 and 60 days respectively public disclosure of EIA including Non-technical Summary, Environmental Monitoring and Management Plan and Stakeholder Engagement Plan.
• Other aspects: status of permitting and licenses, land plots, etc.
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Study cases
Transelectrica (Romania) Oradea (RO)– Bekescsaba (HU) Transmission Line This was the first non-sovereign loan granted to a state owned electricity company in Romania
(A/B loan structure syndicated to Raiffeisen) € 23m A/B corporate loan, signed in December 2004 Transelectrica followed EBRD PPR and was very happy with the outcome Project was completed in 2009; fully repaid in 2015. Moldova- Romania Interconnection The Bank is financing a Feasibility Study to prioritise the three possible interconnections
between Moldova and Romania: Chisinau-Isaccea, Balti –Suceava and Ungheni-Straseni. The Current Financing Structure for the South Interconnector (Chisinau- Isaccea) is EIB € 60m,
EBRD € 60m, NIF € 20m. However, the NIF fund is apparently overbooked in 2016, so inclusion on PCI list will help
attract CEF money. Bank is looking to finalise due diligence 2016; financial completion 2017.
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Thank you for you attention
For all further enquiries, please contact:
Roxana Simon Principal Banker Power & Energy Utilities Tel: + 44 207 338 6181 Email: simonr@ebrd.com
EBRD, One Exchange Square London, EC2A 2JN UK www.ebrd.com
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