ASSET CAPITAL PARTNERS

Transcription

1 ASSET CAPITAL PARTNERS «Maturing Market or Market Bubble?» Vladimir Matias The Russian and CIS Oil & Gas Investment Forum The Energy Exchange 30 November - 2 December 2004 Moscow

2 Contents 1. Market trends: longer loan tenors and larger size 2. Need for financing at current oil prices: challenges for financial institutions 3. Deal competition or pricing dumping? 4. New business via innovative credit structures? 5. Asset Capital Partners Page 2

3 Russian Economy... remarkable macroeconomic indicators... Major trends Fifth successive year of relatively impressive GDP growth 7.3 % GDP growth in 2003 (US$ billion) [4.7 % in 2002(US$ billion)] Average GDP growth rate in Russia over the last five years approx. 6.6 % a rate that few other European countries have matched Nominal and Real GDP 110,0 107,3 107,4 106,4 105,1 104,7 4823,2 7305,6 8943, , ,2 7552, (2Q) Industrial Production 111,0 111,9 107,0 104,9 103, Nominal GDP (bn rub.) Real GDP (in % to the corresp. period of the prev.year) Industrial Production (% to the prev. period) Inflation Source: Goskomstat, own calculations CPI 2004 Consumer Price Index % , ,1 104,6 105,3 106,1 109,3 102,8 103,5 101, , ,7 100,8 100,9 101,1 100,4 100,4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct ,5 120,2 118,6 115,1 106,1 112, (2Q) in % to Dec of the prev. year in % to the prev. period CPI (in % to the prev. period) Source: Goskomstat, own calculations Improvement => Fall from above 20 % in 2000 to appx. 12 % in 2003; Page 3

4 enhanced political and economic stability, combined with high oil prices dramatically improved the economics of Russian oil investment Russian Economy Investments Fixed Capital Investments ,2 16,5 16,5 20,0 13,9 15, ,9 15, , ,0 670,4 1165,2 1599,5 1758,7 2186,2 1000,5 0 0, (2Q) Fixed Capital Investments (bn. rub.) Fixed Capital Investments (% GDP) Source: Goskomstat, own calculations Foreign Trade Foreign Trade , , ,0 31, , ,3 18,1 17,6 17,4 16, ,4 44,9 53,8 61, , ,6 101,9 107,6 135,9 93,3 0 0 Export, f.o.b.(us$ bn) Import, f.o.b.( US$ bn) Export (% GDP) Import (% GDP) Substantial increase in investment demand. With capacity by and large fully utilised, growth could not be sustained without investment. In 2003 fixed capital investment amounted to US$ 71 billions or 16.5% of the GDP. In the first 2 quarters 2004 this indicator was equal to US$ 34.7 billions. 17,1 26,7 Oil Price 23,0 23,7 27,1 41, (Oct.) Urals (US$/bbl period avg.) Rub ,6 130,8 28,1 104,3 Official Exchange Rate 29,2 107,0 31,4 105,4 30,7 92,7 28, (2Q) rub. for US$ avg. for the period % to Dec of the prev. year % Source: Goskomstat, Central Bank, own calculations Significant increase in the import and export volumes (Main reasons: ruble strengthening, increase in real income and purchasing power of the population) In 2003 Export (f.o.b.) = US$ bn and Import (f.o.b.)= US$ According to Central Bank data: positive trade balance in Jan-Aug 2004 = US$ 51.2 bn (30.3% increase to the same period in 2003) High oil prices. Page 4

5 Russian Economy Government Finances Gold and Foreign Exchange Reserves Deficit (-)/Surplus (+) of the Consolidated Budget Refinancing rate of the Central Bank ,9 130,5 124,6 161,0 165,3 130,9 12,5 28,0 36,6 47,8 76,9 107, (October) Reserves (US$ bn, end of period) Reserves (% to the prev. period) rub. bn ,5 6,5 207,4 180,2 256,6 2,8 2,9 111,9 0,9 1,0 1, (2Q) -44,4 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0-1,0-2,0 % GDP % ,0 25,0 21,0 16,0 13, (2Q) Central Bank redinancing rate (end of period., % annually ) Source: Goskomstat, own calculations Gold and foreign exchange reserves at historical highs: more than US$ 107 billion in 2004 Stable growth of taxation income Stabilisation fund in Oct 2004 = bn rub. (only 106 bn rub. in Feb) Marked decline in official poverty levels. Real disposable incomes in Russia grew by 14.5 % in 2003, and real wages increased by 10.4 % Page 5

6 1. Market trends: longer loan tenors and larger size (i) Date Borrower Type Status Amount (US$ mm) 03 June 2003 Lukoil-Perm Refinancing Bilateral 80 6 years LIBOR:350,00 bp Maturity Pricing Arrangers EBRD, ABN-AMRO Bank NV, BNP Paribas, DZ Bank AG, Commerzbank AG, WestLB AG. 28 August 2003 Transnefteproduct AK Working Capital Bilateral 75 5 years Undisclosed EBRD,RZB, Natexis Banques Populaires SA, Commerzbank AG 12 September 2003 Siberian Oil Co OAO - Sibneft Refinancing; General Corporate Secured years and 4.5years EURIBOR 215,00 bp ; LIBOR 300,00 bp BNP Paribas, Citygroup Inc., WestLB AG 24 September 2003 Yukos Oil Co OAO Trade Financing ; General Corporate Secured and 5 years LIBOR 150,00 bp and LIBOR 175,00 bp Citigroup inc.; Credit Lyonnais SA; HSBC; SG; KBC Bank NV; Commerzbank AG; Deutsche Bank AG; ING Bank NV; BNP Paribas; UFJ Group 06 November 2003 Rosneft OAO Trade Financing Secured years Undisclosed Natexis Banques Populaires SA; RZB; Natexis Banques Populaires (Moscow); Raiffeisenbank Austria ZAO 11 November 2003 Lukoil OAO Trade Fincning; Debt Repayment Secured and 7 years LIBOR 200,00 bp and LIBOR 250,00 bp ABN-AMRO Bank NV; Citygroup Inc. 16 December 2003 Nizhnekamskneftekhim OAO Trade Financing Secured 67 5 years EURIBOR 425,00 bp Citigroup inc. 30 January 2004 Lukoil OAO General Corporate Self-Arranged year Undisclosed Lukoil OAO 04 March 2004 Rosneft OAO General Corporate Bilateral year 4 months Undisclosed HVB Group 23 March 2004 Archneftegeologya JSC Trade Financing Secured 25 3 years Undisclosed BNP Paribas 15 April 2004 Rosneft OAO Trade Financing years LIBOR 220,00 bp ABN-AMRO ; SG; HVB Group Limited choice and innovation: borrower and banks prefer proved credit instruments, i.e. corporate and trade finance based loans Page 6

7 1. Market trends: longer loan tenors and larger size (ii) 8 7 Luk-11/03-$765 Gazprom-04/02-$300 6 Luk-06/03-$80 Gazprom-09/02-$325 Maturtiy (years) 5 4 Yuk-09/03-$1000 RN-04/04-$500 TNK-01/03-$200 Sibneft-01/03-$400 Luk-05/02-$300 Sibneft-10/02-$500 Sibneft-10/02-$500 Nizhnekamskneftekhim-12/03-$67 RN-01/03-$200 Sibneft-04/02-$225 3 Sidanco-01/03-$200 Sibneft-01/03-$150 Slavneft-01/03-$180 Tatneft-01/03-$300 RN-05/02-$150 Slavneft-06/02-$250 Sibneft-09/03-$412 Sidanco-12/02-$30 2 Tatneft-07/02-$100 KMOC-05/02-$ ,50% 2,00% 2,50% 3,00% 3,50% 4,00% Margin 4,50% 5,00% 5,50% 6,00% Current trend: maturities over 7 years for secured loans and over 10 years for capital market instruments (e.g. 30 years Gazprom bond) Pricing competition: margin under 100bps soon? Page 7

8 Evolution of financing instruments in the Russian oil sector. Complexity und Investment Size (with risk adjustment) Financial Equity Investors SF/M&A CMI PF Strategic Equity Investors CTF ECA ECA Export Credit Agency; CTF Commodity Trade Finance; SF/M&A Structured Finance/Mergers & Acquisitions; CMI Capital Market Instruments (bonds, commercial papers); PF Project Financing Tenor Page 8

9 2. Need for financing at current oil prices: challenges for financial institutions Why secured if unsecured is cheap? Declining margins and longer tenors Borrowers are cash rich No silver lining due to high oil and gas prices Limited choice of transactions and projects Shooting for white elephants? Page 9

10 3. Deal competition or pricing dumping? Foreign banks face lack of attractive deals Central and Eastern Europe is with EU Latin America and Africa are behind Russia (in credit terms) Growing local rouble market Competition from cash/assets rich Russian banks New typical borrower profile: second tier companies on a move Blue chips credit limitations: too much for borrowers (conservative existing financial covenants) and banks (credit exposure) New lenders coming Changing credit profile Page 10

11 4. New business via innovative credit structures? (i) Transition era: between corporate and project financing Majority of banks still not prepared for true project financing, i.e. loans secured by project assets and receivables only Shift to more aggressive credit structures: US$ to RUR: from export to domestic receivables Offshore to onshore account structures Trade financing based structures to project / asset based structures with limited or no recourse, incl. acquisition and resource based financings Need for specific financial and industry know-how Credit innovation is a must: work on your credit polices and educate your credit committees Page 11

12 4. New business via innovative credit structures? (ii) Main advantages of project financing for the borrower: Off-balance sheet structures possible Larger investment volumes Longer tenors Higher leverage More flexibility: tailor made repayments Cost saving potentials Risk sharing Transparency and better monitoring Page 12

13 Evolution of financing instruments in the Russian oil sector Complexity und Investment Size (with risk adjustment) Financial Equity Investors SF/M&A CMI PF Strategic Equity Investors CTF ECA ECA Export Credit Agency; CTF Commodity Trade Finance; SF/M&A Structured Finance/Mergers & Acquisitions; CMI Capital Market Instruments (bonds, commercial papers); PF Project Financing Tenor Page 13

14 Contents 1. Market trends: longer loan tenors and larger size 2. Need for financing at current oil prices: challenges for financial institutions 3. Deal competition or pricing dumping? 4. New business via innovative credit structures? 5. Asset Capital Partners Page 14

15 Introduction to Asset Capital Partners Focus Asset Capital Partners is a globally operating investment banking firm based in Munich and Moscow Munich Moscow Given the partners proven track record Asset Capital Partners has a special focus on Russia and other CIS countries Asset Capital Partners provides investment banking and private equity services for asset based industries, particularly the oil & gas, mining, power and infrastructure sectors Page 15

16 Introduction to Asset Capital Partners (cont d) Activities Asset Capital Partners offers a wide range of investment banking services: Financial advisory with regard to debt, mezzanine and equity Acquisitions and divestiture (A&D) services in the oil and gas sector Private equity services, including fund management and direct equity investments Asset Capital Partners Financial Advisory Oil & Gas A&D Private Equity Page 16

17 Introduction to Asset Capital Partners (cont d) Founders Asset Capital Partners was established as a spin off from the private equity and corporate finance division of HVB Group, one of the leading European banks The company s founders Hansjörg Gonser, Vladimir Matias, Jan-Hendrik Röver and Marc Wallenstein have successfully worked as a team for more than 5 years and have a combined financing and industry experience of almost 40 years All founders are executive partners of Asset Capital Partners Experience The partners expertise covers the whole spectrum of financing solutions from equity over mezzanine to senior debt Thorough senior debt know how and track record as well as unique investment track record and reputation in Russia and other CIS countries, resulting inter alia in the No. 1 arranger position in 2002 and Deal of the Year awards in 2001 and 2002 Quasi-equity financing experience in the form of asset based mezzanine investments Substantial private equity know how and track record as the partners represented the first institutional fund-of-funds-investor exclusively focused on asset based investments Page 17

18 Contact details Wagmüllerstrasse Munich, Germany p: f: Prechistensky per. 14/ Moscow, Russia p: f: Page 18