Public-Private Private Partnership 1. Expanding the Scope of Projects

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1 Public-Private Private Partnership 1. Expanding the Scope of Projects 2. Innovative Financing Combinations between Banks and Institutional Investors 1

2 YEHUDA RAVEH & CO. Law Offices Israel Europe North America 2

3 P.P.P. Public Private Partnership B.O.T. Build-Operate-Transfer B.O.O. Build-Operate-Own P.F.I. Private Finance Initiative Owner Lenders SPC Shareholders Contractor Operator 3

4 P.P.P. Expanding the Scope of Projects Suitable for these Methods Recently, we witness expansion of the use of the P.P.P. methods to areas that were previously and traditionally considered as unsuitable The Traditional Perception P.P.P. is suitable mainly for large infrastructure projects initiated by Governments The Perception Today P.P.P. is suitable also for middle sized projects (not necessarily infrastructure projects and not necessarily initiated by Governments) Main Examples: Municipal Projects Non Profit Organizations Projects 4

5 Sample of Projects Suits for the Municipal Sector (1) Water Projects Sewage Projects Parking Facilities Schools, Colleges and Universities Hospitals Municipal buildings Cultural centers Offices Commercial Centers 5

6 Sample of Projects Suitable for the Municipal Sector (2) Municipal Power plants Solar and Clean-tech Facilities Municipal Desalination Projects Schools Sport centers Day Care centers Projects built by Donations Almost any income generating project 6

7 Sample of Israeli P.P.P. Projects in the Municipal Sector Tenders for sewage-treatment facilities (Jerusalem, Akko, Hadera) Nation Square Complex in Jerusalem (parking and commercial project) Municipality Building in Jerusalem Office complex in Raanana Light Train projects in Tel-Aviv and Jerusalem (joint venture with the government) 7

8 Innovative Financing Systems for Municipal Projects General Obligation (G.O.) Bond; or Revenue Bond specified stream of future income (This Option enables struggling municipalities to leverage profitable projects located in the region for the purpose of bonding, while isolating such revenues from other activities of the Municipality) Rating Agency Primary market or Secondary market (Stock Exchange) SPC a municipal sole-purpose company 8

9 Non-Profit Organizations Non-Profit organizations which holds real-estate are most suitable of entering into P.P.P. Projects : Posses suitable land Free from red-tape and regulatory obstacles Usually not obligated to issue a tender More flexibility in negotiating with the private sector Can assist on getting the first equity for the project from donors Enables leverage of real-estate assets in order to enhance and develop projects P.P.P. projects will surely increase the number of projects in this sector 9

10 Israel s First Infrastructure Fund (1) As part of the general policy to increase the involvement of the private sector in the development of infrastructure, there is a need for Infrastructure Funds. The first infrastructure fund in Israel is Israel Infrastructure Fund ( IIF ) Main rolls of the Fund: Raising capital for investments in infrastructure projects being built by the private sector. Locating infrastructure projects that have good potential. Serving as an arranger for raising the needed funds together with other funds, banks and accredited investors. 10

11 Israel s First Infrastructure Fund (2) The fund will invest in small and medium size PPP projects, focusing on development of projects that are not in the public domain and that institutional investors would otherwise have limited access to. Most of the Investors in the Fund are Institutional Investors. The Fund identifies for the Institutional Investors low risk, long terms investments. The return on the investments in the Fund is projected at % per annum. 11

12 Innovative Financing Combinations between Banks and Institutional Investors The Traditional Perception: Banks negotiated the Financing and served as Arrangers. Institutional Investors played the role of co-investors. The New Perception: Banks and Institutional Investors join together in the Financing (including negotiations), while Banks negotiate and finance the short-term construction credit facilities, the Institutional Investors negotiate and finance the long-term credit facilities. 12

13 A Few Selected B.O.T. / P.F.I. Projects in which our office has been involved Cross Israel Highway The Tel-Aviv LRT The Jerusalem LRT The Tel-Aviv and Jerusalem Fast Lanes Ashkelon Desalination Facility Ashkelon IPP Hadera Desalination Facility Road 431 Road 531 Natural Gas Transmission System The Municipality Square in Jerusalem The Nation Square Parking Complex in Jerusalem Expansion of the Knesset Building Student Dormitories Complex Imprisonment Facility in Be er Sheva Representing International Bidders on B.O.T. Projects in the Transportation Field in: Greece, Republic of Czech, Poland, Bulgaria, Mexico and other Countries 13

14 Selected Projects in which our office has been involved B.O.T. Cross Israel Highway / Section 18 Largest B.O.T. Project in Israel as of today Estimated cost 1.32 billion US dollars for main project; 180 million US Dollars for Section km inter-city roads, 14 intersections, 140 bridges, 2 tunnels, control & operating center Titled Project of the Year in the Project Finance Magazine of 1999; Section 18 awarded Project Finance Deal of the Year 2007 Our firm has represented the concessionaire, the international consortium, throughout the tender process, including the Financial Close and continues to represent the operation of the project. 14

15 Selected Projects in which our office has been involved P.F.I. Road 431 PFI project for building and operating road of 22 km., 3 lanes each direction Estimated cost 500 million US dollars Banks funded short term construction loans and the Institutional Lenders committed to fund the long terms loans Awarded Project Finance Deal of the Year 2006 Our firm represents the lenders Bank Hapoalim, HSBC, Bank Mamizrahi-Tfahot, First International Bank of Israel, Harel Insurance Group, Clal Insurance Group, New Mivtachim Fund, Menorah Insurance Group and Mivtachim Fund. 15

16 Selected B.O.T./P.F.I. Projects in the Pipeline P.F.I. Roads Solar Energy Facilities Natural Gas Powered Private Power Plants Alternative Energy Power Plants Police Academy Facilities Military Facilities 16

17 Summary Opportunity to recruit the creativity and innovation at the base of the P.P.P. projects for the benefit of Municipal Projects and Non Profit Organizations Projects Integration of the B.O.T. method with the P.F.I. method can promote many partially financed projects. The B.O.T. portion can be financed by the private sector and the residual part can be performed in the P.F.I. method or by way of fund raising Opportunity for struggling entities to initiate large scale projects Basically, any yield-giving project may be initiated and performed by way of the P.P.P. method 17

18 YEHUDA RAVEH & CO. Law Offices Jerusalem - 26 Usishkin St., P.O.B Tel Aviv - Rubinstein House, 20 Lincoln St. Haifa - Amot House Haifa, 157 Jaffa Rd. Beer Sheva 49 Atzmaut St. Representatives North America Europe.ד יהודה רוה וש ות' משרד עורכי דין יר ו של י ם - רח' תל אביב ח יפה באר שבע רח' ת, אוסי שקין 26 - בית רובינשטיין, רח' לינקולן 20 - בית אמות חיפה, דרך יפו 157 עצמאות 49 נציגויות צפון אמריקה אירופה Tel. (Main office) טל. (משרד ראשי) פקס Fax דואר אלקטרוני: lawfirm@yraveh.co.il 18