DEG: We finance opportunities.

Transcription

1 DEG: We finance opportunities. Energy Project Finance in Mexico Volker Schwab Vice President Mariott Reforma, 14 November 2017

2 DEG s mandate and experience Promoting the private sector in emerging economies Long-terminvestment capital at market-oriented conditions Relation to Germany welcome but not necessary Focus on international Environmental, Social and Governance standards Global sector competence in Agri-business, Financial Institutions, (Renewable) Energy, Manufacturing Industry/Services Technical Assistance Programmes to enable/ accompany DEG has 50 years of experience in promoting entrepreneurial initiative through long-term funding and special programmes. 2

3 Custom-made solutions We can do anything as long as it is long-term Solutions Project Mixed Corporate Increasing project risk Shared project and country risk Complex structures and higher costs Increasing capital structure risks Strengthened capital structure Higher return requested Debt Mezzanine Equity 3

4 Energy Project Finance Stand-alone for local project company Characteristics: Relatively huge total investment (> USD 50m) Usually USD 15-30m on behalf of DEG (mobilization of up to USD m from other financiers on best effort basis) Usually 4-15 (max. 18) years, depending on cash-flow Fixed or variable USD, EUR or MXN, terms & conditions market-oriented depending on tenor, project & country risk Typically 20-40% equity provided by the company depending on PPA and/or Spot Market conditions. Project Mixed Corporate Debt Mezzanine Equity Controlling Company ( Sponsor ) Project Company (Mexico) Loan Repayment from CFADS Securities Possibly additional financiers Advantages Custom-made solution Long-term / matching maturities Sponsors liability ends with technical/financial completion Charge on local assets What should be considered Predictability of Cash Flows determine debt size Further lender needed for risk-sharing Quite time-consuming and intensive due diligence 4

5 Criteria for DEG of energy projects Financing Equity ratio of at least 25 % (depending on project structure up to 40 %) Adequate cash-flow oriented structure (i.e. debt service coverage, current ratio, flexible repayment structures) Minimum environmental social standards required. Construction Preferred: EPC contract on turn-key basis with completion and performance guarantees Adequate arrangements to cover cost overruns, project delays, unexpected events Operation Long term O&M contract with experienced operator Modern equipment and operating system Sales Long-term PPA with adequate cover of currency, fuel and O&M risk Creditworthiness of buyer; if needed, additional securities and/or government support Merchant power plants in liberalized, good-performing power markets Supply Source Preferred use of renewable energy sources or other locally available energy sources Long-term Fuel Supply Agreement for gas (and oil) 5

6 Energy Project Finance Mexican Framework Basics: Legacy Projects vs. New Market Auction PPA vs. Bilateral PPA Contracted Products: Energy, CELs, Capacity? Cash Flows: Contractually secured vs. Spot market Predictability, e.g. P50 vs. P90, dispatch rates Subject to potential penalties? Finance Structure: Required equity ratio depends on Cash Flow predictability Long-term, including risk mitigants, e.g. Cash Sweep Risk perception determines further elements, e.g. reserve accounts 6

7 Track record in Renewable Energy Selected Transactions Renewable Energy in Latin America USD 15,000,000 Equity Participation USD 20,000,000 Term Loan USD 24,000,000 USD 25,000,000 USD 25,000,000 Equity Participation USD 20,000,000 Term Loan 88 MW Wind Power Project Company 280 MW Combined Cycle 50 MW PV solar 44 MW Wind 148 MW Hydro 122 MW Wind Uruguay 2013 Peru 2010 Honduras 2014 Nicaragua 2012 Chile 2006 Peru 2014 Other (ex-) clients / projects USD 18,900,000 USD 25,000,000 Equity Participation USD 19,000,000 Corporate Credit USD 32,000,000 USD 25,000, MW Geothermal Renewable Energy Project Developer 40 MW Biomass Co-generation 250 MW Wind 50 MW Wind Nicaragua 2010 Brazil 2007 Guatemala 2008 Mexico 2010 Uruguay

8 Why work with DEG? Tailor-made Solutions Equity/debt structures crafted according to project needs Currency flexibility (EUR, USD, MXN) Global Reach, Local Presence Investment experience in +85 countries 10 years office presence, over 40 years experience in Mexico Long-term Approach Maturities matching your business horizon (up to 18 years) Financial stability from a AAA-rated institution Seal of Quality DEG represents the Federal Republic of Germany Our involvement will enhance your company profile Partnership Developmental approach, beyond profit maximization Technical Assistance programs 8

9 OurTeamin Mexico Dr. Stefan Blum Director Representative Office Mexico Tel.: Sergio Viso Equity & Mezzanine Corporates Tel.: Eduardo Avendaño Energy/ Project Finance Tel.: Xochitl Melendez Office Manager Johannes Goderbauer Equity & Mezzanine Corporates Tel.: Sergio García Loans Corporates Tel.: Volker Schwab Energy / Project Finance Volker.Schwab@deginvest.de Tel.: DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbh Oficina de Representación México Arquímedes#19 Piso 4, Bosque de Chapultepec, 11580, México D.F. Phone / Fax