WELCOME TO KONSTRUKSI INDONESIA AND THE BIG 5 CONSTRUCT INDONESIA CPD CERTIFIED WORKSHOPS

Transcription

1 WELCOME TO KONSTRUKSI INDONESIA AND THE BIG 5 CONSTRUCT INDONESIA CPD CERTIFIED WORKSHOPS

2 ALTERNATIVE INFRASTRUCTURE FUNDING THROUGH INVESTMENT MANAGEMENT INDUSTRY YOGA PRAKASA, CDIF, CFP

3 Private Issuance Mutual Fund Reksa Dana Penyertaan Terbatas (RDPT) 3

4 RDPT Structure OJK Regulation 37/2014 The RDPT structure as an alternative mean of financing, is regulated under OJK Reg number 37 year 2014 RDPT as a vehicle to fundraise to professional (accredited) investors through private placement. Minimum initial investment of IDR 5 million for each Unitholder. Investment Manager (IM) as the manager has to participate as a Unitholder Unit change of ownership may be conducted as long as there is no breach on term of Public Offering (max offering to 100 parties) Securities portfolio may be consisted of one or more securities, to finance one or multiple Real Sector Activities : Activities which direct or indirectly, related to production of goods, provision of services in the real sectors which is not limited to the production of goods, and/or provision of working capital for such activities; Securities in the RDPT have to be of one kind (debt or equity), and addition of new Securities/issuer has to go through General Meeting of Paticipation Unit Holder. Underlying debt securities may not undergo Public Offering; and underlying equity securities have to issued by non-listed companies. 4

5 RDPT Characteristics Equity RDPT with underlying equity investment Similar to private equity model Investment Committee must have at minimum 1 member with minimum 5 years experience in financial valuation (may be IM employee or third party) Have to appoint expert consultant if IM does not have expertise in Target Company s line of business May appoint representative of RDPT as member of BOD/BOC of the Target Company RDPT is always in control of the Target Company Cash flow is similar to equity investment in general Debt RDPT with underlying debt investment Commonly used debt securities is in the form of MTN, but may in other form as long as it is not publicly offered Collateral have to amount at minimum 100% of the securities par value, if the securities do not have investment grade rating Have to appoint Payment Agent/Trustee to represent RDPT s interest Cash flow is similar to debt investment in general 5

6 Debt-based RDPT Illustration 1 Investment Manager and Custodian Bank forms Collective Investment Contract as the basis of RDPT Custodian Bank Investment Manager PT X PT X issues private debt instrument (i.e., Medium Term Notes) to finance its project Collateralize account receivable or other assets amounting to 100% of issuance par value, if the MTN cannot obtain investment grade rating 4 MTN (proceeds shall be used as working capital and/or capital expenditure of the project) RDPT 3 IM chipping in the RDPT, at minimum IDR 5 billion, as per OJK regulation Investor Investors subscribes and purchase Participation Unit of the RDPT 2 5 The PT X MTN is the underlying assets of the RDPT 6

7 Equity-based RDPT Illustration A special purpose vehicle/company may be formed to be used as legal form to finance the project and receive its benefits; project sponsor or partner may join in ownership of the SPV PT X PT Y (as the SPV) shall execute the projects; other forms or structures may be used depending on legal need and compliance 5 4 PT Y (special purpose company) Projects 1 Investment Manager and Custodian Bank forms Collective Investment Contract as the basis of RDPT Custodian Bank Equity (proceeds shall be used as working capital and/or capital expenditure of the project and/or capital restructuring) RDPT Investment Manager 3 IM chipping in the RDPT, at minimum IDR 5 billion, as per OJK regulation Investor Investors subscribes and purchase Participation Unit of the RDPT 2 6 The PT X share is the underlying assets of the RDPT 7

8 Pros and Cons of Debt Based RDPT PROS CONS Relatively more liquid than equity securities Exit strategy is when the securities mature Relatively safer relative to equity instruments, due to collateral Relatively more stable return due to interest payment Ownership of debt is less complicated Investment does not require complicated corporation bureaucracies Mandatory collateral with 100% of debt par value Alternative is investment grade for the securities Managerial control relatively less stringent than equity participation Return may be less attractive compared to equity securities Above certain amount may still need approval of BOC/shareholders of the Target Company Highly negotiable debt structure Enable investor to perform a more detailed due diligence (relative to conventional mutual fund) 8

9 Pros and Cons of Equity Based RDPT PROS CONS Potential for higher return relative to debt investment May determine business plan and/or activities of the Target Company May appoint representative(s) in BOD/BOC structure Suitable for issuer who does not collateral and cannot obtain investment grade rating Enable investor to perform a more detailed due diligence (relative to listed companies) Cannot invest in listed companies Have to form new subsidiary if Target Company is a listed company Have to retain expert consultant Investment Committee member with experience in financial valuation at minimum 5 years Consultant with expertise in Target Company line of business Continuous control in the Target Company May not be diluted Relatively less liquid relative to debt instruments No maturity Exit strategy through IPO, private placement, or put option Equity ownership may be complicated May need to obtain approval of BOC and/or shareholders of the Target Company as well as RDPT s investors 9

10 Asset-Backed Securities Kontrak Investasi Kolektif Efek Beragun Aset (KIK-EBA) 10

11 KIK-EBA Structure Bapepam-LK Regulation IX.K.1 The KIK-EBA structure as an alternative mean of financing, is regulated under Bapepam-LK Reg number 493 year 2008 Asset Backed Securities (ABS or EBA ) may consists of financial assets such as future receivables, mortgages, credit enhancement, cash flow enhancement, receivables to debt instruments, and other similar and related financial assets. Originator (asset owner) sells assets to KIK-EBA, including their entitlements to future cash flows. KIK-EBA may be issued in tranches or different classes of ABS corresponding to each class riskreward characteristics. Cash flows received by KIK-EBA, and passed through to investors, commonly consist of principal and interest resulting in declining amount of assets under management. KIK-EBA may retain the colleting service of a Servicer, which commonly being the originator. 11

12 KIK-EBA Illustration Investors Investment Manager KIK EBA Custodian Bank 1 IM and CB create KIK-EBA, where: 1) IM shall receive management fee for its collective management service, and 2) CB shall receive custodian fee for its collective safekeeping and asset administration 2 Investors subscribe and purchase Participation Unit of KIK EBA during its Initial Public Offering (IPO); subsequent cash flow repayments from Borrowers are passed through by KIK EBA to Investors Borrowers (to the receivables) 3 Financial Assets (receivables) KIK-EBA purchase the underlying financial assets from the Originator Originator 4 KIK EBA signs agreement with a Servicer, commonly the Originator, to conduct debt service collection of the Financial Asset 5 Borrowers repays KIK EBA receivables, assisted by the Servicer Servicer 12

13 Comparative Table Private Issuance Mutual Fund Asset Backed Securities Infrastructure Fund Underlying Assets Debt atau Equity securities Financial asset, commonly account receivable from the originator Diversification Characteristics Principal Repayment Collateral on the Principal Depending on securities inside the portfolio Depending on debt or equity securities which underlie the fund Debt securities, must be collateralized 100% with fixed assets and/or account receivable, or rated investment grade Equity securities, uncollateralized Tax Incentive* Debt securities, final income tax at 5% rate on coupon and capital gain (vs 15% rate outside fund) until year 2020, subsequently at 10% rate Equity securities, currently double taxation for dividend and capital gain, at issuer and fund level Final income tax at fund level, not in investor level Depending on borrower of the account receivable Commonly amortized similar to mortgage Melalui mekanisme tranche dan credit enhancement EBA arus kas tetap, mendapat prioritas pelunasan EBA arus kas tidak tetap, tidak dijamin Final income tax at 5% rate, treated similar to mutual fund Final income tax at fund level, not in investor level Infrastructure assets at minimum 51% of the portfolio Depending on securities inside the portfolio Depending on debt or equity securities which underlie the fund Debt securities, collateral mechanism is negotiated bilaterally, unless regulated by authority Equity securities, uncollateralized Not regulated yet (no incentive) Final income tax at fund level, not in investor level Equity securities, currently double taxation for dividend and capital gain, at issuer and fund level * Made under BNI Asset Management understanding of the regulation, it is not meant as recommendation. Each project owner and investor is advised to consult with their respective tax advisor as financial condition of each project owner and investor may differ one another. 13

14 Infrastructure Fund Dana Investasi Infrastruktur (DInfra) 14

15 DInfra Structure DInfra structure as an alternative mean of financing, is regulated under OJK Regulation 52 year 2017 A minimum of 51% in Infrastructure Assets, the rest may be in money market and/or securities portfolio. Infrastructure Assets have to be within Indonesia jurisdiction, and have to support government infrastructure initiative and/or deliver public benefits. Infrastructure Assets are technical, physical, system, hardware and software facilities that are needed to deliver public service and support structural network. Included as infrastructure asset category: transportation, road, irrigation and water system, water utilities, waster management, telecommunication, electricity and power plant, oil and gas, renewable energy, energy conservation, urban facilities, education facilities, sports and arts facilities, tourism objects, health facilities, prison, and public housing. May be offered in public or private offering; publicly, may opt for Exchange listing and/or sold through third-party agents DInfra is a mean to asset recycling, selling operating asset to generate funding for subsequent projects Asset owners may purchase DInfra units to maintain certain level of recurring income 15

16 Investment in Infrastructure Assets DInfra may invest direct or indirectly through the use of SPV Direct purchase of Infrastructure Assets Share acquisition of infrastructure asset owners and/or operators Infrastructure project financing Investing in debt securities issued by infrastructure asset owners and/or operators Infrastructure Assets Have to be income positive (brownfield) Greenfield projects may be at maximum 25% of public DInfra assets or 100% of private DInfra assets DInfra can leverage itself Bank borrowing or debt issuance at maximum 45% of brownfield Infrastructure Asset value to be purchased 16

17 DInfra Illustration (equity or project finance) A special purpose vehicle/company may be formed to be used as legal form to finance the project and receive its benefits PT X 3 1 Investment Manager and Custodian Bank forms Collective Investment Contract as the basis of RDPT Custodian Bank Investment Manager PT Y (as the SPV) shall operate the projects; other forms or structures may be used depending on legal and commercial need as well as regulatory compliance 4 PT Y (special purpose company) Projects Infrastructure Assets (proceeds shall be used to invest in infrastructure projects) DInfra Investor Investors subscribes and purchase Participation Unit of the DInfra 2 17

18 THANK YOU! SEE YOU NEXT YEAR