PPP s in Australia and the Region. Calyon s Experiences to Date. PECC Conference in Sydney November 24th, 2006

Transcription

1 page 1 PPP s in Australia and the Region Calyon s Experiences to Date PECC Conference in Sydney November 24th, 2006

2 Contents page 2 1. Calyon Brief Overview 2. PPP Track Record Recent Credentials 3. Calyon Australia Limited s Approach 4. Volume / Market / Patronage Risk 5. Characteristics of the Australian PPP Market 6. Selected Australian PPP Deals 7. Challenges 8. South Korean PPP Market 9. Korean PPI Key Characteristics 10. Singapore PPPs 11. Conclusion in the Context of the PECC Guidelines 12. Contact

3 Calyon Brief Overview page 3 Calyon is the corporate and investment banking arm of Crédit Agricole Formed from the merger of Crédit Agricole Indosuez and Crédit Lyonnais' Corporate and Investment Banking division Largest banking organisation in France, in terms of capital number two European bank, and fifth largest in the world Total Assets of more than EUR 480 billion, generating Net Banking Income of EUR 4,398 million in 2005 Ratings: S&P: AA-; Fitch: AA; Moody s Aa2 Present in 55 countries: Outside of Europe have operations in North America; South America; Africa; the Middle East; and 13 countries in Asia, with multiple operations in China and India Calyon is one of Europe's leading project finance banks with a staff of more than 100 professionals based in regional centres of expertise in Paris, London, Madrid, Milan, New York, Singapore, Hong Kong, Tokyo and Sydney. Ranked 4 th in terms of Worldwide Mandated Project Finance Arrangers in 2005

4 PPP Track Record Recent Credentials page 4 Shibei Shibei Shanghai Shanghai Water Water Privatization Privatization China China Uijeongbu Uijeongbu LRT LRT Korea Korea 2006 NSBT Australia 2006 UK M6 Refinancing Spain San Sebastian Hospital PPP Financial Financial Advisor Advisor to to Bidder Bidder US$450 US$450 million million Financial Financial Advisor Advisor MLA MLA A$ 1,989 Million Joint Lead Arranger & Arranger GBP 1,030 Million Mandated Lead Arranger EUR 140 Million Financial Advisor Mandated Lead Arranger France Saint Nazaire Hospital China Sino French France Lesley France Prisons lot 2 On-going Hong Kong West Kowloon Cultural District PPP EUR 250 Million Financial Advisor and Potential Arranger Development of a water treatment plant in Chongqing Financial Advisor Rail link - Lyon and Saint-Exupery Airport Financial Advisor and Potential Arranger EUR 160 Million Financial Advisor and Potential Arranger Three new prisons HKD ~30 billion Advisor to Bidder Moalajah UAE UAE water treatment NA Financial Advisor 2006 France College de Villemandeur EUR 13 Million Arranger School PPP Greece Corinth Patras EUR 2,200 Million Financial Advisor & Lead Arranger Financing of a toll road 2005 UK Defence PFI c.gbp 2,500 Million Senior Lead Arranger 2004 Australia Victoria Prisons AUD 240 Million Mandated Lead Arranger

5 Calyon Australia Limited s Approach page 5 S&P: PPP Global Credit Survey 2005 So far, A$9 billion worth of PPPs has been contracted, and a further A$4 billion is up for grabs. Although PPP still constitutes a comparatively small share in total capital spending (annual state and commonwealth government capital spending is at A$15 billion), the concept continues to gain currency in Australia. Determined By: Toll roads have developed outside of each states PPP/PFI framework In terms of the use of private finance, Victoria and NSW have led the way, with Queensland a recent convert Outside of Victoria, previous stop start nature of the development of social infrastructure PPPs number of false dawns, protracted bid process PPP developed at different speeds between states due in part by the Federal nature of the country Initially social infrastructure projects dominated by financer led funding arrangements, with a capital markets solution

6 Volume / Market / Patronage Risk page 6 Queensland NSBT (Financial Close Aug 2006) Victoria Melbourne CityLink (opened 1999) ConnectEast / MFF (opening 2007/2008) New South Wales M4 (Private ownership 1989) M5 Interlink (opened 1992) Airport Link Corporation (1995) M2, Hills Motorway (opened 1997) Eastern Distributor (opened 1999) Cross City Tunnel (opened 2005) WestLink M7 (opened 2006) Lane Cove Tunnel (opening Q1 2007) Real tolls Mature market Successful refinancing Long term concession Moving towards full electronic tolling Termination payment in event of a default by the Concessionaire Fixed price fixed time D&C KPI regime Revenue sharing in more recent deals Refinancing benefits shared Diversification in equity funding Debt financing utilising bullet structures Refinancing pre-ramp up

7 Characteristics of Australian PPP Market page 7 Trends. Historically a lack of national standardisation However Victoria currently leads the way with Partnerships Victoria (June 2000) Consistent approach emerging National Public Private Partnerships (PPP) Forum Partnerships Victoria Standard Commercial Principles Increasing level of interaction between the respective States and bidding consortiums States advised by experienced independent advisors, thus enhancing negotiations and understanding Variations continue to persists between projects, i.e. revenue sharing, refinancing benefits, though differences are diminishing

8 Characteristics Continued page 8 Typical characteristics Long-term contract with debt > 20/28 years Supply and maintenance of social infrastructure asset (Schools, Hospitals, Prisons, accommodation etc) Generally no usage risk transferred (1) Performance-based payments including KPIs and abatement regimes CPI indexed annuity stream Private Sector delivers Non Core Services Design Construction Refurbishment Facilities Maintenance Unlocks 3rd Party Revenues (1). (1). Exceptions Exceptions include include airport airport rail rail links, links, student student accommodation, accommodation, and and toll toll roads roads

9 Selected Australian PPP Deals page 9 Victoria 1997: Geelong Private Hospital 1998: Berwick Community Hospital and Mildura Hospital PPPs 2002: Southern Cross Station (Spencer Street) redevelopment 2004: Victoria PPP Prisons 2004: Swinburne University of Technology student accommodation 2005: Royal Women s Hospital Redevelopment in Melbourne 2005: Monash University Student Accommodation 2005: Royal Melbourne Showgrounds 2006: Melbourne Convention Centre 2007: Royal Childrens Hospital

10 Selected Australian PPP Deals page 10 NSW 1992: Rouse Hill Recycled Water Area project in Sydney 2003: Sydney PPP Schools Project 2005: Newcastle Mater Hospital 2005: Sydney PPP II Schools Project 2006: LongBay Forensic Hospital in NSW 2006: Bonnyrigg Estate PPP 2006/07: Reliance Rail 2006/07: Single Living Environment and Accommodation Precinct

11 page 11 Queensland 1997: St Vincent s Hospital (Gold Coast) Sisters of Charity Health Service 2005: Brisbane Southbank TAFE, Queensland South Australia 2005: South Australian Police ACT 2003: Australian National University student accommodation Western Australia 2005: Perth Courts Federal Government 2006: Joint Operations Command Headquarters

12 Challenges page 12 Reduce bid costs and further streamline bid/tender process Limited number of bidders for large projects A possible issue for State Governments as opposed to financiers Limited contractors Could be an issue if step-in required Further standardisation required, but not at the cost of flexibility Actively educate public / users of benefits of the PPP model Not simply a funding issue Possible increase in political risk Continue to work towards a more uniform national framework

13 South Korean PPP Market page 13 Calyon Experience South Korea has been one of the large PF markets of Asia since the beginning of this decade, being mostly an infrastructure market thanks to the very efficient PPI framework, and the good track record of the central and local governments. Korean Project Finance is generally KRW-denominated, and dominated by local banks. Calyon has focused its efforts on this hard-to-penetrate market, with a view to being involved in selected projects on par with Korean banks. A specific focus on PPI projects, led by domestic construction companies, and supported by local governments, building on Calyon s ability to fund KRW on the same basis as Korean banks. Financial Advisor and an Arranger for the Uijeongbu LRT Project, which closed this month.

14 page 14 Korean PPI Key Characteristics More akin to the UK PFI model in that a clearly defined framework has been established, though the Private Participation in Infrastructure ( PPI ) program In contrast to Australia, Korea has in place a centralised and standardised PPP framework The PPI Act requires the central government to formulate an annual plan for private participation in infrastructure. The purpose of this plan is to: weigh up national and regional infrastructure priorities provide any modifications to the list of solicited projects or administrative rules governing the PPI program announce any adjustments in public support to be provided for new projects under the program. For solicited projects, the central government covers the cost of the feasibility study and the preliminary design costs. Dispute Resolution Mechanism - Ombudsman of Korea - members are appointed by the president of South Korea The PPI Act, originally enacted in 1994, amended as the market developed

15 Korean PPI Key Characteristics Con t page 15 Example of PPI characteristics in action can be seen from Calyon s involvement in the Uijeongbu LRT Project, i.e.: Build-Transfer-Operate with a 30 year operating period Minimum Revenue Guarantee More recent development Downside limit on revenue guarantee Upside revenue sharing Government support via a construction subsidy Government to share losses / gains due to foreign exchange variations Termination payment sufficient to repay senior lenders in full including: defaults by the project company, non-political and political Force Majeure Calyon has found the PPI framework to be well administrated and well protected legally

16 Singapore PPPs page 16 In October 2004 Singapore s Ministry of Finance launched its Public Private Partnership initiative. Approach differs from South Korea, with MoF releasing a Handbook which acts as an extensive PPP guide for the public sector and potential bidders MOF Handbook did not seek to address all key areas PPP closed to date: 2003: S$250 million Tuas seawater desalination plant (BOO basis) 2004: Newater Plant (DBOO basis) 2006: Ulu Pandan Incineration Plant, Tuas (DBOO) 2006: Defence Science and Technology Agency Deal pipeline includes: S$650 mln Singapore Sports Hub Project National University of Singapore Student Accommodation We expect PPP s to grow, assisted by Singapore s AAA credit rating, its stable political environment, and strong government support on projects.

17 Conclusion in Context of PECC Recommendations page 17 Aside from Japan, in the region PPP has become firmly established in Australia and South Korea, and is growing in Singapore. Why these countries specifically: Macroeconomic and political stability Clear and reliable legal system in terms of contracts /concessions and dispute resolution mechanisms Governments generally committed to PPPs regulatory stability Transparent bidding process developed local financial market Difference of approach Flexibility versus prescriptive, centralised approach Level of Government authority support Prospects

18 Contact page 18 Calyon Australia Limited Iain Stewart Tel : Director, Project and Infrastructure Finance iain.stewart@au.calyon.com