UK Export Finance Access Financing for International Healthcare Projects UKIHMA Forum - January 2018 Carla Senatore UK Export Finance International Business Development Officer 1 Presentation title - edit in the Master slide
What is an Export Credit Agency (ECA)? ECA A Government department or Government-sponsored institution with sovereign status, established to support the export of capital goods and services from its country Guarantees ECAs typically extend insurance / guarantees representing a sovereign risk against which commercial banks issue financing to overseas buyers at competitive terms Direct Funding Some ECAs also offer direct lending programs on terms usually equally or more beneficial than bank funded debt OECD Consensus Typically ECA financing follows a common set of guidelines and characteristics known as the OECD Arrangement, which sets the parameters of the support they can offer 2
About UK Export Finance (UKEF) We are the UK s export credit agency, and a Government department, with nearly 100 years experience in helping buyers globally to purchase goods and services from the UK. The UK Government has an ambition that no viable trade with the UK should fail for lack of finance or insurance. We work with colleagues in the Department for International Trade to realise this ambition. We help UK companies access the funding and insurance required to win, fulfil and get paid for export contracts. We can support exports for any size of company and across all sectors, from capital goods to services and intangibles such as intellectual property. We have a range of flexible support on offer and are pro-active in looking for ways to help our International Business Devpt. team and Export Finance Managers enable early-stage discussions, whilst our in-house sector knowledge offers the capacity to support complex/bespoke structures. 3
Support, not subsidies We returned 1bn to HMT over the past 5 years We charge a premium for the risks we take We complement rather than compete with the private sector 3 billion of support provided for 221 companies in 2016/17 alone 79% of exporters benefiting from our support are SMEs We connected over 350 companies with lead UK contractors for international infrastructure projects 14 billion of support provided over the last five years for UK exporters 4
UKEF: the scale of potential 50bn UKEF s total capacity to support exports 28bn 22bn UKEF s remaining capacity to support exports The amount of its 50bn risk capacity it currently uses Reputation as one of the world s most innovative and flexible ECAs 5 Our transactions regularly win awards for their innovation and flexibility, and we ve won TXF News Exporters Choice Award two years in a row
UKEF positioning UKEF Lead with Finance to help UK exporters capture opportunities Export contract negotiations exporter bid includes expression of interest Overseas Buyers Buyer finance products Working capital and bonding products UK Exporters Posts to source opportunities Expression of interest UKEF UKEF to engage with UK exporters Sector teams interrogate UK supply chain DIT/FCO in Post Posts keep sector teams and UKEF informed of opportunities EoI DIT Industry Sector Teams Sector teams to identify UK supply chain for overseas projects 6 7
What we do and how we do it 7 Presentation title - edit in the Master slide
Competitive finance for overseas buyers Our long-term financing solutions, in the form of direct loans or 100% unconditional guarantees to banks, allow buyers to spread costs of purchases of capital goods and services from the UK Repayment terms of 2-10 years (extending to 14 for project finance and 18 for renewable energy) Support for up to 85% of total contract value, provided there is a minimum of 20% UK content Financing in a range of over 50 currencies Flexibility to meet your requirements, including innovative products such as Islamic financing 8 Ability to support public-private partnership structures and project finance
Local currency financing Australian Dollars Chinese Yuan Icelandic Krona Malaysian Ringgit Peruvian Sol South African Rand Turkish Lira 9 Bahraini Dinar Botswana Pula Brazilian Real Canadian Dollars Chilean Peso Czech Koruna Danish Krone Egyptian Pounds Hong Kong Dollars Hungarian Forint Indian Rupee Indonesian Rupiah Israeli new Shekel Kenyan Shilling Kuwaiti Dinar Mauritian Rupee Mexican Peso New Zealand Dollars Norwegian Krone Omani Rial Polish Zloty Qatari Riyal Russian Ruble Saudi Riyal Singapore Dollars South Korean Won Swedish Krona Swiss Franc Thai Baht UAE Dirham Ugandan Shilling Uruguayan Peso Zambian Kwacha
10 How UKEF funding works
Case Study: Hospitals Construction in Ghana In October 2012, UKEF guaranteed a US $162.2m loan to the Ghanaian Ministry of Finance The first of these hospitals was opened in Dodowa by the President of Ghana and local Chiefs in April 2016 This financed a US $175m contract between the Ghanaian Ministry of Health and NMS Infrastructure for the construction of 7 district hospitals. The contract included medical supplies and an integrated IT system NMS is a relatively small business itself, which has brought together around 50 UK SMEs to deliver a turnkey solution NMS has produced a Ghanaian solution to a Ghanaian problem 11
Our products: (ii) fulfil contracts Fulfil contracts Export Working Capital Scheme A guarantee of up to 80% of the value of a working capital facility, to allow a bank to increase its capacity to lend to a UK exporter Bond Support Scheme A guarantee of up to 80% of the value of a contract bond (eg. advance payment guarantees, performance or warranty bonds) to enable a bank to issue a bond without requiring as much of the exporter s cash as collateral, or to issue more bonds on behalf of the exporter Exporters need working capital to fulfil export orders, (eg) to buy raw materials, pay bills and pay staff. Additionally, buyers may require advance payment bonds or performance bonds, which often means exporters capital can become held up in deposits required by their banks. In these instances, UKEF can help companies access the working capital needed to fulfil a contract, whilst also giving them confidence to take on more contracts and increase their turnover. 12
Case study: Algeos Manufacturer of specialist footwear to prevent lower limb loss caused by diabetes Identified a market opportunity due to a spike in the disease in the Middle East and won a major $4.2 million contract with hospitals in the Gulf 2 year contract required long payment terms and leadin times, and so significant greater working capital than it usually dealt with Thanks to a UKEF guarantee, Algeos secured a 650,000 working capital loan from NatWest Working with UKEF has given us the opportunity to realise a substantial increase in our revenue and grow our presence in an important market. Jackie Fisher, Chief Executive Officer, A. Algeo Ltd (Algeos) 13
Case study: MR Solutions MR Solutions, based in Guildford, is a world-leading developer of MRI technology Winner of the Queen s Award for Enterprise for Innovation Won a 1.2 million contract with Sydney University but long manufacturing times put a strain on its working capital limits UKEF provided an 80% guarantee to allow MR Solutions bank to issue a working capital loan of much greater value than otherwise, affording it the cash to fulfil the contract We are a smaller company and are often exposed to prolonged periods in between high-value contracts. By bridging the gap when there have been intervals between our inflow and outflow of cash, UKEF support has been a real lifeline for us. Kevin Darley, Finance Director at MR Solutions 14
Our products: (iii) get paid Get paid Export Insurance Policy Up to 95% insurance against the risk of not being paid, either due to default by the buyer, or due to specified political, economic or administrative events Bond Insurance Policy Up to 100% insurance against a demand for payment under a bond, which is either unfair or caused by political events Businesses may be concerned about risks associated with exporting, such as: Difficulty securing payment Political risk relating to the overseas market(s) Bonds being called unfairly UKEF can offer insurance to help manage these risks, even where the private market isn t able to. Letter of Credit Guarantee Scheme 15 A guarantee of up to 90% of the value of a letter of credit to enable UK exporters to get their letters of credit confirmed by their bank
Case Study: Export Insurance to South Africa CIGA Healthcare, based in Ballymena, is a family run healthcare products firm making rapid self-diagnostic kits for pregnancy, cholesterol, diabetes, temperature and heart monitoring. In 2014, CIGA won a US$47,000 new contract in South Africa. UKEF provided export insurance, providing CIGA with assurance of being paid as it entered a new market. 16 UKEF are there to help and for the South Africa contract, they were there at the right time in our contract negotiations, which was critical for us. Neill Armstrong, director, CIGA Healthcare
Product suite recap Win contracts Fulfil contracts Get paid Buyer Credit Guarantees Provision of guarantees against bank loans to overseas buyers of UK exports for up to 85% of the contract value, enabling the buyer to pay on extended credit terms, normally of between 2-10 years Direct Lending Facility Provision of loans directly (working with a bank as an agent) to overseas buyers of UK exports for up to 85% of the contract value, enabling the buyer to pay on extended credit terms, normally of between 2-10 years Export Working Capital Scheme A guarantee of up to 80% of the value of a working capital facility, to allow a bank to increase its capacity to lend to a UK exporter Bond Support Scheme A guarantee of up to 80% of the value of a contract bond (eg. advance payment guarantees, performance or warranty bonds) to enable a bank to issue a bond without requiring as much of the exporter s cash as collateral, or to issue more bonds on behalf of the exporter Export Insurance Policy Up to 95% insurance against the risk of not being paid, either due to default by the buyer, or due to specified political, economic or administrative events Bond Insurance Policy Up to 100% insurance against a demand for payment under a bond, which is either unfair or caused by political events Letter of Credit Guarantee Scheme 17 A guarantee of up to 90% of the value of a letter of credit to enable UK exporters to get their letters of credit confirmed by their bank
Summary notes and final considerations An export contract must include at least 20% UK content for us to consider support Our cover is available for exports to over 200 markets and in a range of 40 currencies We can support both public and private sector transactions and project financing, including PPP We operate within the conditions set out under the OECD Arrangement on Officially Supported Export Credits We require anti-bribery and corruption declarations, including exporter declarations Large projects must meet environmental, social and human rights standards set by the IFC and Equator Principles Cost of Cover: We charge a premium for our support based on benchmark rates set by the OECD, and calculated on a case by case basis, taking into account factors such as credit risk and loan tenor 18 Premium is a one-off charge which is separate from interest charged on the loan, and can be paid up front or funded from the loan
Thank you www.gov.uk/uk-export-finance Carla Senatore International Business Development Officer T: 0207 271 1259 E: carla.senatore@ukexportfinance.gov.uk 19 Presentation title - edit in the Master slide