galaxy fund · 2008. 11. 12. · portugal france uk ireland - illustrative* - europe ... 2001 2002...
TRANSCRIPT
Confidential
Copyright © 2004 Galaxy Fundl
Galaxy Fund
PPP in Europe Emerging Opportunities
2
Confidential
Warning
This presentation is based on results of pan-European reviews of the role of public financial institutions and public private partnerships
carried out by the Galaxy Fund.
This document constitutes proprietary and confidential information and remains the sole property of the Galaxy Fund.
This presentation is based on results of pan-European reviews of the role of public financial institutions and public private partnerships
carried out by the Galaxy Fund.
This document constitutes proprietary and confidential information and remains the sole property of the Galaxy Fund.
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PPP in Europe : Latest Trends
Agenda
I.
II. PPP: New Tools for Public Players
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Source: Advention
In Europe, the development of PPPs is closely related to the existence of a national structure dedicated to the promotion of PPPs
PPP Market Trends and Major Players Emergence of PPPs in Europe and Positioning of Major Countries
Development of PPPs and Existence of a Promotion StructureDevelopment of PPPs and Existence of a Promotion Structure
Strong
Weak
Countries having put in place one or several structure(s) dedicated to the promotion of PPPs
Weak Strong
UK
Spain
Italy
Ireland
Portugal
Belgium
Group 3
Group 2
Group 1
Rel
ativ
e im
port
ance
of p
ublic
fin
anci
alpl
ayer
sin
pub
lic
inte
rest
finan
cing
Relative importance of PFI-type PPP
TheNetherlands
France
GermanyCountries with projects to put in place one or several structure(s) dedicated to the promotion of PPPs
Countries with no structure dedicated to the promotion of PPPs
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PPP Market Trends and Major PlayersStructures Dedicated to the Promotion of PPPs in Europe
Source: Advention
• PPP Units and PPP Central Unit
• NDFA
• 4Ps• Partnerships UK• PPP Forum
• Regional promotion structures in creation
• Regional promotion structures in creation
• Federal Competence Center FCC (starting summer 2004)
• Europrogetti e Finanza• Finlombarda• Infrastrutture SpA
• PPP Taskforce (Ministry of Economy)
• Kenniscentrum PPS• OPP (BNG’s subsidiary)
• VlaamsKenniscentrum PPS
More and more European countries are implementing PPP promotion structures
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PPP Market Trends and Major PlayersPFI / PPP Development Trends per Country and Sector
Note: * Selection of upcoming projectsSources: Desk research, Advention
• The UK, Ireland and Italy should be the most dynamic countries in the near future• Transportation, health and public infrastructure should be the most dynamic sectors
Importance of PPP / PFI projectsLow: few projects to come identifiedMedium: some projects to come identified
High: many projects to come identified
• Transportation: 11 schemes in the national roads improvement programme (M3 Clonee to North of Kells project worth €500 M, Dublin Metro scheme)
• Accommodation: hospitals, schools, etc.
• Total value of PFI projects 2003-06: €27.4 bn• Ministry of Defense: €7.1 bn forecasted• Health: €5.8 bn forecasted• Transportation: €5.1 bn forecasted
• 10 pilot PPP projects• Health: “Hospitals 2007 Plan” regrouping 932
projects at a total cost of some €10.2 bn• Justice: Project around the construction of 18
prisons worth €900 bn
• Health: Program on 10 DBFO projects on hospitals, worth €750 M (1st hospital: Loures)
• Health: “New Public Health Infrastructure Plan 2004-07” regrouping the construction of 8 hospitals worth €800 M
• Infrastructure development plan, €103 bnuntil 2010, 20% of it from the private sector
• Transportation: E18 road project in Norway worth €250 M
• Education: Small education projects in Finland
• Transportation: Zuiderzeelijn rail project, A4 corridor road
• Education: 2 school projects (Rinjnlands) • Health: on study by the PPS Kenniscentrum
• Transportation: some road projects• Urban renovation: Project around the
renovation of Antwerp
• Transportation: A-model projects should start once the Toll Collect has been sorted out
• Justice: Project s for the construction of 2 prisons (Magdeburg and Hannover) and 1 court building (Chemnitz, €30 M)
• Water treatment: future projects expected
• Total value of PPP projects 2003: €10.6 bn• Transportation: Modena light rail scheme
project worth €450 M• Public infrastructure: Spedali Civili hospital
project in Brescia worth €230 M
• Transportation: Road PPP Program around 9 schemes, including the €290 M Thessalonikitunnel and the €575 M Maliakos-Klieidi highway
Scandinavia
Netherlands
Belgium
Germany
Italy
Greece
Spain
Portugal
France
UK
Ireland
- Illustrative* -
Europe• TEN
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0
5
10
15
20
25
30
1994-97 1997-00 2000-03 2003-06*
4.8
3.9
3.4
3.1
0.82.3
£18.4 bn
Total capital value of PFI projects (on a three-year basis, from FY 1994-95 to FY 2005-06)
Total capital value of PFI projects (on a three-year basis, from FY 1994-95 to FY 2005-06)
Note: * Estimates based on interviews and published projects; ** Including accommodation projects; *** London Underground projects Sources: Desk research, interviews, Advention
• The UK PFI market should follow a steady growth trend over the coming years• The MoD, Health, Transport and Education sectors should be the most dynamic during this
period
x 8.4
PPP Market Trends and Major PlayersFocus on the market for PFI / PPP in the U.K.
£2.2 bn
£7.3 bn
£24.1 bn
MoD** (25%), Aphrodite accommodation project (£200 M), Corsham estate development project, Chelsea barracks rationalization, HMS Excellent accommodation, etc.
Health (22%), university hospitals of Leicester (£403 M), university hospitals of Birmingham (£379 M), Peterborough hospitals (£293 M), Staffordshire hospitals (£269 M), etc.
Education (17%), group of 12 schools in Leeds (£104 M), 8 schools in Nottinghamshire (£100 M), etc.
Transport (19%), Nottingham tram, M25 widening likely to be financed through a PFI (£1.6 Bn), Birmingham road maintenance (£378 M), Tyne crossing (£300 M), etc.
Street Lighting (4%), Manchester City Council, etc.
Other (13%)
£ bn
Key sectors for the coming years
Key sectors for the coming years
16.3***
7.8
8
ConfidentialPPP Market Trends and Major PlayersFocus on the market for PFI / PPP in Italy
0
2
4
6
8
10
12
2001 2002 2003
Transport (30%), Autostrada A4 Bresciano –Bergamo – Milano (€720 M), Venice Orte, Genoa tunnel, A25 and A24 revamping, maintenance and operation (€900 M), etc.Public accommodation (32%)(social housing, government buildings, etc.), 4 hospitals in Tuscany (€350 M), Mestre hospital in Venice (€195 M), Desenzano sul gardaaccommodation for elderly people (€100 M), etc.
Leisure facilities, tourism, etc. (12%), Congress Centre in Rome, etc.Power, water, environment (19%), waste-to-energy plants in Napoli, Piacenza, Bologna and Gioia Tauro (€1.1 Bn), waste water project in Campania (€200 M), etc.
Other (7%)
• Over the period 2001- 2003, the total capital value of PPP / PFI projects amounts to €22.8 Bn, which compares favourably to the amount invested in the UK over a typical 3-year period
• The Italian PFI / PPP market is dynamic and mainly driven by transportation and accommodation projects
Note: * Official data on PPP / PFI projects in Italy have been published since 2001Sources: Desk research, interviews, Advention
Total capital value of PPP / PFI projects over the last three years*Total capital value of PPP / PFI projects over the last three years* Key sectors for the coming years
Key sectors for the coming years
€9.1 bn
€3.1 bn
€10.6 bn
3.3
3.1
2.0
1.3
0.7
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PPP Market Trends and Major PlayersPFI / PPP Projects’ Segmentation by Sector
Sources: Desk research, Advention
PFI / PPP projects can be segmented into eight categories
TRANSPORTATION INFRASTRUCTURE
PFI / PPP Projects
HEALTH
LOCAL ECONOMIC & URBAN DEVELOPMENT
UTILITIES & ENVIRONMENT
DEFENCE
Rail
Road
Airport
Seaport
HospitalsLabsEtc.
Urban renovationNTIC
Business ParksEtc.
Water plantsWaste treatment
Utility Network ManagementEtc.
Training pg. / SimulatorsShips, AircraftsAccommodation
Etc.
Galaxy Fund focus
EDUCATIONSchools
UniversitiesEtc.
OTHERE-government software
Government Building / Admin.Satellite communications
Etc.
JUSTICEPrisonsCourts
Etc.
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Main areas of intervention
Involved players
Source: Advention
Large national and European equipment and
infrastructure projects
Large national and European equipment and
infrastructure projectsOutsourcingOutsourcing
Large transnational / national projects Local or regional scale projectsVariable according to the different sectors – generally local
Public: European (EU, EIB, etc.), national (government, ministry, etc.) and sometimes regional authorities
Private: banks, funds or industrial companies (generally international)
Public: local authorities (regions, municipalities, local communities)
Private: any type of banks and industrial companies
Public: normally local authorities, except government programs
Private: any type of banks and industrial companies
Scale
Three segments of PPP stand out for their scale, for the nature of the players involved and for their characteristics
Local economic development
Local economic development
PPP market segments
• Public infrastructures • Reconversion of industrial sites• Urban renovation• Supporting new business• NICTs
• Real estate• Urban transports
Identified characteristics and evolution
• Traditional model: public services concession
• Strong development in all countries of PFI-type PPP (ie. project finance)
• Important role of public authorities and financial investors
• Important role of the public/private co-enterprises
• Few examples of PFI-type PPP
• Trend towards the privatisation of public / private co-enterprises (local public transports)
• First experiences of PPP built on a PFI model can be found in the real estate sector (Mestre’s hospital)
Strong Weak Medium / StrongMarket potential for PFI-type PPP
PPP Market Trends and Major PlayersPPP markets: Segmentation and Modes of Intervention
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Education
Economic & Urban Development
Economic & Urban Development
Utilities & Environment
Utilities & Environment
Large national and European equipment and
infrastructure projects
Large national and European equipment and
infrastructure projectsLocal economic
developmentLocal economic
development Outsourcing Outsourcing
Source : Advention
Growth in the European PPP market should be primarily driven by large national and European equipment and infrastructure projects
Transportation Infrastructure
Health
Justice
PPP Market Trends and Major PlayersEuropean PPP markets: Segmentation and Areas of Intervention
DefenceDefence
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Relative importanceof PPPs:
Low
Medium
Strong
Growth of PPPs:
Decreasing
Stable
Increasing
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PPP in Europe : Latest Trends
Agenda
I.
II. PPP: New Tools for Public Players
13
ConfidentialPPP Market Trends and Major PlayersOverview of Major Public Financial Institutions in Europe
CDCCDC
BNGBNG
CDPCDP
KfWKfW
ICOICO Infrastrutture SpAInfrastrutture SpA
De Nederlande Bank
De Nederlande Bank
Alpha Credit BankAlpha Credit Bank
SEKSEKKommunalbankenKommunalbanken
Finnvera Ltd.Finnvera Ltd.
Kommuninvest Cooperative Society
Kommuninvest Cooperative Society
Eksportfinans ASAEksportfinans ASA
Montepio GeralMontepio Geral
Caixa Geral de DepositosCaixa Geral de Depositos
KommuneKreditKommuneKredit
SNCISNCI
FinlombardaFinlombarda
ADMADM
CDC* Ltd.CDC* Ltd.
Note: * Commonwealth Development CorporationSource: Advention
Savings banks
Public financial institutions
Caissesd’épargne
Fondazioni
Cajas de Ahorros
Deutsche Landesbanken
and Sparkassen
ÖsterreichischeLandesbanken
and Sparkassen
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Hypo TirolBank
Notes: * General interest activities represent a minor portion of total overall activities ** Excluding other German LandesbankenSource: Advention
Involvement in activities of General Interest- +
Total assets(€ bn)
€ 100
€ 50
€ 350
€ 200
KfW
KommuneKredit
ICO
Major Cajas de Ahorros(La Caixa, Caja Madrid, etc.)
Finnvera
Alpha CreditBank
SviluppoItalia
Cassa Depositie Prestiti
FinlombardaFondazioni
SNCI
Eksportfinans
Kommunalbanken
BNG
De NederlandeBank
MontepioGeral
Caixa Geral de Depositos
SEK
Kommun-investADM
CDC
Second-tier players
PPP Market Trends and Major PlayersMapping of Major Public Financial Institutions
CDC
CDC and KfW, 2 core investors in Galaxy Fund, are leading European Public Financial Institutions
€ 0
Major ÖsterreichischeLandesbanken
(Hypo Tirol Bank)
Major Landesbanken(NRW, Balaba, etc.)
Leading players**
French Caisses d’Epargne
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1. Germany
To local authorities
(debt)
Public/private co-enterprises*Equity Debt
PPP Project Co.
Equity Debt
Projects
Via banks Via funds
Direct IndirectAdvisory
Financing
2. SpainICO
3. ItalyCassa DPSviluppo Italia
4. The NetherlandsBNG
La CaixaCaja Madrid
Finlombarda
KfWLandesbanken
Key
pub
lic p
laye
rsO
ther
type
s of
pla
yers
Notes: * ie. SEM in France, Kommunal Unternehmen in Germany and similar public-private enterprises in other countries ** Subscription of bonds issued by the project company
Sources: Advention
Not coveredCurrent line of business
Legend :
Future line of business
Foundations
Subsi-dies
**
PPP Market Trends and Major PlayersStrategic Positioning of Major Public Financial Institutions
5. FranceCDC
CorporatesBanksInvestment FundsEIB
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Source: Advention
ToolsTools GermanyGermany
Public grants / subsidies
Public grants / subsidies
Tax incentivesTax incentives N/A
Favourable supply of goods and services
(premises, PIK contributions)
Favourable supply of goods and services
(premises, PIK contributions)
Unusual Frequent
Usage frequency:
Equity investment(equity funds, public / private
co-enterprises, etc.)
Equity investment(equity funds, public / private
co-enterprises, etc.)
Loan guaranteesLoan guarantees
Risk guarantees(construction / exploitation
risks)
Risk guarantees(construction / exploitation
risks)
Tariff policy(eg. shadow tolls)Tariff policy
(eg. shadow tolls)
Public financial incentives
(attribution of European / national funds via loans, etc.)
Public financial incentives
(attribution of European / national funds via loans, etc.)
PPP Market Trends and Major PlayersCurrent Financial & Risk-sharing tools
Players Projects
ItalyItalyPlayers Projects
SpainSpainPlayers Projects
N/A
Federal StateLänderMunicipalities
KfWDtA
Federal StateLänderMunicipalities
Municipalities
KfWMunicipalitiesLänder
KfWInvestitions-banken
MinistriesRegions
MunicipalitiesRegions
EPFCDP
MinistriesRegions
Municipalities
CDPFROPRegional financing struc.
RegionsCDP
StateRegionsMunicipalities
Any player
Municipalities
ICOStateRegionsMunicipalities
Municipalities
StateRegionsMunicipalities
StateRegionsMunicipalities
StateRegionsMunicipalities
Municipalities
Warnow’stunnel
Reconversion(Düsseldorf’s region)
Aid programs DtA
50% systematic from KfW(indirect aid)
Rostock’stunnel
KasselUnterneustadt
Warnow’stunnel
PRUSST
Area SviluppoNord Milano
Genoa’s tunnel
Mestre’shospital
Barcelona’s harbour
ATM
Madrid’s transportation system
Barcelona’s tram
Barcelona’s tram
Barcelona’s tram
N/A
Most projects
TransportMestre’shospital
N/A
N/A
Usagefrequency
Usagefrequency
Usagefrequency
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Note: * CGFS = Credit Guarantee Finance Scheme; ** NDFA = National Development Finance AgencySource: Advention
ToolsTools
Public grants / subsidies
Public grants / subsidies
Tax incentivesTax incentives
Favourable supply of goods and services
(premises, PIK contributions)
Favourable supply of goods and services
(premises, PIK contributions)
Unusual Frequent
Usage frequency:
Equity investment(equity funds, public / private
co-enterprises, etc.)
Equity investment(equity funds, public / private
co-enterprises, etc.)
Loan guaranteesLoan guarantees
Risk guarantees(construction / exploitation
risks)
Risk guarantees(construction / exploitation
risks)
Tariff policy(eg. shadow tolls)Tariff policy
(eg. shadow tolls)
Public financial incentives
(attribution of European / national funds via loans, etc.)
Public financial incentives
(attribution of European / national funds via loans, etc.)
PPP Market Trends and Major PlayersCurrent Financial & Risk-sharing tools
FranceFrancePlayers Projects
StateRegionsMunicipalities
CDCBanks
CDCRegionsMunicipalities
SofarisBDPME
TransportAccommodation
Business park development
SEM
TransportAccommodation
N/A
Public incubators Start-ups
Usagefrequency
Tax-free zones
United KingdomUnited KingdomPlayers Projects
All private players
Department for Transport
UK Treasury CGFS*
All
Highway DBFO
To be implemented
Usagefrequency Players Projects
IrelandIreland
All private players
Department for Transport
NDFA**
Dublin docklandsBusiness park dvt (IDA, Cork)
All
To be implemented
Highways (M3 Cloneeto Kells)
Usagefrequency Players Projects
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Tax-free zones
N/A
N/A
N/A
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Tax benefitsTax benefits Tax-credit bonds, ISPATax-credit bonds, ISPA5Public authorities put in place the appropriate legal framework to grant tax benefits on interests, thus enabling sponsors to raise money on capital markets more easily
Public authorities put in place the appropriate legal framework to grant tax benefits on interests, thus enabling sponsors to raise money on capital markets more easily
Credit enhancement through collateralization /
guarantees / insurance (funding leverage)
Credit enhancement through collateralization /
guarantees / insurance (funding leverage)
GARVEES / FFGA, SRF, SIB, revenue bonds, wrapped bonds
GARVEES / FFGA, SRF, SIB, revenue bonds, wrapped bonds
Credit enhancement through public funds
subordination(risk leverage)
Credit enhancement through public funds
subordination(risk leverage)
SIB, TIFIA, compartment fundsSIB, TIFIA, compartment funds
Improved subsidy schemeImproved subsidy scheme SRF (Reserve funds), FROP, subsidy with profit sharing clause
SRF (Reserve funds), FROP, subsidy with profit sharing clause
1
2
3
Public authorities put in place collateralization mechanisms which enable projects to raise private funds more easily
Public authorities put in place collateralization mechanisms which enable projects to raise private funds more easily
Funds invested by public authorities are subordinated to those provided by private parties, thus making projects less risky and more attractive to them
Funds invested by public authorities are subordinated to those provided by private parties, thus making projects less risky and more attractive to them
Public authorities create new subsidy schemes which enable them to reduce the level of subsidies or recapture a part of them
Public authorities create new subsidy schemes which enable them to reduce the level of subsidies or recapture a part of them
Financial levers available to the Public Sector
Public authorities can activate five types of levers regarding project financing
Financial leversFinancial levers Innovative financial toolsInnovative financial tools
Sources: desk research, Advention B.P.
Funding provided by public authorities
(leverage on public rating)
Funding provided by public authorities
(leverage on public rating)ISPA, NDFA, UK credit guarantee finance
schemeISPA, NDFA, UK credit guarantee finance
scheme4
By investing in projects, public authorities, thanks to their high quality rating, enable projects to optimize the cost of total funding
By investing in projects, public authorities, thanks to their high quality rating, enable projects to optimize the cost of total funding
RationaleRationale
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US Public / State ProgramsUS Public / State Programs
New Tool Kit – Emergence of innovative financial tools
Innovative financial tools for project financing have been identified in different contexts
• Programs initiated by the US public authorities to foster investments in certain sectors (e.g. transports)
• Generally require the implementation of a specific legal framework
• Instruments generally created with the following objectives:
Facilitate fund raising from capital markets in project financing
Change / improve the way public authorities invest into projects
Sources: desk research, Advention B.P.
Innovative financial tools have been identified in US Public / State programs, in European PPP initiatives or in innovative project financing structures
European PPP InitiativesEuropean PPP Initiatives
• Programs initiated by European governments with the objective to promote PPP projects
• Generally created by law
IIIIII Financial instruments used in project financing
Financial instruments used in project financingIIIIII
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- State Infrastructure Bank (SIB)
- State Revolving Funds (SRF)- Non relevant -
- FROP (Italy)
- Infrastrutture SpA (Italy)
- National Development Finance Agency (Ireland)
New structures and new instruments
Sources: desk research, Advention B.P.
Financial instruments
Financing agencies / structures
- Grant Anticipation Revenue Vehicles (GARVEEs)
- Full Funding Grant Agreement (FFGA)
- Transportation Infrastructure Finance and Innovation Act (TIFIA)
- Tax credit bonds
- Revenue-backed bonds
- Wrapped bonds
- Future-flow securitization
- Subsidy with profit-sharing clause
- “Compartment” funds
US Public / State ProgramsUS Public / State Programs European PPP InitiativesEuropean PPP Initiatives
II
Financial instruments to be used in project financing
Financial instruments to be used in project financing
IIII III
AA
- UK Treasury credit guarantee finance scheme
BB
Innovative financial tools are either financial instruments directly available to the sponsors / projects, or agencies / structures in charge of promoting innovation in project financing
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State Revol-vingFunds (SRF)
• Bond issued to finance long-term loans for water and wastewater utilities which benefit from subsidies on interest rates
State Infrastructure Bank (SIB)
• State (or multistate) revolving fund (initially capitalized through Federal and local subsidies) offering a range of long-term loans and credit enhancement products to public and private sponsors
Water and wastewater treatment
Highway building, transit platform projects
Reserve funds structures
Cash flow structures
• Bond issued to finance long-term loans for water and wastewater utilities• Debt service and principal repayment secured on loans repayment
US Government programs Specific objectives & Dedicated instruments
Grant Anticipation Revenue Vehicles (GARVEEs)
• Bond issued, the debt service and principal repayment of which are secured on future FHA (Federal Highway Administration) subsidies
Transportation (roads, rolling stock, transit equipments)
Sources: desk research, Advention B.P.
Financial toolsFinancial tools SectorSector DescriptionDescription
In the US, public authorities have created a financial toolbox aiming at improving projects’ credit conditions mainly through collateralization
Transportation Infrastructure Finance and Innovation Act (TIFIA)
• State revolving fund offering loans and credit assistance subordinated to private debt
Transportation (roads, bridges, rail, inter-modal platforms, etc.)
Full Funding Grant Agreement (FFGA)
• Subsidy mechanism established by Congress to support the multi-year capital needs of transit project construction
• Can be used to secure debt service on GARVEEsTransportation
Tax-credit bonds • Bond which grants bondholders federal income tax credits in lieu of traditional interests / coupons
Educational infrastructure
AA
Financial instruments
BB
Financial agencies / structures
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US Government programs Amounts raised
State Revol-vingFunds (SRF)
State Infrastructure Bank (SIB)
Reserve funds structures
Cash flow structures
Grant Anticipation Revenue Vehicles (GARVEEs)
Transportation Infrastructure Finance and Innovation Act (TIFIA)
Tax-credit bonds
AA
Financial instruments
BB
Financial agencies / structures
• $2.6 bn have been raised since 1998
• $4 bn of loans have been agreed by SIBs on 297 commitments as of June 2002
• $21 bn have been allocated by SRFs since 1989
• $3.5 bn have been financed via TIFIA as of March 2003
• $22 bn fund raising on school programs have been agreed by Congress in 1997 over 20 years
Amounts at stakeAmounts at stakeFinancial toolsFinancial tools
In excess of $50 billion have been raised / committed through US public / state programs over the past decade
Sources: desk research, Advention B.P.
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Infrastrutture SpA, ISPA (Italy - 2002)
• Private entity wholly owned by Cassa Depositi e Prestiti which raises money on capital markets and finances PPP projects via long-term loans
All types of public works (Italy)
FROP (Fondo Rotativo per le Opere Publiche) (Italy -2002)
• State revolving fund offering long-term loans to projects’ sponsors which then have to grant an annual subsidy to the project
All types of public works (Italy)
National Development Finance Agency (Ireland -2003)
• Public entity dedicated to (i) advise public or private structuring PPP project finance Ireland, (ii) finance projects through the creation of Special Purpose Companies
All types of public works (Ireland) with a focus on public transport and roads
PPP initiatives in Europe
Sources: desk research, Advention B.P.
Financial toolsFinancial tools SectorSector DescriptionDescription
In Europe, public authorities have recently launched dedicated structures and financial instruments in order to further promote PPP
UK Treasury reforms on PFI (2003)
• Public long-term loans offered to PFI contractors provided that debt service and principal repayment are guaranteed by private credit providers (mainly insurance companies)
Well-established PFI projects whose risk profile is well-known
AA
Financial instruments
BB
Financial agencies / structures
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Financial instruments derived from Project Finance
Sources: desk research, Advention B.P.
For public and private sponsors, it is possible to adapt capital market instruments and other innovative schemes to project financing
Financial toolsFinancial tools DescriptionDescription
Revenue bonds
Wrapped-bonds
Future-flow securitization
Compartment funds
• Debt instrument backed by an identifiable and predictable stream of revenues
• Bond with enhanced credit profile through the insurance of specialized companies
• Bond issued on the back of a future stream of revenues generated by an asset• Helps monetize an asset and provides alternative source of fund
• Funds dedicated to take equity shares in projects• The fund is capitalized by different types of investors which subscribe to different classes
of shares in the fund, each class of share having a determined level of subordination translating into priority access to dividends / capital gains
Subsidy with profit-sharing clause
• Public subsidy combined with a profit-sharing mechanism
AA
Financial instruments
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Objectives of these instruments
Project finance specific instrumentsEuropean PPP InitiativesUS Public / State Programs
- Credit enhancement
- Risk pooling
- Subordination
Make better use of public funds
Reduce project financing costs*
Improve project risk profile through:
Raise cash / monetize future flows
Subsidy without
profit sharing clause
Com
partment
funds
Future-flow
securitization
Wrapped bonds
Revenue bonds
ND
FA (Ireland)
ISPA (Italy)
FRO
P (Italy)
Credit G
uarantee Finance Schem
e (U
K)
SIB
SR
F
Tax-credit bonds
TIFIA
GAR
VEESObjectives
Innovative financial tools aim at raising cash, improving project risk profiles, reducing project financial costs or substituting / improving subsidy schemes
OBJECTIVES
Note : (*) independently of risk profileSources: desk research, Advention B.P.
IIIIIII