1st GET FIT STAKEHOLDER MEETING GET FIT STAKEHOLDER MEETING Frontier Markets Fund Managers A Fund...
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1 Kampala, 9 April 2013 Frontier Markets Fund Managers Orli Arav, Head of Project Finance 1st GET FIT STAKEHOLDER MEETING
Transcript of 1st GET FIT STAKEHOLDER MEETING GET FIT STAKEHOLDER MEETING Frontier Markets Fund Managers A Fund...
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Kampala, 9 April 2013
Frontier Markets Fund Managers
Orli Arav, Head of Project Finance
1st GET FIT STAKEHOLDER MEETING
Frontier Markets Fund Managers
A Fund Management Company with USD 1.1 billion under management
Managing two funds:
- Emerging Africa Infrastructure Fund; and
- GuarantCo
Our mission is to find commercial solutions to overcome development challenges
Based in London
Financed 61 projects to date with a total exposure of USD 1.1 billion
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Emerging Africa Infrastructure Fund & GuarantCo
EAIF
First dedicated infra debt fund for sub-Saharan Africa
Size: USD 750 million
Shareholders: 4 European Governments (UK, Sweden,
Netherlands, Switzerland)
Lend to private sector owned, managed and controlled
entities with infrastructure sector focus
- Power
- Transport
- Telecoms
- Water
- Manufacturers of components of infrastructure
e.g. cement, steel
- Infrastructure within mining, agribusiness projects
Investment size per project: USD 10 - 35 million
Tenor: up to 15 years
Instruments: Senior and Mezzanine Debt (possibly with
equity features)
In principle, no requirement for Political Risk Insurance
(PRI)
GuarantCo:
“Credit enhancement of local currency debt issuance by the
private, municipal and parastatal infrastructure sectors in lower
income countries”
Initial capital of USD 165m leveraged to USD 300m by
KFW Barclays and FMO.
Covers similar infrastructure sectors to EAIF, operates
globally
GuarantCo offers:
Partial credit guarantee covering default risk on a portion
of a loan or bond - generally on demand and
unconditional
Partial risk guarantee covering default risk due to specific
events - such construction failure or revenue shortfall
Cover for senior, mezzanine or sub debt; maturity, coupon
or principal strips; Loans, bonds or securitisation
Other methods of risk transference considered (e.g.
insurance / reinsurance or CDS / derivatives)
Preference for risk sharing - defined on a case-by-case
basis
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EAIF Power Portfolio
To date EAIF financed 13 power projects with a total exposure of USD 250 million
- AES-Sonel , Cameroon
- Tronder Power, Uganda
- Rabai, Kenya
- SAEMS I, Uganda
- Olkaria III, Kenya
- Aldwych Corporate Finance
- Tower Power Abeokuta, Nigeria
- KivuWatt, Rwanda
- Kalangala Renewables, Uganda
- SAEMS II,Uganda
- Addax Bioenergy, Sierra Leone
- Takoradi, Ghana
- Azito Energie, Ivory Coast
EAIF is currently evaluating several other power projects in Uganda, Zambia, Rwanda, Tanzania, Kenya, Senegal, Nigeria, Burkina Faso, Ghana and South Sudan
Bio Mass 10% Combined Fuel
4%
Gas 24%
Geothermal 6%
Hydro 21%
Integrated Utility 12%
Renewable 11%
Thermal 12%
EAIF Power Portfolio by Source
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EAIF financed 3 mini Hydros in Uganda
To date EAIF financed 3 mini hydro power projects in Uganda with a total exposure of USD 52 million
Tronder Power 14MW
USD 35m Underwritten Facility for a run of river small hydro Power Plant;
Total Transaction Size:
USD 56m;
EAIF Role: Arranger and
Underwriter.
USD 14m senior secured
debt facility;
Total Transaction Size:
USD 85m;
Co Financiers: FMO,
Finnfund and DEG;
SAEMS I 18MW
Signed: May 2008 Signed: Sept 2008
SAEMS II 9MW
USD 6m secured senior debt facility.
Total Transaction Size: USD 30m;
Co Financiers: FMO, Finnfund and DEG;
Signed: Jan 2012
Typical Project Structure
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Lenders
EAIF
Others
Project Company or Holdco
“Borrower”
Loan agreement
UETCL
GoU /Ministry of
Energy
EPC
O&M
Insurance provider
Shareholders
Per
mit
s/ L
icen
ses/
Im
ple
men
tati
on
Agr
eem
ent
EPC
Insurances
PPA
WorldBank/PRG
KfW/GetFIT
LC Provider
Payment Support
Termination Payment support
Tariff Subsidy
UETCL/
Distribution Concession
Interconnection Agreement
Land owners
Lan
d L
ease
O&M Agreement
The PPA will be credit enhanced by:
‐ LC payment support: The World
bank might provide payment
support under the PPA by
providing back up financial support to a local LC provider
‐ Termination payment support
through MIGA .
‐ Tariff subsidy provided by KFW
under GetFIT programme.
FMFM can offer
Fast track Due Diligence and Closing process
Role FMFM: Debt Arranger
Standardized DD ‐ Legal DD: PPA, IA, Permits, licenses etc; ‐ Insurance DD; ‐ Market DD; ‐ Financial model; ‐ Dedicated group of lenders advisers.
Project specific DD
‐ EPC, O&M, transmission/interconnect arrangements; ‐ Technology, hydrology; ‐ E&S; ‐ Sponsor; ‐ Contractors.
Standardized debt Syndication/Financing process
‐ DD sharing process, credit approval sharing process; ‐ Suite of standardized finance documents (Loan documentation, direct agreements etc); ‐ Dedicated group of lenders that will follow FMFM based on standardized DD process.
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Possible Financing structures
Gearing assumptions:
‐ In general Projects could be financed on a Debt/Mezzanine to Equity basis of 65-80%/20-35%.
‐ Final gearing ratios will be determined after assessment of the financial projections and the cash flow profile of the
company.
‐ The minimum equity requirement will be approx 20% of total project costs.
FMFM can provide the following services for SHP projects:
‐ Senior Term Facility: Arrange and partly finance an up to [15] year Senior Term Facility.
‐ Mezzanine Facility: Arrange and (partly) finance a up to [15] year Mezzanine tranche.
‐ Standby/Reserve Facility: Such a facility can be considered but needs to be reviewed in context of the project budget,
contingencies, sponsor support, EPC terms etc.
‐ Working Capital : The need for initial working capital can be included in the project budget and financed accordingly.
‐ EAIF could considering financing portfolio’s of SHP projects.
‐ EAIF is not in a position to underwrite the transaction or to provide a stand-alone working capital facility.
‐ EAIF intends to hold up to USD [15-30] million per transaction in either the Senior Term Facility and/or through a mix
of Senior Debt and Mezzanine.
‐ FMFM will syndicate the transaction mainly through DFI’s but also will approach (local) commercial banks.
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Get Fit Premium
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Base Fit COD Grant
Financing options
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Equity
25-35%
Senior Debt
65-75%
Mezzanine
5-15%
Senior Debt
65-75%
Equity
20 -30%
Pro
ject
co
st
Traditional limited-recourse project financing.
Advantage: Simple structure and straightforward. Limited intercreditor issues.
Addition of Mezzanine tranche as a partly subsitute for equity.
Limits equity requirement and boosts Equity IRR.
Allows lenders to share in potential upside and GETFIT payment Mechanism
Slightly more complicated financing structure but certainly manageable.
Indicative terms Senior Debt Facility
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Facility : Senior Secured Term loan facility
Facility Amount Up to 65-75% of project costs
Tenor : Up to 15 years
Grace period : 2 years , to reflect the construction period of the Project.
Repayment : The loan will be repaid in semi annual instalments. Some sculpting of the repayment profile could be considered to cater for the start up period or hydrology patterns.
Availability Period
: Up to [2] years. Any undrawn portion of the Facility Amount will be automatically cancelled at the end of the Availability Period.
Interest : 6 months Libor + Margin (EAIF can provide fixed interest rates)
DSRA : An amount equal to 6 months of debt service so as to cover the each next installment of debt service under the Facility (principal and interest).
MRA : To be determined during due diligence
Covenants :
Customary for this type of project financings: Historic/Projected DSCR, LLCR, Net debt / Ebitda, Dividend restrictions, Capital expenditure not to exceed amounts as agreed for the Bank Case Model, restrictions on debt, assets sale, investments, liens, merges, consolidations, capital expenditures, transactions with affiliates, change of business, [other]
Security package : 1st ranking security package including: i) Fixed and floating charge over all the Borrower’s assets; ii) Pledge of the Borrowers business; iii) Pledge of shares in the Borrower; iv) Assignment of insurances and reinsurances; v) Security over project accounts.
Indicative terms Mezzanine Debt
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Facility : Mezzanine Term loan facility (Subordinated to Senior debt but senior to equity providers)
Facility Amount Up to 5-15% of project costs.
Tenor : Up to 15 years
Grace period : In general to reflect the construction period of the Project.
Repayment : Sculpted to reflect cash flow profile and target Mezzanine IRR.
Options : Subordinated Debt Mezzanine (A + B,C,D or a combination of B,C,D)
A. Base Cash Margin:
+
B. PIK toggle payments:
C. EBITDA Kicker: D. Warrants:
Compensation
[x] % Interest per annum compounded and payable semi annually in cash in arrears
[x%] per annum compounded and payable semi annually in cash in arrears.
[x%] per annum compounded and payable semi annually in cash/in kind in arrears. Borrower has the option to PIK up to [x] semi annual cash payments for each tranche.
x% of EBITDA (a percentage which results in the Target IRR in the base case projections).
% share in Borrower: (a percentage which results in the Target IRR in the base case projections).
Target IRR to be agreed in relation to projected equity IRR and overall project risk assessment.
Transactions closed to date
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EAIF Transactions 2003-2009
Oct 2004
MOMA
GBP 594 million
Construction and operation of a Greenfield mineral sands project (ilmenite, rutile, zircon)
near Moma, Northern Mozambique
US$ 5m - Senior Debt
US$ 24.5m – Mezzanine Debt
Jan 2003
MSI-Cellular / Celtel
US$ 260 million
Expansion of a GSM network across selected countries in Africa
US$ 30m - Mezzanine Debt
Feb 2007
Eleme Petrochemicals
US$ 400 million
Financing of a post privatisation turnaround program for a petrochemical plant in Nigeria
US$ 20m - Senior Debt
February 2007
Celtel Nigeria
US$ 190 million
Corporate facility for the expansion of CeltelsGSM network in Nigeria
US$ 35m - Senior Debt
June 2007
Celtel Africa
US$ 320 million
Corporate facility for expansion of GSM network in 5 African countries
US$ 24m - Senior Debt
Nov 2007
Seacom
US$ 600 million
Debt financing for equity participation of IPS Kenya (AKFED) in Seacom, the first submarine
fibre optic cable along the Eastern coast of Africa
US$ 36.5m lender to IPS CSH
for Seacom equity
Jan 2009
Orpower 4
US$ 180 million
Expansion of the Olkaria III Geothermal power project to 48MW
US$ 15m - Senior Debt
Mar 2008
Safal Investments
US$ 211 million
Construction of a 150,000MT p.a. Greenfield rolling mill and galvanising plant at Durban
and expansion of the processing facilities in a number of Eastern & Southern African
countries
US$ 15m - Senior Debt
US$ 14m - Sub Debt
May 2008
Tronder Power
US$ 56 million
Construction of a 13MW run of river hydro power plant in Uganda
US$ 35m - Senior Debt
Underwriter and Arranger
Sept 2008
Rabai Power Project
EUR 120 million
Construction of a 90MW HFO fired power plant in Kenya
EUR 19.75m - Senior Debt
EUR 2.82m - Sub Debt
Arranger
September 2008
SAEMS
US$ 85 million
US$ 14m - Senior Debt
Corporate facility for a portfolio of 12 small hydro power plants in Sri Lanka and Uganda
Aug 2003
AES Sonel
EUR 240 million
Construction of an 85MW HFO fired power plant in Cameroon; in 2006 the facility was
increased to EUR 240 million and EAIF acted as a co-lender
EUR 24m - Senior Debt
Arranger
Nov 2004
MTN Nigeria
US$ 200 million
Corporate facility for the expansion of MTN’s GSM network in Nigeria
US$ 10m - Senior Debt
September 2005
Obajana Cement
US$ 798 million
Construction and commissioning of a Greenfield cement production plant with a capacity of 4.4 million tons per annum in
Nigeria
US$ 30m -Senior Debt
Nov 2004
SPM Ghana
US$ 47.3 million
Financing of a Single Point Mooring system and a conventional buoy mooring system in
the waters outside Tema Port, Ghana
US$ 12m - Senior Debt
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EAIF Transactions 2009-2011
July 2010
ALAF Limited
US$ 35 million
Construction of a Metal Coating and Roofing facility in Tanzania
US$ 5m - Senior Debt
October 2010
Tema Osonor Power Ltd
US$ 128 million
Construction of a 126MW gas-fired power plant in Tema, Ghana
US$ 15m - Senior Debt
Co-Arranger
November 2010
DPW Dakar
EUR 216 million
Upgrade & expansion of the container terminal in the Port of Dakar, Senegal
EUR 12.5m - Senior Debt
November 2010
O3b Networks
US$ 1.2 billion
Satellites and ground facilities to deliver fibre quality broadband communications services
to emerging markets
US$ 12.5m - Senior Debt
US$ 12.5m - Sub Debt
December 2009
Helios Towers Nigeria
US$ 250 million
Corporate facility for the expansion of Helios’ tower network in Nigeria
US$ 19m - Senior Debt
October 2009
Bisha Mining Share Company
US$ 460 million
Construction and operation of the first modern gold and copper mine in Eritrea
US$ 25m - Mezzanine Debt
June 2009
Zain Ghana
US$ 523 million
Construction and operation of a Greenfield mobile network in Ghana
US$ 17.5m - Senior Debt
Jan 2009
SPA Maghreb
US$ 24 million
Construction of green field steel pipe manufacturing company in Algeria
US$ 17m - Senior Debt
February 2009
Aldwych International
GBP 44 million
Round B equity and high yield debt financing for start up power plant developer Aldwych
International
EUR 7.4m - Senior debt
US$ 1m - Equity
June 2011
Tower Power Abeokuta Ltd
US$ 21.3 million
Constriction of Greenfield 12.5MW gas fired combined cycle power plant in Nigeria
US$ 15m - Senior Debt
Arranger
June 2011
Addax Bioenergy
EUR 267 million
The development of a 10,000ha sugarcane plantation, an ethanol distillery producing 82,000 m3 of ethanol p.a. and a 32MW
cogeneration power plant in Sierra Leone
EUR 20m - Senior Debt
Co-Arranger
US$ 25m - Senior Debt
Co-Arranger
August 2011
KivuWatt Ltd
US$ 142 million
The development of an Integrated Methane Gas to Power Project in Rwanda utilizing
Lake Kivu’s unique methane gas resources. The project will consist of a Gas Extraction
Facility plus a 25MW power plant
December 2011
Helios Towers Tanzania
US$ 85 million
Acquisition of >1000 telecom towers from Millicom Tanzania Ltd. Debt facility for
refurbishment and expansion of the tower network
US$ 15m - Senior Debt
December 2011
Kalangala Infrastructure
US$ 54 million
Development of road, ferry, water supply and power services for Kalangala District in
Uganda
US$ 7m - Senior Debt
December 2009
African Foundries Limited
US$ 130 million
Construction of a 150,000MT p.a. rolling mill that will produce TMT Rebars in Nigeria
US$ 20m - Senior Debt
African Foundries
Limited
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EAIF Transactions 2012-
January 2012
SAEMS II
US$ 30 million
Increase of the corporate facility to facilitate the development of SAEMS’s 2nd hydro
power project in Uganda
US$ 6m - Senior Debt
June 2012
Expansion of Takoradi (T2)
US$ 356 million
US$ 15m - Senior Debt
Expansion of Takoradi 110 MW simple cycle power plant to 330MW combined cycle
thermal plant in Ghana
October 2012
Tunisia Steel Pipes
US$ 24 million
Construction of green field steel pipe manufacturing company in Tunisia
US$ 17m - Senior Debt
October 2012
Ethiopian Airlines
US$ 1 billion
Financing the acquisition of 10 Boeing 787-800’s (“Dreamliners”)
US$ 30m – Co Arranger
October 2012
Azito Energie Expansion
US$ 420 million
Expansion of the Azito Power Plant in Ivory Cost from 288MW to 426MW
US$ 30m - Senior Debt
February 2013
Indorama Eleme Fertilizer
and Chemicals Ltd
US$ 1.2 billion
US$ 30m - Senior Debt
Construction of a 1.4M MTPA Nitrogenous Fertilizer Complex in Port Harcourt, Rivers
State, Nigeria
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GuarantCo Transactions 2005-2009
December 2005
CELTEL KENYA
KES 725 million (USD 12 million)partial credit guarantee to creditenhance a local bond issue to supportnetwork expansion programme of thesecond largest mobile operator inKenya.
June 2007
ALAF LIMITED
TZS 6.5 billion (USD 5.1 million) partialcredit guarantee made available toprovide credit enhancement for a localbond issue to finance the expansionof a steel plant in Tanzania.
June 2007
MABATI ROLLING MILLS
KES 750 million (USD 9.7 million)partial credit guarantee madeavailable to provide creditenhancement for a bond issue tofinance the expansion of a steel plantin Kenya.
October 2007
CELTEL CHAD
XAF 3.5 billion (USD 8 million) partialcredit guarantee for Afriland Bank toprovide additional lending to theleading mobile telecommunicationsoperator in Chad.
December 2008
SHRIRAM I
INR 900 million (USD 19 million)partial credit guarantee of themezzanine tranche of a truck financereceivables securitisation in India.
January 2009
WATANIYA PALESTINE TELECOM
USD 10 million partial risk guaranteeof two Palestinian banks lending to astart-up mobile telecommunicationsoperator in the Palestinian Territories.
September 2009
CALCOM CEMENT
INR 1,120 million (USD 25 million)partial credit guarantee of two Indianbanks’ lending to a new cement plantin Assam, India.
November 2009
ACKRUTI CITY LIMITED
INR 940 million (USD 20 million)partial credit guarantee for lending toseveral slum redevelopment project inMumbai, India.
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GuarantCo Transactions 2010-2011
September 2010
SHRIRAM II
INR 916 million (USD 20 million)partial credit guarantee of Tier IIcapital raising by truck financecompany in India.
September 2010
HOME FINANCE GUARANTORS AFRICA
USD 5 million stop-loss insurance forHome Finance Guarantors Africa whowill reinsure Collateral ReplacementIndemnities for low and lower middleincome households in Sub SaharanAfrica.
October 2010
SPENCON
USD 15 million performance bondguarantee facility for a local EastAfrican construction company.
September 2010
SOUTH AFRICAN TAXIS
ZAR 139 million (USD 20 million)partial credit guarantee of the seniortranche of a loan programme for aminibus leasing company in SouthAfrica.
March 2011
KUMAR URBAN DEVELOPMENT LIMITED
INR 920 Million (USD 20 million)partial credit guarantee to support thefinancing of one of the largest slumredevelopment projects in Pune, India.
September 2011
TOWER ALUMINIUM GROUP LIMITED
Partial credit guarantees totalling NGN2.21 Billion (USD 14.2 million) tocredit enhance the maiden bond issueof the largest manufacturer ofaluminium roofing in West Africa.
December 2011
KALANGALA RENEWABLES
USD 1 million partial credit guaranteeto help support construction of ahybrid solar plant and associateddistribution and supply facilities onKalangala Island, Uganda.
December 2011
KALANGALAINFRA. SERVICES
USD 1.8 million partial creditguarantee to support a note issuanceprogramme funding a range ofinfrastructure initiatives on KalangalaIsland , Uganda.
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GuarantCo Transactions 2012 -
December 2012
KALUWORKS LIMITED
Partial credit guarantees totalling KSH750 million (USD 9 million) to creditenhance the maiden bond issue of thelargest manufacturer of aluminiumroofing in East Africa.
December 2012
CAMEROON TELECOMMUNICATIONS
LIMITEDPartial credit guarantee totalling XAF20 billion (USD 20 million) toovercome regulatory single obligorlimits and increase its lending toCamTel to support the roll out of aNational Broadband Network
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Contact details
Orli Arav Head of Project Finance Frontier Markets Fund Managers (FMFM) Add: 20 Gresham Street, London, EC2V 7JE Tel: +44 203 145 8610 Email: [email protected]
www.emergingafricafund.com www.frontiermarketsfm.com www.guarantco.com `
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