Developing by Public Private Partnership (PPP): Meeting ......3. Typical Tendering Process 4. Major Players in PPPs 5. Typical Contractual Scheme 6. Key Success Factors 7. Conclusions

Developing by Public Private Partnership

(PPP):

Meeting infrastructure needs successfully.

Vicky D. Kefala

Head, Investments & Development Projects

Consolidated Contractors Company (CCC)

MBA Finance, BA Economics

PRESENTATION – NOVEMBER 2014

Developing by Public Private Partnership (PPP):

1. Definition & Characteristics

2. PPP in Various Sectors

3. Typical Tendering Process

4. Major Players in PPPs

5. Typical Contractual Scheme

6. Key Success Factors

7. Conclusions & closing remarks

Project Data & Charts throughout

Vicky D. Kefala, BA Econ., MBA Finance

Public Private Partnerships – What are they?

• The Public Sector defines the output specifications for an

asset and /or a service and the Private Sector delivers them

• A collective name for projects carried out between public

bodies and private companies

• An alternative way of funding projects by bringing private

finance to public sector projects


4

Main Characteristics

• An arrangement between public and private sector whereby the

private entity implements a project (asset & service) according to

specifications

• Assuming the risks and receiving the benefits (payments) for a

significant period of time

• Αppropriate allocation of resources, risks, rewards, responsibilities

and obligations -> CONCESSION AGREEMENT


For New & Existing Public Assets

• PPPs for New Facilities

• Design-Build-Finance-Operate (DBFO) or Design-Build-Finance-

Maintain (DBFM)

• ΒΟΟΤ Build Own Operate Transfer

Public Private Partnerships

• PPPs for Existing Public Assets

• Service

• Management

• Leasing Contracts &

• Concessions


6

PPP SECTORS

Transport & Infrastructure

• Motorways

• Bridges

• Tunnels

• Railways

• Airports

• Ports

Fuel, Environment & Energy

• Waste Collection

• Waste Recycling &

Treatment

• Wastewater Treatment

• Waste to Energy Plants

Attiki Odos Rio - Antirrio


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PPP SECTORS

Education

• Schools

• Universities

• University Housing

Health

• Hospitals

• Treatment Centers

14 Schools in Attica


8

PPP SECTORS

Public Order

• Police Stations

• Fire Brigade Stations

• Prison Facilities

Defence

• Defence Academies

• Simulator & Training Facilities

Others

• Street Lighting

• Recreation & Culture

• Telecoms

7 Fire Stations Greece


http://www.google.gr/imgres?imgurl=http://weirdnews.gr/wp-content/uploads/2010/03/ministry_of_defence_400656a.jpg&imgrefurl=http://u-f-o.pblogs.gr/&usg=__Jw9WlGkLUp_8o5ergcuSt5x7rYY=&h=400&w=682&sz=35&hl=el&start=14&zoom=1&um=1&itbs=1&tbnid=jzaNglBoxTWW6M:&tbnh=82&tbnw=139&prev=/images?q=%CE%A5%CE%A0%CE%9F%CE%A5%CE%A1%CE%93%CE%95%CE%99%CE%9F+%CE%91%CE%9C%CE%A5%CE%9D%CE%91%CE%A3%2B%CE%9A%CE%A4%CE%99%CE%A1%CE%99%CE%9F&um=1&hl=el&tbs=isch:

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PPPs in EUROPE

Projects by Value and Number of Projects

Source: EPEC Market Update 2013

80 closed

vs

68 in 2012

EUROPE


EUR 16.3 bln

10

Europe: PPPs by Sector for 2013 – Value and Projects

Source: EPEC Market Update 2013

59% in

Transport

21 projects in

Education

Healthcare –

fastest growing

in value


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PPP Tendering Steps & Tasks

PROJECT

PLANNING PERIOD

6 months

PUBLIC SECTOR TASKS

PRIVATE SECTOR TASKS

FINAL NEGOTIATIONS

FINANCIAL CLOSE

6+ months

PRE -

QUALIFICATION

3 months

TENDER PERIOD

PREFERRED BIDDER

6+ months

11


PROJECT

PLANNING PERIOD

6 months

• Define project

• Conduct a feasibility study / business case

• Engage Advisors

PUBLIC SECTOR TASKS


12



PROJECT

PLANNING PERIOD

6 months

PRE -

QUALIFICATION

3 months

• Issue tender notice

• Publicize the project

• Issue pre-qualification documents

• Shortlist candidates

• Assess interest for the project

• Prepare pre-qualification response

13

PUBLIC SECTOR TASKS




PROJECT

PLANNING PERIOD

6 months

PRE –

QUALIFICATION

3 months

TENDER PERIOD

PREFERRED BIDDER

6+ months

• Issue Bid Documents

• Hold Bidder Information Sessions, provide

Clarifications

• Evaluate Candidates & select the Preferred

Bidder

• Study Bid Documents & seek clarifications

from Authority & its Advisors

• Engage Advisors

• Prepare Technical Solution, Financial

Model, Funding Proposal, & Bid Guarantee 14

PUBLIC SECTOR TASKS




PROJECT

PLANNING PERIOD

6 months

FINAL NEGOTIATIONS

FINANCIAL CLOSE

6+ months

TENDER PERIOD

PREFERRED BIDDER

6+ months

• Agree the final Partnership

Agreement with Bidder

(including Lenders’ remarks)

• Oversee project documents

finalization

• Agree Partnership Agreement

with Lenders and Authority

• Finalize financing, D&C, O&M

agreements

• Financial Close 15

PUBLIC SECTOR TASKS


PRE –

QUALIFICATION

3 months



Μajor corporate, funding and advisory entities:

1. Construction & Development companies

2. Funding institutions (commercial banks, multilaterals,

DFIs)

3. Private equity, infrastructure funds

4. Consultants (financial, technical, legal, insurance)

Public Private Partnerships (PPPs) Major Players

Major PPP Players: 1- Construction & Development companies

Source: Public Works Financing 2013 Survey of Public-Private Partnerships, October 2013

Top 10 PPP Transportation Firms

Company Country (US $B)

1. Ferrovial/Cintra Spain 73.5

2. ACS Group/Hochtief Spain 72.0

3. Vinci/Cofiroute France 70.7

4. Macquarie Australia 48.2

5. Bouygues France 38.6

6. Egis Projects France 26.6

7. Sacyr Spain 21.8

8. John Laing United Kingdom 21.4

9. Global Via Spain 19.8

10.OHL Spain 18.2

Major PPP Players: 2- Funding Banks & Institutions

LENDING BANKS /

LEAD ARRANGERS

BTMU

State Bank of India

China Develop. Bank

SMBC

Mizuho

Korea Develop. Bank

Credit Agricole

Barclays

HSBC

ING

Commonwealth Bank of

Australia

Unicredit

Deutsche Bank

Goldman Sachs

Standard Chartered

MULTILATERAL / ECAs

• JBIC/Nexi

• US Ex-Im

• Kexim/K-Sure

• IFC/MIGA

• China Exim/Sinosure

• EIB

• EKF

• SERV

• GIEK

Source: Infrastructure Investor, December 2013, p. 30

Major PPP Players: 3- Infrastructure Funds

RANK FUND NAME BASED US$ B

1 Macquarie Infrastructure and Real Assets Australia $23.34

2 Brookfield Asset Management Canada 18.48

3 Global Infrastructure Partners United States 16.47

4 Borealis Infrastructure (OMERS) Canada 6.78

5 IFM Investors Australia 5.85

6 Alinda Capital Partners United States 5.48

7 Caixa Economica Federal Brazil 5.20

8 Korea Infrastructure Investments South Korea 4.61

9 EQT Sweden 4.18

10 SteelRiver Infrastructure Partners United States 4.16

11 Morgan Stanley Infrastructure United States 4.00

12 ArcLight Capital Partners United States 3.91

13 InfraRed Capital Partners United Kingdom 3.85

14 JP Morgan Asset Management United States 3.48

15 Citi Infrastructure Investors United States 3.40

16 Goldman Sachs Principal Investment Area United States 3.38

17 Ardian France 3.16

18 Meridiam Infrastructure France 2.88

19 Infracapital United Kingdom 2.68

20 Kohlberg Kravis Roberts United States 2.41

Major PPP Players: 4- Consultants

LEGAL ADVISORS

Allen & Overy

Norton Rose

Ashurst

Pinsent Masons

Hogan Lovells

Chadbourne & Park

Linklaters

White & Case

Clifford Chance

Trowers & Hamlins

TECHNICAL ADVISORS

• Mott McDonald

• Atkins

• Fichtner

• Babcock & Brown

• Arup

• McBains Cooper

INSURANCE ADVISORS

• Marsh

• Jardine Lloyd Thompson

• ΑΟΝ

FINANCIAL ADVISORS

• Ernst & Young

• PwC

• KPMG

• Credit Agricole

• BNP Paribas

• SBI Capital

• ΗSBC

• BTMU

• Rothchild

• SMBC

• Green Giraffe Energy

Bankers

Typical PPP Structure

Public Sector (ministry,

municipality, national road

company)

Special Purpose

Vehicle (SPV)

Service providers

(Operator or Facility

Manager)

Contractors

Equity

Funding Banks,

Multilaterals (EBRD,

Development Banks)

Partnership Agreement

(DBFM)

Shareholders

Agreement

Financing

Agreements

Design & Construction Agreement Operating (or Facility Management) Agreement

21


Design & Construction Phase


municipality, national

road company)

Special Purpose

Vehicle (SPV)

Service providers


Manager)

Contractors

Shareholders

Funding Banks,


Development Banks)

Partnership

Agreement (DBFM)

Payments for Design

& Construction

Equity

Loans

22


Operation & Maintenance Phase


municipality, national

road company)

Special Purpose

Vehicle (SPV)

Service providers


Manager)

Contractors

Shareholders

Funding Banks,


Development Banks)

Availability

Payments

Dividends

Principal &

Interest

payments

Payments for

operation &

maintenance

23


* Adapted from The National Council for

Public Private Partnerships

24

Factors for Successful Partnerships*

Good Private

Partner

Organized Project

Structure

Risk Profile

Statutory &

Political

Environment

Appeal to

Financial Market

Stakeholder

Support

Key Success

Factors


Factors for Successful Partnerships

• Open and frank discussion

between sectors

• Being well informed: knowing &

sharing facts

• Understanding each others’

concerns & language

25

Stakeholder

Support


• Availability of suitable &

adequate financial market

26


Appeal to

Financial Market


• Legal framework

• Enter into a project agreement

• Grant land rights including planning

obligations

• Enabling legislation

• Regulatory environment

• Local Regulations and Property Law

• Strong & committed political leadership

(will to change the system)

27


Statutory &

Political

Environment


• Risk assumed by the party best

able to manage & control it

• Risks not be "parked" with the

Project Company

• Risk transfer & allocation

undertaken ahead to tender

documentation

28


Risk Profile


• Dedicated group to the project

& the purpose of the partnership

• Dedicated & trained staff to

monitor project implementation

• Good governance & procurement –

assure a fair & open procurement process

29


Organized Project

Structure


• Long-term relationship: 25-30 yrs

• Experience, financial capability,

able to deliver best value overall,

not just lower price

30


Good Private

Partner


• Recognizes the role of private sector to bring socio-economic

development

31

CONCLUSIONS: DEVELOPING BY PPP

• A tool to attract private investments

• Enables the Government to fulfill its responsibilities in efficient

delivery of socio-economic goods & services

• Successfully addressing constraints of financing, managing &

maintaining public goods & services


Vicky D. Kefala, BA Econ., MBA Finance Vicky D. Kefala, BA Econ., MBA Finance

• EUROPEAN INVESTMENT BANK (EIB)

http://www.eib.org/epec/about/

• WORLD BANK

http://ppp.worldbank.org/public-private-partnership/

PPP References – EUROPE & GLOBAL

http://www.sdit.mnec.gr/

http://www.eib.org/epec/about/






THANK YOU

Vicky D. Kefala

MBA Finance, BA Economics

Head, Investments & Development Projects

CONSOLIDATED CONTRACTORS COMPANY (CCC)

34