InfraCo Asia

Creating Infrastructure for Developing Asia

InfraCo Asia’s mandate

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• InfraCo Asia aims to stimulate greater private investment in Asian infrastructure by acting as a principal to develop primarily greenfield projects and bring them to a stage that they can attract domestic and international debt and equity finance

• Mandate covers the poorer regions of South and South East Asia

• Projects must satisfy three criteria: Additional – projects where private sector developers are unwilling or unable to

take on the upfront costs and risks on their own Development impact – projects must deliver development benefits for the poor

and meet social and environmental best practice Commercial viability – projects must be commercially viable (to attract private

investment and ensure a return on the sale of InfraCo Asia’s ownership rights)

• “Balanced portfolio” approach - InfraCo Asia pursues a mix of larger, more commercial projects (e.g. power plants) and some smaller, more directly “pro-poor” projects (e.g. agriculture-supporting infrastructure)

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Supported by PIDG• InfraCo Asia is backed by the Private Infrastructure Development Group

(PIDG) a multi-donor organisation that promotes private infrastructure investment in developing countries through a range of specialised financing and project development facilities and programmes

DGIS &FMO DFAT

UK

UKAid KfW

Private Infrastructure Development Group (PIDG)

GuarantCoGreen Africa

PowerDevCoTAFEAIF

ICF

Debt Pool

InfraCo Asia

DevelopmentInfraCo Africa

SECO

InfraCo Asia

Investments

SIDA NORAD

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ApproachCombining donor capital and private sector expertise, InfraCo Asia:• Develops infrastructure projects as a principal

– Project development leadership and commitment as Joint Owner & Sponsor– Participates in full development cycle to bring projects to financial close– Works with local governments and development partners– Provides development capital and expertise– Invests in equity ownership– NOT a consultant

• Acts commercially– Seeks market based risk adjusted returns– Development timeline is a priority – seeks to close projects expeditiously

• Actively participates in project development– NOT a passive funding source for development expenses

• Puts development capital at risk– Takes on risk and loss associated with unsuccessful projects

• Offers a world class team of developers– Partners with experienced developer teams– Developers worked in leading infrastructure development companies

InfraCo Asia fills a critical gap in the market

by funding high risk development costs

Stages of

Infrastructure

Project

Development

Most institutional investors

focus on Stage 3 and Stage 4

projects as a way to diversify

their portfolios

• Investment at this stage only

$2 to $3 Million (2 to 10% of

the total cost depending on

project size)

• However, riskiest stage of

investment

• Lack of sources of early

stage financing in industry

InfraCo

Asia plays a

key role in

attracting

more private

sector

investment

but very few

peers exist

• IFC Infra Ventures

• Global Infrastructure Facility • Recent World Bank initiative

• Supported by Australian government,

European institutions and Swiss firms

• Commercial Banks

• Multi-laterals

• Private Equity

• Pension Funds

• Sovereign Wealth Funds

• Infrastructure focused

government sponsored

funds such as AIF, AIIB

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How InfraCo Asia operates

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• Identifies and screens infrastructure opportunities

• Creates a local subsidiary company to act as an ‘organising entity’ on the ground

• Develops projects to financial close at own cost and risk

• Secures debt financing and sells majority stake in local company to (domestic and foreign) equity investors

• Reinvests proceeds from successful sales in more development activity

• Works in partnership with local and foreign partners when appropriate

• Access to credit enhancement facilities and output based aid can help make projects bankable and politically acceptable

InfraCo Asia makes infrastructure projects happen in

situations where the private sector would otherwise be

unwilling or unable to invest

Consistent with

InfraCo Asia Mandate

Reduce poverty and

provide social benefits

Complement, not

compete with, the Private

Sector

Commercially viable

InfraCo Asia applies a consistent and disciplined approach to project screening

Development Partner

Commitment to project

Acceptance of InfraCo Asia

role

Government Commitment

Understanding of InfraCo

Asia’s objectives

Acceptance of economic user

charges

Implementation support

Amenable regulatory

environment

Visible path to closing

Commercial tariff

Technically feasible

Sustainable development

Development Path

Understands potential private

sector equity co-investors’

considerations

Flexibility to invest a minority

portion of the equity capital

beyond financial close

Equity Investment

Considerations

Project selection

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Sector Coverage

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Indonesia

Vietnam

Philippines

Bangladesh

India

Sri Lanka

Nepal

Laos

Pakistan

Snapshot of Key Projects

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37.6MW Kabeli A Hydro Power, Nepal

Integrated Grain Mandi(2 projects), India

29.7MW Coc San Hydro Power, Vietnam

10 MW Kotte Waste to Energy, Sri Lanka

30MW Nyadi Hydro Power, Nepal

InfraCo Asia Office

50MW Gul Ahmed Wind Power, Pakistan

50MW Metro Wind Power, Pakistan

Cambodia

InfraCo Asia: a unique position

• Bridges a critical gap in Asian infrastructure development: Early stagedevelopment expertise complemented by development capital

• Complements efforts of host governments: Seeks to identify and developcommercially viable infrastructure projects in host government priority areas

• Balances the interests of host governments, private sector investors andfinanciers

• Complements and does not compete with local or international developers forprojects: Additionality is a core principle

• Focuses on commercially viable and attainable projects that produce socialbenefits (improved services, jobs and environment) and help to alleviatepoverty

• Aims to exit the investment at or near financial close: Draws in new privatesector investment once the project is prepared and structured

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Co-Development Program overview (1/2)

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Concept

• Invest in 3rd party developer projects before and up to financial close

• Limit investment to no more than 50%

• Project development lead is with the 3rd party developer

• InfraCo Asia in “Supervisory Management role”

• Oversight by InfraCo Asia Corporate Governance etc. by Board of Directors

Context

• Complementary to developer model and consistent with mandate

• Criteria of additionality, development impact and viability apply

• Can be used to address region and sector gaps in developer coverage

• Potentially higher and faster returns than developing projects at origin

Screening

Process

1.Preliminary Exchange of information

2. NDA & Q&A and exchange of

project details

3. Fill project proposal template

with financials

4. Review proposal and determine next

steps

Key

Factors

• Sector/Type/Size

• Location

• Developer detail

• Consultant (if any)

• Project Status

• Project Cost

• Development cost

• Production Cost

• Loan Terms

• IRR

• Development impact

• Key Risks

Co-Development Program overview (2/2)

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Approval

process

Term

Sheet

SHA

JIDA

•Budget approval for site visit and compliance check

•Budget approval for financial, technical & legal due diligence

•Term sheet approval in line with investment guidelines

•Sign JIDA with local partner

•Agree on budget

•Sign SHA

•Funds drawdown

Action

Result

• Drafted based on Board approved Investment Guidelines (July 2015)

• Contains key terms of investment and scope of IAD involvement

• Focus on investment amount, return thresholds, duration and exit for IAD

• Joint Investment & Development Agreement with details on scope, investment

amounts, investment structure, board positions, board reserved matters

• Detailed budget for which IAD investment will be used and project milestones

• Binding Shareholders Agreement committing IAD funding & investment terms

• Other documents also possible if investment instrument is not equity (e.g.

Convertible Loan Agreement)

1. Present to Investment

Committee (IC) and IAD Board

2. Present results of compliance checks & site

visits

3. Present results of financial, legal &

technical due diligence

4. Draft JIDA; present for approval

5. Draft SHA; present for approval

InfraCo Asia Investments - Overview

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Concept

Eligibility

• Provides capital to viable infrastructure projects to assist in financial close

and completion of projects

• Assists projects to get access to capital in cases where market is unable to

supply all capital needed

• Project at late stage of development

• Completed feasibilities studies along with demonstration of anticipated

financial returns on incremental capital investment

• Gap in equity or debt needed for financial close which would delay

construction of the project

Form of

Investment

• Investment capped at US$ 10 Million per project

• Participates as Co-Investor alongside private sector; will only take

minority stake

• Flexible range of instruments: Common Equity, Preference shares,

Subordinated Debt, Shareholder Loans

Key Factors • Sector

• Location

• Key Risks

• Commercial Returns

• Development Impact

• Other Pvt. Investments

Thank you

For further information please visit:

www.infracoasia.com

InfraCo Asia Development Pte. Ltd.

Level 18 Republic Plaza II

9 Raffles Place

Singapore 048619

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