Präsentation zum Thema: "DEG: We finance opportunities."— Präsentation transkript:
1DEG: We finance opportunities. G20 Africa Infrastructure Investment ConferenceFinancing Infrastructure in AfricaStephan Diefenthal, Vice PresidentLondon, 18 July 2013
2A bank with a wide range of responsibilities DEG, a subsidiary of KfW Domestic PromotionInternational FinancingWe promote GermanyWe ensure internationalisationWe promote developmentBusiness area MittelstandsbankPromotion SMEs, business founders, start-upsPromotionconstructionof new housingand modernizationas well as educationBusiness area PrivatkundenbankFinancing municipal infrastructure projects and global loans Germany agency business for Federal GovernmentBusiness area KommunalbankInternationalproject andexport financeKfW IPEX-BankBusiness area KfW EntwicklungsbankDeveloping andemerging-market countries:Financial cooperationDEGDeveloping andemerging-market countries:Private sector promotionPromotion of environmental and climate protection
3DEG at a glance Facts and Figures 2012 Established 1962Employees 480Head office CologneShareholder KfW FrankfurtEquity EUR 1.8 billionBalance sheet total EUR 4.7 billionNew business EUR 1.3 billionPortfolio EUR 6.0 billionDEG is a partner for companies investing in emerging markets and developing countries. For more than 50 years, we have been successfully supporting people and markets on the spot.
4DEG at a glance Mandate and working method German development finance institution (DFI) for the private sector in emerging markets and developing countriesSpecialist for entrepreneurial development in all sectors of the economyAgribusiness, finance sector, infrastructure, manufacturing industries, servicesLong-term investment capital for private enterprisesFinancing of investments with a positive developmental impactMarket-oriented conditionsEcological and social acceptance according to international guidelinesContributions to sustainable economic growth and poverty reduction
5Reasons to corporate with DEG Strategic planningLong-term financeCompetent partnershipInformation on possible types of financeAdvice on strategy and countriesEvaluation of business plansAdvice via local DEG officesArranging contacts with local authorities and institutionsParticipation development costPolitical supportStructuring of tailor-made financeProvision of various financing instrumentsArranging of additional finance from commercial banks or financial institutionsFinance from public programmesCoordination of the complete finance packageEstablishment of suitable controlling instrumentsMobilisation of additional fundsAnalysis of weak pointsRestructuringSpecific project and sector expertiseInfrastructure Brochure / Cologne /
6New business 2012 EUR 1.3 billion SectorsRegionsWith a share of nearly 40 per cent, risk capital financings are at the core of DEG’s new business.
7DEG worldwide Our work on-site Our commitmentOur portfolio: EUR 6.0 bnStrategicReliableDevelopmental effectivenessInternational networksMoskowAsia EUR 1.8bn 191 companiesEurope EUR 1.3bn 108 companiesIstanbulPekingNew DelhiMexico CityBangkokAccraSingapurLatin America EUR 1.6bn 146 companiesOur project criteriaNairobiJakartaLimaAfrica EUR 1.1bn 123 companiesProfitableSuccessful in the long-termEnvironmentally and socially compatibleSão PauloJohannesburgDEG representative officesPortfolio, as of: 31/12/2012Our customers benefit from our network across the globe and individualised on-site advisory services.
8International partnerships A strong alliance DEG is a member of the European Development Finance InstitutionsInternational partnershipsMobilisation of further capitalShared risksStructuring of complex financeFurther partners outside Europe (International Finance Corporation, regional development banks)DEG is one of the leading European development finance institutions which have joined to become the association of European Development Finance Institutions (EDFI).
9Promotion of the developing countries: private sector Establish and expand private sector structures in developing and transition countriesfor a sustainable economic growthfor lasting improvement in the living conditions of the local populationBy means of:Long Term LoansMezzanine FinanceEquityGuaranteessupported by technical assistance
10Financial instruments Long-term loans Currency: EUR or USD, in exceptional cases also local currenciesTerm: usually between four and 15 yearsGrace period: depending on cash-flow of the project companyInterest rate: fixed or variable, margin is market-oriented depending to project and country risksCollateral: fixed and movable assets in the country of investment, project-specific arrangementsAmount: usually up to EUR 30 million; larger volumes through cooperation with EDFI
11Financial instruments Equity capital Equity participation in the project companyMinority stake, usually over a limited periodVariable arrangement of the risk components (common shares, preference shares)In certain cases, voting rights and board seatClearly defined exit strategies
12Financial instruments Mezzanine finance Financing combining elements of equity and debt:Tailor-made arrangementsSubordinationConversions optionsRisk-oriented yield (equity kicker/ Ebitda multiple)
13General criteria for DEG financing Integrity, transparency of shareholderTrack record of shareholder (know how, finance, management)International accounting standardsTransparent corporate governance; secured local legal frameworkMajority interest in the project company through private company and private managementAdequate protection for foreign capital investment; transfer of capital must be assuredLimited governmental influence on license and concession agreements (independent regulatory authority)Financing: Equity ratio of at least 25 % (depending on project structure up to 40 %), adequate cash-flow oriented structure (i.e. debt service coverage, current ratio, flexible repayment structures)Minimum environmental social standard: in compliance with local, EU and World Bank requirements; in compliance with international standards of the International Labour Organisation and the UNConstruction: Preferred: EPC contract on turn-key basis with completion and performance guarantees; adequate arrangements to cover cost overruns, project delays, unexpected eventOperation: Long term O&M contract with experienced operator; modern equipment and operating system
14DEG activities in the African Infrastructure sector Infrastructure Brochure / Cologne /
15Infrastructure: The African context High and sustainable economic growth of Africa’s economy: 5.4% average growth (source: African Economic Outlook 2013)Expected increasing FDIs: USD 42.7bn in 2011, USD 49.7bn in 2012 and expected USD 56.6bn in 2013 (source: African Economic Outlook 2013)Current spending on African Infrastructure: USD 45bn p.a.; need to spend USD 93bn p.a. to plug the infrastructure gap in Africa (source Infrastructure Investor Africa/AICD/World Bank)
16DEG activities in the African Infrastructure: sub-sectors Power production and distribution: conventional thermal (HFO, diesel, gas), renewables (wind, hydro, geothermal, solar, biomass)Telecommunication: mobile, fixed line, towers, submarine cables, satelliteWater & waste: treatment, supply, sewage systems, desalinationTransport: airports, railways, toll roads, harbors, container terminals, pipelines
17Type of Transactions Expansion of existing business Greenfield projects (with strong sponsor)PrivatizationBuy-outs (combined with new investments or significant improvements through new shareholder structure)
18DEG financing in the African Infrastructure DEG commitments in African Infrastructure (as of ):All Infrastructure: USD 664m (= 29% of USD 2.3bn global DEG commitments)Power: > USD 200m = 31% of USD 650m globally (10 projects – gas, diesel, geothermal, hydro, wind, solar); strong African project pipeline: > USD 150m in 2013/4Telecommunication: Africa USD 380m (21 projects – mobile (18), fixed line (1), towers (1), submarine cables (1), satellite (1); project pipeline: > USD 80m (mobile, towers)Water & waste: nilTransport: > USD 100m (gas pipeline, rail, container terminal, toll road/bridge, barges, logistics)
19Conclusions for future DEG activities in African Infrastructure Strong business potential in African infrastructure due to existing gap and high GDP growth rates; DEG to almost double its new commitments in Africa to ca. USD 600m p.a. within next 4 years, expects up to 40-50% of its future business in Africa coming from infrastructure sectorPower/Energy to remain the key sector for DEG; focus on renewable energy but also conventional thermal energy and energy distribution. Key countries: South Africa, Kenya, Nigeria, Ghana, Côte d’Ivoire, Cameroon, Zambia; also open for other countries (off-take structure, legal environment for IPPs)Telecommunication remains strong sector, shift from mobile (voice) to data transfer and infrastructure service providers (e.g. towers) expectedHigh potential for transport sector: container terminals/ports, toll roads, airports, pipelines, logistics, etc.Water & waste: on selective basis (market liberalization = prerequisite)
20Selected References Mobile Telecommunication Network CELTEL International - Africa The ChallengeSetting up of an Pan-African mobile phone operator in 13 African countriesHigh growth potential for telecommunication services across the continentLow teledensity / poor fixed line systemsThe SolutionPromoting a newly established company founded by Dr. Mohamed Ibrahim with equity capital provided in several tranches by international financial institutions, investment funds and DFIsBoard- and Management team with rich track record in telecommunication and experience in AfricaValue Added by DEGDEG contributed USD 15 million venture capital in start-up phase and suported expansion phase with another US$ 7 millionDEG experience in developmental projects conveyed through Board Observer SeatFinancing of a Mobile Phone Operator in Sub-Saharian AfricaEquity Amount: US$ 22 million
21Selected References 48 MW Geothermal Power Plant Olkaria III – Kenya The ChallengeOne of first IPPs in Kenya and first geothermal IPP in AfricaHigh potential for geothermal power in AfricaCountry risk (2009), off-take riskEnvironmental and social impactsThe SolutionProject finance USD 105mCompliance with IFC Performance Standards (environmental/social)Strong project sponsor and management teamStrong project advisorsValue Added by DEGDEG contributed USD 50m own finance and acted as arranger for USD 105m debt finance.Strong DEG experience in Kenya and power sectorGeothermal know-how available in KfW Banking GroupFinancing of a Geothermal Power Plant in KenyaSenior Loan: USD 50mDebt Arranger for USD 105m
22Get in touch!Stephan Diefenthal Vice President Africa Infrastructure & MiningPhone: +49 (0) 221 / Fax: +49 (0) 221 / 4986 – 1582DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbHKämmergasse 2250676 KölnGermany