Welcome to the 2016 Thomson Reuters Project Finance International (PFI) Yearbook. The Yearbook is our annual publication in which we look at the events of 2015, through case studies and the PFI Awards, and look forward into 2016 with articles in the Global section of the book.
MUFG has had another big year across the globe in terms of project finance. It currently tops the project finance loan tables for international banks in all three regions – the Americas, Asia-Pacific and EMEA. It frequently serves as the coordinating lead arranger and structuring bank for many deals in the highly active Americas market and has become increasingly involved in advisory in both Asia-Pacific and EMEA.
China is forging ahead with its domestic economic reforms and international aspirations. Jonathan Drew, Iris Ren and Chi Zhang at HSBC discuss the current situation and what it means for project finance.
The issuance by China’s National Development & Reform Commission of the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (the NDRC Circular), which came into force immediately upon promulgation, has been a significant regulatory development in China this year. NDRC’s easing of restrictions will likely facilitate Chinese companies’ entrance into international debt capital and loan markets. By Howard KH Lam, partner, and Rainbow A Au-Yeung, associate, Hong Kong, Latham & Watkins.
Iran is a country with Germany’s population, Iraq’s oil and Russia’s gas. With its educated population, abundant natural resources and favourable location it is ripe for an economic boom. By Jason Kerr, partner, and Tom Bartlett, partner, White & Case LLP.
While the commodity price environment has been extremely challenging in 2015, with prices for Brent crude oil dropping below US$40/barrel for the first time since 2009, a look south of the border provides some optimism for project development and finance in the years ahead. By Steven P Otillar, partner, and Eduardo Canales, associate, Akin Gump Strauss Hauer & Feld.
The import of liquefied natural gas (LNG) for regasification into gas and use as feedstock for generating power (LNG-to-power) is a growing prospect in many developing countries around the world. This article looks at the reason for this, some of the current opportunities, potential structures for LNG-to-power projects and some of the challenges and risks that will need to be overcome for such a project to be successful. By Erol Huseyin, partner, and Vivek Katyal, senior associate, Norton Rose Fulbright LLP.
This article looks at the use of government guarantees in various countries in South-East Asia in the development and financing of independent power projects. By Nathan Dodd and Benjamin Thompson, Singapore, partners in Mayer Brown JSM’s projects group; David Harrison, a partner in Mayer Brown JSM’s Ho Chi Minh City office, and associates Rohan Bilimoria and Norah Mugambi, Singapore, and Orsolya Szotyory-Grove and Hai Nguyen, Ho Chi Minh City.
Before the onset of the industrial revolution, the world used to rely primarily on renewable energy sources such as solar, wind and hydro for most economic and commercial activities. However, as economies and population grew, the demand for electricity and transportation rose sharply. By Allard Nooy, chief executive officer, with contributions by Shalabh Singhania, business analyst and Raghav Koshik, business analyst, InfraCo Asia Development Pte Ltd.
In the three years that have passed since Japan implemented its Renewable Energy Law on July 1 2012, the size of the Japanese solar energy market, and the range of financing options available to it, have evolved significantly. In this article we consider the experience and outlook of the Japanese solar market, including the emergence of Green bonds as an alternative finance mechanism, and assess the lessons that Australia and other Asian markets can draw from the Japanese Green bonds experience. By Naoaki ‘Nick’ Eguchi, partner, and Paul Curnow, Baker & McKenzie, Tokyo and Sydney.
The G20 finance ministers agreed to set up a Global Infrastructure Hub in 2014 to connect the developed, developing and emerging markets with the latest information on financing and building of around US$2trn in much-needed infrastructure projects. Former project finance banker Christopher Heathcote started work in June 2015 as the inaugural CEO at the Hub’s headquarters in Sydney. He talks with PFI’s Australian Editor John Arbouw.
Amid a flurry of large investments in assets as diverse as a pet supply chain and Chinese banking, the Canada Pension Plan Investment Board has emerged as a key US infrastructure player with the Chicago Skyway deal. By Alison Healey.
Since closing its second energy infrastructure fund in 2015, Copenhagen Infrastructure Partners has been quick to deploy its investment pool, taking exposure to three projects: a biomass plant and two offshore wind farms. With more deals in the pipeline, Copenhagen Infrastructure Partners expects to be visible over the next three to four years as it looks to further similar investments in Northern and Western Europe and North America. By Nick Herbert.
One of Belgium’s largest supermarket companies – the Colruyt Group – has become an unlikely champion for offshore wind power in the country, and now has plans to expand abroad. By Stefano Berra.
Americas Bank of the Year – Credit Agricole
The Bear Swamp LP financing combines a unique pumped storage asset with cashflows earned primarily through the ISO NE Forward Capacity Market. By Andrew Cleary, executive director, CIBC Capital Markets.
At their peak in the early 1920s, private railroads carried nearly all US intercity travellers. Following a half-century of declining market share caused by increased highway and air travel, the rail industry nearly collapsed in the late 1960s under the weight of unprofitable passenger lines. By Peter W Denton, rail and Infrastructure groups, and George K Miller and David Narefsky, infrastructure group, Mayer Brown.
To put it simply, US transportation and social infrastructure systems are in great need of improvements and investment. By Rich Cavallaro, chief executive officer, Skanska USA.
One of the big stories of 2015 has been the seeming implosion of Latin America’s largest economy, Brazil. But how will it affect project finance in the country moving forward? By Nic Stone.
Colombia saw the first financings close this year backing the 4G highway programme. Following the optimism, there was a slowdown due to issues with financing. So where to now? By Nic Stone.
It has been a busy year for the head of ANZ’s global project and export finance Paul Orton and his team. The group was involved in about 18 PF deals in Australia with a combined value of around A$15bn. By far the biggest was the A$10bn TransGrid PF acquisition financing by the Spark consortium.
San Buenaventura Power Ltd is a Philippine incorporated special purpose company that will construct, own and operate a 1x455MW supercritical coal-fired power plant and associated facilities in the municipality of Mauban, Quezon Province, Philippines, adjacent to the existing 1x460MW pulverised coal-fired generating facility of Quezon Power (Phils) Ltd Co with a 31km double-circuit transmission line and certain related facilities. By Michael R Cahigas, vice president, BDO Capital & Investment Corporation.
The TVI project is a private sector initiative that aims to address the power requirements of the Visayas, the fastest growing region in the Philippines. By Arsenio Kenneth M Ona, first vice-president at the Investment Banking Group of First Metro.
A case study of an Indian rupee debt financing for a hydro scheme in Bhutan. By Mukta Malhotra, vice-president, and Anita Karnik, assistant vice-president, infrastructure group, SBI Capital Markets.
The Auckland Prison PPP reached contractual and financial close in September 2015, following a procurement process that commenced in October 2013. It was the fifth PPP in New Zealand to reach close, following Hobsonville Schools and the Wiri Men’s Prison PPP, 2012, the Transmission Gully state highway PPP, 2014, and Schools PPP #2, 2015. By Hugh Kettle, partner, Bell Gully.
A partnership between Altrac Light Rail and Transport for NSW, this project will transform Sydney and provide reliable, high capacity public transport. By Matt David, manager, Capella Capital.
Standard Chartered had a good year across the Middle East & Africa (MEA) region at a time when the markets were active but could have benefited from more deal closings. The bank had its fair share of success in the Gulf and was involved in many of the significant African deals on a lead basis. Standard Chartered is undergoing a shift in corporate strategy, while maintaining its emerging market focus, but one key target area in the new set-up is Africa.
Societe Generale performed strongly throughout Europe during 2015. The French bank was the protagonist of some of the top deals of the year across the infrastructure, power and oil and gas sectors, adapting nimbly to the opening up of the project finance market to new funding sources.
On October 29 2015, the financing of the Galloper Offshore Wind Farm reached close. RWE Innogy had led the development of the project since SSE announced its intention to depart from the project in 2014. By Mark Muldowney, managing director and Miruna Onofrei, director, BNP Paribas.
On October 15 2015, DONG Energy, Global Infrastructure Partners and a group of 20 institutional investors led by Talanx Asset Management closed the equity and debt financing for the Gode Wind 1 offshore wind farm. By Daniel Reichert-Facilides, partner, Freshfields Bruckhaus Deringer, and Peter Brodehser, director of infrastructure investments at Talanx Asset Management.
The eagerly awaited closing of the first sea lock PPP afforded another opportunity for the Dutch market to show off its enviable attractiveness to investors. By Simon Caridia, partner and Hannah Roscoe, senior associate, at Herbert Smith Freehills.
Financial Close for the M11 PPP project was achieved on October 14 2015. The €400m project involves 27km of new motorway, 8km of new single carriageway and 4km of new dual carriageway, and construction is expected to start in early 2016 and to last 3½ to four years. By Stewart Robinson, Societe Generale Corporate & Investment Banking, and Patrick ‘Paddy’ Boyle, Ashurst.
On November 19 2015 TramContractors, a consortium comprising BAM PPP-PGGM and Cofely Fabricom, reached financial close on the Brabo 2 project. With three concession contracts combining two fundamentally different philosophies the only successful approach to a winning financing structure was to be a creative one. By Carlo Lamari, director, energy and infrastructure group, Crédit Agricole Corporate & Investment Bank, and Zoran Manović, BAM PPP.
This year’s PFI Yearbook is littered with lovely pictures of offshore wind farms … dramatic shots with the sea, impressive monopiles and huge turbines. Spare a thought for power station workers on land, however, who have not had such a great year. Or indeed, the folk looking after the cables that take power from those lovely offshore wind farms on land.