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Global Infrastructure Finance Review

H1 2010
Researched and published in July/August 2010 for Infrastructure Journal and Emap Ltd
by Muhabbat Mahmudova, Gaurav Sharma and Yoann Rey

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Headline Figures – Project Finance 1

Regional Analysis 4

Africa & the Middle East 5

Asia Pacific 6
North America 7
Latin America 8
Eastern Europe 9
Western Europe 10
Indian Subcontinent 11

Sector Analysis 12

Oil & Gas 13

Power 14
Renewables 15
Transport 17
Social Infrastructure 18
Water & Sewage 20
Telecoms 20
Mining & Metals 21

League Tables 22
Project Finance First Half 2010

Global Volume: Deal Count: Total Debt:

US$100bn 220 US$65bn

Previous Years
2009 volume: US$176bn H209 volume: US$92bn H109 volume: US$84bn
2008 volume: US$284bn H208 volume: US$127bn H108 volume: US$157bn
2007 volume: US$312bn H207 volume: US$168bn H107 volume: US$144bn

2009 deal count: 497 H209 deal count: 250 H109 deal count: 247
2008 deal count: 677 H208 deal count: 297 H108 deal count: 380
2007 deal count: 693 H207 deal count: 351 H107 deal count: 342

2009 total debt: US$120bn H209 total debt: US$68bn H109 total debt: US$52bn
2008 total debt: US$217bn H208 total debt: US$100bn H108 total debt: US$117bn
2007 total debt: US$256bn H207 total debt: US$133bn H107 total debt: US$123bn

Figures rounded to the

nearest billion.
Changes from H1 2009 to H1 2010

Global volume (total debt plus total equity) up 18%

Deal count down 11%
Debt (limited-recourse loans and bonds) up 24%

Leading players Sectors (closed deals, global volume)

Oil & Gas Transport
First Half 2010
2010 – 20, US$38.93bn 2010 – 25, US$17.49bn
• BNP Paribas (MLA) H109 – 23, US$9.95bn H109 – 44, US$24.63bn
H209 – 32, US$27.53bn H209 – 20, US$14.62bn
• RBC Capital Markets (Bond Arranger)
• Société Générale (Financial Adviser)
• Allen & Overy (Legal Adviser)
Power Renewables
• Stone & Webster (Technical Adviser)
• ExxonMobil (Sponsor)
2010 – 27, US$16.78bn 2010 – 91, US$13.69bn
H109 – 20, US$23.04bn H109 – 93, US$12.93bn
H209 – 27, US$18.56bn H209 – 97, US$15.90bn

Second Half 2009

Social Infra Mining & Metals
• Calyon (MLA)
• Credit Suisse (Bond Arranger) 2010 – 40, US$9.74bn 2010 – 9, US$2.36bn
• Royal Bank of Scotland (Financial Adviser) H109 – 42, US$5.87bn H109 – 11, US$4.34bn
• Allen & Overy (Legal Adviser) H209 – 52, US$6.71bn H209 – 9, US$2.50bn
• Mott MacDonald (Technical Adviser)
• Global Infrastructure Partners (Sponsor)
Water & Sewage Telecoms

2010 – 4, US$0.36bn 2010 – 4, US$0.36bn

First Half 2009 H109 – 11, US$1.07bn H109 – 6, US$2.61bn
H209 – 7, US$4.80bn H209 – 6, US$4.14bn
• Grupo Santander (MLA)
• FI-FGTS (Bond Arranger)
PPP/PFI* * Includes deals in all
• Itau-Unibanco (Financial Adviser)
sectors that qualify as a PPP
• Linklaters (Legal Adviser)
or PFI transaction
• Mott MacDonald (Technical Adviser) 2010 – 68, US$27.45bn
• Reliance Power (Sponsor) H109 – 79, US$25.64bn
Arrows show changes from
H209 – 70, US$21.53bn
H1 2009 to H1 2010

1 © Copyright 2010 Emap Limited

Flat growth in an age of austerity
Infrastructure investment has begun to recover, but struggles to gain in
the new era of public spending cuts

Following the global financial crisis, public debate over infrastructure IJ’s data over a 24-month period commencing H108 makes it
investment – its usage and funding dynamic – has turned hugely apparent that bond markets have taken a chastening and access
political; more so in nations and states facing massive budget to commercial debt continues to be restricted, despite some
deficits. This of course is on top of the funding squeeze witnessed in improvement. Commercial lending peaked over H207 with a total
the aftermath of the credit constriction triggered by the crisis itself. of US$117.5 billion in underwritten debt. Since then, the first half-
yearly underwriting of Mandated Lead Arrangers (MLAs) has been
Infrastructure Journal’s project finance league table results for the in decline.
first half of 2010 bear testimony of such a sentiment. Over H1 2010,
the total number of project finance deals to reach financial close For H108, MLAs underwrote US$104.4 billion which plummeted to
came in at 220 with a total valuation of US$99.7 billion versus the a mere US$45.7 billion for H109. It has since recovered marginally
H109 figure of 247 deals with a valuation of US$84.4 billion. While to US$55 billion for H1 2010, but is nowhere near the levels last
this hitherto constitutes an improvement over H109, the figures seen in 2007. British banking majors are near conspicuous by their
represent a steady decline from H108 and H107 wherein deal absence in the top ten MLA league table for H1 2010, which is
counts came in at 380 and 342 respectively with valuations of being led by a trio of French banks – BNP Paribas, Crédit Agricole
US$157.1 billion and US$143.9 billion. Group and Société Générale (in that order) – followed by Spain’s
Grupo Santander and Japan’s SMBC. Dutch bank ING and UK’s
However, a recovery or at the very least a flat growth trajectory Royal Bank of Scotland – both of which were hit hard by the
is on the cards for remaining half of 2010. A break-up of the total credit crisis – finished just outside the top ten in 11th and 12th spots
valuation figure for the first half of the year by source of funding (see respectively.
chart on next page) is also indicative of an interesting movement
and is perhaps the real noteworthy development to emerge from Government agencies have moved in to attempt to fill the
the figures. funding gaps elsewhere. Lending from development banks
and export credit agencies has grown steadily. This comes with
Of the total of US$99.7 billion, equity accounted for US$17.4 billion an additional dilemma for governments with deficits – one of
while US$2.28 billion was financed by bonds. Loans accounted prioritising investment under the duress of falling tax receipts for
for US$62.31 billon and government plus multilateral agency their respective exchequers as fragile economies recover from the
support was US$17.88 billion. Contrast this with H207 when out of crisis. Nevertheless, development banks and export credit agencies
a total funding valuation of US$168.68 billion, equity came in at are likely to remain central to many infrastructure projects over the
US$28.82 billion, bonds at US$16.8 billion, loans at US$120 billion and next two fiscal years and the remainder of 2010 at the very least.
government plus multilateral agency support at US$3.06 billion.

2 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review

Deal Activity
Month 2010 2009 2008
January 30 25 54
February 33 35 63
March 60 46 61
April 39 36 61
May 29 38 58
June 29 67 83
July -- 57 81
August -- 16 54
September -- 34 54
October -- 43 39
November -- 44 35
December -- 54 34

3 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review

Regional Analysis
Overall regional uncertainties about the health of the market, The developers that faced difficulties in securing favourable project
including weak economic growth, sovereign and currency risks, finance loan terms were prompted to look at capital markets
new bank regulations and the drying up of government stimulus to fill the funding gap, either to complement bank financing or
continue to persist. refinance expensive loans with more attractive bonds. In the H1
2010 there were as many as 12 projects with bond financing in their
However, project financing is recovering from the fall-away seen debt structure.
in early 2009, buoyed by growth in Asia and some other markets.
That said, not all markets have performed equally well in terms of Growth in project finance will be driven by the increased use of
closing deals. In the first half of this year – the volume of deals that public-private partnerships schemes, particularly in Western Europe,
reached financial close was considerably higher in Asia Pacific and the growth of investments in the renewable energy sector. The
and Europe and held-up strongly in North America. long-term financing for infrastructure will depend on the ability of
international lenders to lend on domestic transactions as well as
Volumes were dramatically down this half year in the Indian the ability of local lenders to raise funding. The cost of funds may
Subcontinent, Middle East and Africa. Latin America also saw a also be an issue as some domestic lenders source dollars in order
slight dip in investment volume of deals that raised project finance to lend into deals.
funding in H1 2010.
Capital markets are still insufficient to support project finance. In
Indian Subcontinent started the year on a weak footing as deals the future, it is likely that local pension funds will become more
struggled to proceed beyond the procurement stage. Middle East, active participants in infrastructure finance as sovereign wealth
previously the second largest region for project investments, saw a funds are already today.
sharp dip in volumes courtesy of the fluctuation in oil prices and the
economic woes that hit the region’s European lenders especially Governments need to create an appropriate legal and regulatory
for the first three months of 2010. framework for infrastructure that is favourable to debt financing and
fosters private sector investment. This may include decreasing risks
Presently industry observers say the challenge for developers is to to lenders and developers, as well as attractive return incentives to
look at a mix of funding options for their schemes as the atmosphere lure investment from the emerging class of regional infrastructure
in the market is different with banks slowly starting to underwrite and private equity funds.
deals. The syndication market is not yet an option, but multilaterals
and other types of financiers are entering as fully active players.

4 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review Africa & the Middle East

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Power 2,253 Riyadh PP11 IPP Saudi Arabia 2,253 25/06/2010

Oil & Gas 650 Accugas Pipeline Nigeria 250 29/06/2010

Mining & Metals 525 Lumwana Copper Mining Refinancing Zambia 400 09/03/2010

Telecoms 150 Helios Towers Nigeria Expansion Nigeria 150 04/02/2010

Dakar Container Terminals

Transport 128 Senegal 128 30/03/2010

Water & Sewage 109 New Cairo Wastewater PPP Egypt 109 03/02/2010

Africa & the Middle East finished the first half of 2010 with a project The International Finance Corporation (IFC) is investing US$100
finance volume of US$3.82 billion – down 78 per cent from US$17.28 million in the second Africa Infrastructure Investment Fund (AIIF2),
billion in the second half of 2009. Comparison with the equivalent which was aimed at promoting the development of basic
period shows that the volume was down by 50 per cent. infrastructure on the African continent.

However, deal activity shows that for the first time in the project The UK and South Africa have signed a memorandum of
finance market there were more transactions in Africa than in the understanding committing the UK to provide £67 million to help the
Middle East – 7 deals out of 9 in total. Nigeria was the most active regional economic communities improve transport infrastructure
country in the region with four project finance transactions raising in eight countries. India has approved a total of US$125 million in
the total of US$369 million in commercial and multilateral debt. As credit for Zambia, part of it to finance a key power project – the
in the previous years, the MEA region was dominated by energy 120MW Itezhi-tezhi hydroelectric project, worth US$240 million. The
projects. Indian Export and Import Bank (Exim) will contribute US$50 million
to the project.
Activity in the Middle East was led by the US$2.25 billion Riyadh
PP11 IPP, the only other deal that closed there was US$109 million Recently, the governments of Mozambique and Botswana signed
Egyptian New Cairo Wastewater PPP. Government funding a memorandum of understanding to develop a deep water port at
especially in Gulf Cooperation Council (GCC) countries, which Techobanine point, in Mozambique. Additionally, the government
increased rapidly over 2007-2008 especially for PPP projects, has of Mozambique will build a new bridge across the Zambezi River to
now subsided. With the fall of oil prices many governments cut the allow for a giant coal mining project in the interior Tete province.
long-term financing into deals.
The USAID programme will launch four tenders worth over US$300
Project finance in the region was short of social infrastructure and million late this year to rebuild roads and improve water and
renewable energy projects. sanitation in Mozambique. In Egypt, there are plans to build a US$1
billion tunnel under the Suez Canal at Port Said.
*Leading Players – H1 2010
Ethiopia’s government announced plans to target infrastructure
• Credit Agricole Group (MLA) development to drive growth. Even in small countries, like Lesotho
• Citigroup / Credit Agricole Group (Financial Adviser) for instance, the authorities plan to start construction of their new
• Norton Rose (Legal Adviser) Metolong dam and raw water pumping station in early 2011.
• Fichtner (Technical Adviser)
• Saudi Electricity Co (Sponsor) Ghana will fast-track construction of a deep sea oil port and
revamp a major rail link in 2010 to help exploit its energy and
Outlook minerals. In the Middle East, the governments are targeting areas
such as high-speed rail, water and renewables. Middle Eastern
From the start of the year, many African countries saw active governments have committed over US$100 billion on rail projects
investment opportunities in infrastructure. Despite the global in the coming years. Renewable energy is on the rise, with Saudi
recession, African economies will go through gradual recovery Arabia developing large solar projects on the rooftop of King
with average growth reaching 4.5 per cent in 2010 and 5.2 per Abdullah University (KAUST) and UAE developing a massive 100MW
cent in 2011, according to African Development Bank. solar plant outside of Abu Dhabi – Shams 1.

The infrastructure gap in Africa is vast, and to drive recovery the

region needs to address policy gaps, institutional capacity gaps as
well as financing. Funding is available to help boost investments in
African infrastructure.

The African Development Bank (AfDB) is expected to nearly double

its infrastructure funding to the region over the next five years to
US$10 billion to accelerate economic growth. The AfDB approved
a loan of US$40 million for Burkina Faso to fund a rural electrification
project. China is an active investor in several African countries - it
will lend Congo around US$700 million to build a hydroelectric dam
in the north Sangha region.

*Leading Players identified in this report are determined by the number of

closed transactions completed in a sector or region and taken from IJ’s first
half 2010 league tables. Total value is used to break a tie.

5 © Copyright 2010 Emap Limited

Asia Pacific Global Infrastructure
Finance Review

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Oil & Gas 18,565 ExxonMobil PNG LNG Phase I Papua New Guinea 18,200 16/03/2010

Power 4,758 Paiton 3 IPP Indonesia 1,519 08/03/2010

Renewables 1,341 206MW Collgar Wind Farm Australia 680 31/03/2010

Transport 840 Peninsula Link PPP Australia 781 05/02/2010

Kooragang Island terminal

Mining & Metals 283 Australia 232 14/05/2010

Social Infrastructure 223 Ararat Prison PPP Australia 223 27/05/2010

Telecoms 60 Kalimantan Fibre Optic Financing Indonesia 60 26/03/2010

Asia Pacific finished H1 2010 with a project finance volume of Outlook

US$26.07 billion – up 84 per cent from US$4.3 billion in the same
period last year, and overall exceeding the annual project finance Asian infrastructure will remain dynamic for the remainder of the
investment volume in Asia Pacific last year. year. Almost all regional governments have announced massive
infrastructure spending. Record growth in the value of investments
The region’s dramatic rise was primarily due to US$18.2 billion PNG shows that energy sector will be driving force for infrastructure
LNG Phase I deal in Papua New Guinea, which accounted for over investments in this region. Chinese and other Asian governments
70 per cent of total investments in the region. However, the overall pledged more than US$600 billion to invest and develop the
deal count was also up as 22 deals closed from the start of the regional infrastructure.
year, compared to 17 in the same period last year.
Market experts are of the opinion that Asia has to develop its
Active sectors in Asia Pacific in terms of the volume of investments consumer markets and expand its consumption base in order to
included oil & gas (US$18.6 billion) and power (US$4.8 billion). reduce their vulnerability from the exposure to the markets of other
In terms of the number of deals, the most active sectors were regions.
conventional (eight deals) and renewable power sectors (five
deals). One of the largest multilateral investors in the region is Asian
Development Bank (ADB) which loaned about US$10 billion last
Renewable energy projects are picking up in the region, in Australia year and will increase its lending to about US$12 billion this year.
and South Korea as well as China. All three countries announced
more investments in renewables this year. South Korea will invest According to ADB, developing Asia with the annual investment
around US$18.6 billion in renewable energy over the next three of around US$800 billion in transport, communication, and energy
years as announced by the government in July. infrastructure during 2010-2020, is likely to reap welfare gains of
US$1,616.3 billion (in 2008 prices) in 2020, or 10 per cent of the
One social infrastructure deal closed in Australia – the US$227.78 regional projected aggregate gross domestic product.
million Ararat Prison PPP. In transport, two transactions worth
US$840.3 million reached financial close in Australia – Peninsula Link
PPP and the refinancing of the port of Portland.

Leading Players – H1 2010

• PwC (Financial Adviser)
• Allens Arthur Robinson (Legal Adviser)
• International Power (Sponsor)

6 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review North America

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Renewables 4,324 150MW Alta Wind I Long-Term Debt United States 477 03/03/2010

Lyndon B Johnson Freeway Managed

Transport 3,230 United States 2,661 22/06/2010
Lanes P3

Oil & Gas 3,189 Ruby Pipeline Long-Term Financing United States 2,910 05/05/2010

Power 1,450 TrAIL Refinancing United States 800 20/01/2010

CRCHUM Montreal University

Social Infrastructure 649 Canada 431 21/05/2010
Hospital Research Centre

Mining & Metals 130 Mineral Park Mine Refinancing United States 130 26/04/2010

North America finished H1 2010 with a project finance volume of In the US, the financial crisis has caused a flight to safety, making
US$12.97 billion – roughly the same volume of investments as in the infrastructure investment more attractive than it used to be.
first half of 2009 (US$12.4 billion). Deal count in the first half was 32, Although economic recovery in the US is fragile, many infrastructure
a few short of the results in the same period last year. sectors are being driven by stimulus funding, which will result in
positive growth in the near-term future. Between 2010 and 2014,
The region continues to be dominated by energy, notably the infrastructure is forecast to grow by 3.4 per cent on average per
renewable energy sector. At the same time, the volume of year.
investments in oil and gas and power diminished.
The US Government is allocating tens of billions in funds to a
Renewables was the region’s largest sector this half year supported number of infrastructure and construction projects – especially
by the US Government’s policy to encourage investments in high speed rail projects, large loan guarantees for power plants,
renewable energy. The sector saw total investments of US$4.3 billion. and renewable energy projects. Many PPP projects in the transport
The renewable sector was followed by oil & gas and transport. sector are seen moving forward.

Despite reduction in the number of deals, oil & gas attracted a In Canada, the outlook for infrastructure investments is positive as
high volume of investments, particularly, Ruby Pipeline’s US$2.9 is the level of activity in the market so far into 2010. Renewable
billion long-term financing. Transport volumes were boosted by a energy projects and social infra projects are underway across the
big-ticket Lyndon B Johnson Freeway Managed Lanes P3 project country. However, domestic reports are indicative of project delays
worth US$2.66 billion. Transport could see more investments going that could potentially cost Canadians millions of dollars in federal
to high-speed rail projects as the political support grows around infrastructure spending aimed at stimulating the economy.
this a much hyped but under-delivered asset class.
Canada’s Infrastructure Stimulus Fund was set up in 2009. The fund
The US project finance market is expected to grow this year works in the following way - cities and provinces have to identify
supported by tax credits and government grants (see Renewables projects and then apply to obtain money to help pay for part of
section). Canadian social infrastructure remains consistent, but a the project. The fund will share the costs of those local projects but
shift in focus towards renewable energy was also noted over H1 one of the key conditions for federal funding is that the project has
2010; two PV solar parks and a wind farm with the total capacity of to be completed by 31 March 2011.
142MW secured funding since the start of the year.
The country’s Parliamentary watchdog states that currently
Leading Players – H1 2010 there are delays and only 25 per cent of CAD4 billion has been
allocated to individual projects, running a risk that many projects
• Bank of Tokyo-Mitsubishi UFJ (MLA) may not start or be completed by the deadline. Besides the delays
• Credit Suisse (Financial Adviser) in realisation of the stimulus programme, there is also the issue of
• Latham & Watkins (Legal Adviser) what may happen when the two-year stimulus programme ends,
• RW Beck (Technical Adviser) which is a growing point of concern for Canadian politicians.
• Meridiam (Sponsor)


Canadian and US markets are intensely involved in developing

infrastructure domestically as well as through an action plan
to strengthen infrastructure via an integrated cross-border

There is strong political support for infrastructure projects, including

PPP projects and renewable energy. The US government aims to
boost job creation, long-term economic growth and sustainability
of recovery from the global economic crisis.

7 © Copyright 2010 Emap Limited

Latin America Global Infrastructure
Finance Review

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Oil & Gas 2,586 Tupi FPSO Project Brazil 800 30/03/2010

Power 1,397 AEI Jaguar Energy Guatemala 758 01/04/2010

Renewables 1,115 Eurus 250MW Wind Farm Mexico 514 04/06/2010

Mining & Metals 1,040 Pueblo Viejo Mine Dominican Republic 1,040 30/04/2010

Transport 335 Red Vial n°4 Concession PPP Peru 335 11/02/2010

Social Infrastructure 131 Ixtapaluca Hospital PPP Mexico 131 25/02/2010

Latin America finished H1 2010 with a project finance volume of Brazil is the largest market with infrastructure needs estimated at
US$6.6 billion; a depreciation of 67 per cent from US$20.1 billion US$85 billion over the next decade in transportation and energy,
H1 2009. according to Banco do Brasil. Two major global sporting events (i.e.
2014 Soccer world cup and the 2016 Olympics), offshore oilfield
Fewer transactions have closed in the region in the first half of development and expansion of the domestic housing programme
this year. The largest decline in activity was noted in the transport will boost infrastructure spending in the years to come.
sector but some energy sectors – power, renewables and mining
also suffered. The number of deals that made it to financial close From the start of the year, there was an increased activity in
fell to 13 down from 28 transactions in the same period last year. consolidating private equity and setting up funds focused
on investments in Latin American infrastructure. In March,
There was a decline in project finance activity throughout the Corporacion Andina de Fomento (CAF) committed US$40 million
whole of Latin America. A devastating earthquake in Chile brought to a Peru-focused infrastructure fund managed by Brookfield
project financing to a halt. This affected the overall investment Asset Management of Canada and local private equity firm AC
volume in the region, as Chile has always been one of the major Capitales, with commitments totalling US$500 million, targeting
markets for project finance investments in Latin America. A sharp investments in Peru’s transportation, energy, water and sewage
decline in Brazil, from the record activity witnessed last year, saw and telecoms sectors. The US$150 million Central American
two project financed deals in the oil & gas industry making to Mezzanine Infrastructure Fund (CAMIF) formed at the end of last
financial close – viz. Tupi FPSO and Sevan Driller II. year is currently offering long term funding in 10 countries in Central
America, Mexico, Colombia, and the Dominican Republic.
The start of the year brought improvement to the Mexican project
finance market. Mexico closed five deals across oil and gas, power, In January, Macquarie launched Macquarie Mexican Infrastructure
renewable and social infrastructure sectors. fund (MMIF) with Ps$5.2 billion (US$408 million) in initial commitments
from 7 Mexican pension funds. FONADIN (Mexico’s national
Leading Players – H1 2010 infrastructure fund) and Macquarie solely focused on investment in
infrastructure projects including roads, rail, airports, ports, water and
• SMBC (MLA) wastewater, energy as well as social infrastructure and telecoms.
• Royal Bank of Scotland / Rothschild (Financial Adviser)
• Shearman & Sterling (Legal Adviser) In the tight credit markets, Export Credit Agencies are also trying
• Garrad Hassan (Technical Adviser) to fill the financing gap. ECAs increased their support to Latin
• Ashmore Energy International (Sponsor) America by 16 per cent, over US$10 billion in sectors such as
airports, railroads, water, oil & gas, and manufacturing.
Ex-Im Bank of the United States accounts for about 20 per cent of all
Latin America experienced a dramatic drop in the private sector activities in Latin America. Export Development Canada recently
capital flows starting from the second half of last year. Despite the opened its fourth office in Peru to explore opportunities in the
low figure of project finance investments in the first half of the year, mining, energy, infrastructure, and telecom sectors. China, South
market experts are optimistic about the prospects for the region. Korea and Japan have also been investing actively in the region.
However, the latest data does not back this optimism in the project China is also making substantial sovereign wealth investments in
finance market. regional energy resources, as well as other infrastructure.

There are strong regional disparities in terms of infrastructure

development. However, the annual investment needed to close
infrastructure gaps in the region amount to US$114 billion, or 2.8 per
cent of regional GDP.

The governments of several countries announced measures

to mitigate the effects of the economic crisis by stimulating
infrastructure investments through national infrastructure
programmes, budgetary investments, guarantees, and new laws
that offer flexible legal framework for public private partnerships.
Mexico and Brazil are leading the region in terms of value and
number of deals.

8 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review Eastern Europe

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Oil & Gas 9,121 Nord Stream Gas Pipeline Phase I Russia / Germany 7,631 22/01/2010

Moscow-St Petersburg Toll Road-

Transport 2,318 Russia 2,133 26/04/2010
Section 1

Power 2,220 513MW Boyabat Hydroelectric Turkey 1,214 15/01/2010

146MW Polish Wind Farm

Renewables 280 Poland 168 29/03/2010

Boguchansky Bridge Loan Facility

Mining & Metals 260 Russia 260 15/03/2010

Telecoms 97 MTS Mobile Networks Financing Russia 97 29/03/2010

Eastern Europe ended H1 2010 with a project finance volume of With an estimated €500 billion in total infrastructure investment
US$14.3 billion – up from US$3.6 billion in H1 2009, thereby exceeding needed, the issue of financing is prevalent. Commercial debt
the annual PF investment volume of last year. has so far been the primary source of finance with the market
dominated primarily by western European banks. However, the
The region was the third largest in terms of the total project finance global financial crisis in the European continent overall adds
investments after Western Europe and Asia Pacific. It closed 13 pressure on Eastern Europe’s ability to obtain necessary funding.
transactions up from 9 in the same period last year. Public sector budget consolidation across many countries in the
region will continue, and credit tightening will ease slowly.
Big-ticket deals included the US$7.6 billion Nord Stream Gas
Pipeline, benchmark transport deals in Russia and the US$1.2 billion Several Eastern European countries such as the Russian Federation,
Bayabat Hydroelectric Power Plant in Turkey. In the last few years, Slovak Republic, Slovenia, and Romania have entered the
the region has been experiencing unprecedented levels of activity municipal bond market to finance large infrastructure projects.
aimed at modernising transport, energy and social infrastructure. Other available sources of financing are EU money as well
multilateral development funding from the EBRD, EIB and the World
The governments’ of Romania, Bulgaria, Slovakia, Poland and Bank, which have all already been active in financing infrastructure
Turkey are all supporting the implementation of PPP through a initiatives in the region.
series of policy initiatives to provide stimulus to their respective
economies. The countries where investment opportunities are the most
plentiful are Poland, Hungary, Czech Republic, Slovakia and
Last year, energy sector projects attracted most of the investments Romania. Besides shoring up public finances and addressing
in the region, particularly power, oil and gas and mining. However, funding constraints, many countries in the region have yet to
renewable energy is picking up as well. Poland and Turkey are establish proper legal frameworks to use the PPP model for future
leading the way for renewables in Eastern Europe, especially infrastructure investments.
wind energy. Poland closed two wind farms from the start of this
year, and Turkey project financed 41MW Cataltepe Kuyucak wind

Leading Players – H1 2010

• Garanti Bank (MLA)

• Société Générale (Financial Adviser)
• Clifford Chance (Legal Adviser)
• Stone & Webster (Technical Adviser)
• Gazprom (Sponsor)


Eastern Europe requires significant infrastructure investments. Last

year governments in the region were prompt to enact a series of
anti-crisis measures, adjust national procurement process, as well
as guarantee the provision of government support to developers in
the form of up-front payments, co-lending and direct guarantees.
Infrastructure projects in energy and transportation are set to
grow. Most Eastern European countries will see moderate growth
in electricity consumption over the decade of 2010-2020 due to
increase in personal income and demand for electricity. This will
increase clean power and renewable energy development and
more investments in transmission and grid development in the

9 © Copyright 2010 Emap Limited

Western Europe Global Infrastructure
Finance Review

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Oil & Gas 12,450 Nord Stream Gas Pipeline Phase I Russia / Germany 7,631 22/01/2010

Portugal High Speed Rail Poceirao

Transport 10,323 Portugal 2,142 07/05/2010
to Caia PPP

Social Infrastructure 8,737 Flemish Schools PPP Belgium 2,831 10/06/2010

Eneop 2 Wind Portfolio 480MW

Renewables 6,615 Portugal 1,197 29/01/2010
Phase I

Power 3,876 Exeltium Power Purchase Financing France 2,685 12/04/2010

Water & Sewage 255 Aguas de Cascais PPP Portugal 108 31/03/2010

Mining & Metals 50 Minas de Aguas Tenidas Spain 50 30/03/2010

Hautes-Pyrenees High-Speed
Telecoms 49 France 49 18/02/2010
Network PPP

Western Europe finished H1 2010 with a project finance volume of Outlook

US$34.72 billion up 35 per cent from US$25.7 billion in H109, and also
higher by 66 per cent from the second half of last year. Overall, economic recovery in Europe will be underpinned
by measures taken across the region for the development
The deal count was 125 transactions, five deals short from the results of infrastructure. In the next 2 to 3 years, improved transport
of the same period in 2009 but the same as in the second half of connections are expected to boost the region – requiring increased
last year. The regional market shows an overall improvement on capacity for ports (boosted by the increase in container traffic), toll
an annualised basis but the market sentiment is still one of caution. roads (albeit at a modest pace compared to previous years) and
The region continues to be the largest project finance region airport traffic.
– accounting for 35 per cent of the global volume – with a long
track record and experience closing deals. Europe will lead in the provision of privately financed transport
infrastructure. The increased investments will be supported by
Spain once again led the Western European market with the various regulatory measures such as tolls and congestion charges.
highest number of transactions (46) and had the largest volume Overall, the rating agencies predict a stable outlook for the
(US$9.9 billion). The Spanish renewable energy market continues to infrastructure industry in the region. Moody’s notes that the
dominate project finance activity in the region – with investments generally benign debt capital market conditions for infrastructure
of US$3 billion on 29 PV and thermal solar and wind transactions. are expected to continue over the coming 12 to 18 months.
Nevertheless, it believes that periods of turbulence can be
France is the second largest market with investments totalling expected.
US$7.4 billion over 18 deals. France closed a number of big-ticket
transactions in transport and power. French renewable energy The most critical infrastructure will be required to meet growing
investments grew almost five times over the same period last year demand for electricity and water. Earlier this year a study by PwC
and stand at US$705 million. found that Europe and North Africa could source 100 per cent of
its energy needs from renewable sources. This will require updating
The UK closed 25 transactions worth US$3.4 billion – slightly below 28 the regional power systems to a shared system. Europe is now
deals in H109 – with the capital value of deals not exceeding US$200 engaging in a number of alternative energy projects; the biggest
million excepting Birmingham Highways and Southmead Hospital of which is a plan to build a €400 billion super-grid to link both
projects. The UK also saw two renewable energy projects secure Europe and the Middle East so the continents can benefit from
funding – the 48MW Hill of Towie wind farm and the refinancing of their respective power sources.
the 40MW Bicker Fen & Walkway wind farm.
However, the private sector is right to demand a clear framework
Leading Players – H1 2010 for getting paid before committing to an investment drive.
Currently there is regulatory and policy uncertainty over how to
• La Caixa (MLA) proceed with such ambitious plans. The risks should be identified
• KPMG (Financial Adviser) and the rewards need to be tailored to take the risks into account.
• Garrigues (Legal Adviser) Just as wind and solar were incentivised to get them going, the
• Mott MacDonald (Technical Adviser) early builders of, for instance, the first leg of the Supergrid, should
• Building Schools for the Future Investments (Sponsor) be allowed, and be clearly seen to be making good money from
the investment.

10 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review

Indian Subcontinent
Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Power 826 GVK Goindwal Sahib Power Plant India 693 01/02/2010

Transport 314 NH3/Ma1 Highway PPP India 314 31/03/2010

Mining & Metals 68 GVK Tokisud Coal Mine India 68 27/04/2010

Indian Energy Theni Wind 16.5MW

Renewables 15 India 15 29/04/2010
Phase I

The Indian Subcontinent finished H1 2010 with a project finance Local assessment suggests that Indian infrastructure needs
volume of US$1.22 billion – down 88 per cent from US$10.4 billion investment levels of US$90 billion over the next five years. Half of
in H1 2009. this money will come via the private sector followed by multilateral
agencies, pension funds, and sovereign wealth funds.
During H1 2010 the number of deals fell to four, down from the 14
in the corresponding period last year. There was also one project India is keen to develop its infrastructure to support its economic
in Pakistan – a US$23.5 million expansion of Karach Gas-fired power growth. It is the second-fastest growing major economy after
plant expansion. China. To achieve double digit growth, India needs massive
investments in various infrastructure projects and industries such
The downward trend of investments in the Indian project finance as power generation, ports and roads, renewable energy and
market last year and the beginning of this year is due to delays communication. So far investments were heavily subsidised by
in procurement, as well as the structural issues that the Indian the Indian government but the way ahead is for reduced level of
financial market faces. The power sector was sluggish as a result subsidies as the government seeks to attract private sector and
of cancelations of some coal power projects on environmental foreign direct investment.
grounds, and delays in supplies of equipment, especially since the
introduction of restriction on the import of Chinese equipment and Most of the future power generation capacity in India will
labour. come from coal. It is the government’s plan to increase power
generation capacity by 55GW from the current level of 159GW by
Despite the slowdown of project financing, India introduced a 2012. Although India is the world’s third-largest producer of coal,
number of policy changes, including a landmark Solar Mission, domestic supplies and transportation networks are yet to keep
as well as set feed-in-tariffs to boost investments in PV solar and pace with demand growth. The country will continue to rely on
wind energy. As a result India’s renewable energy market volumes imports to cap the supply-demand gap.
surged since the end of 2009.
Although India’s reliance on conventional power is vast, it also
Leading Players – H1 2010 announced a National Action Plan on Climate Change. According
to plan, the contribution of renewable energy resources to power
• IDBI Bank (MLA) generation would be increased to 10 per cent by 2015 and 15 per
• SBI Capital Markets (Financial Adviser) cent by 2020, as opposed to the current level of 4 per cent.
• SJ Law (Legal Adviser)
• Lahmeyer International (Technical Adviser) Market experts forecast that government’s focus on infrastructure
• GVK Power & Infrastructure (Sponsor) and the rural economy, the surge in industrial production, and
service sector will sustain GDP growth at around 7.5 per cent in
Outlook 2010-11.

In 2010, India is likely to see significant investment activity in Overall, this year will be one of consolidation that is likely to lay the
infrastructure. The asset class is expected to progress at a faster rate foundation for the years to come. A large part of the infrastructure
than ever before as it is heavily backed by government legislation. expenditure is expected to start paying dividends between 2011
The Indian government is going ahead with several initiatives to and 2013. Government and the Reserve Bank of India will continue
boost investments in infrastructure - the Jawaharlal Nehru National to play a very important role in shaping the economic future of
Solar Mission Programme, ambitious wind energy targets 22GW India in 2010.
by 2022, feed-in-tariffs for wind and solar, tax incentives, Viability
Gap Funding Scheme to promote PPP scheme for infrastructure

11 © Copyright 2010 Emap Limited

Sector Analysis
Global Infrastructure
Finance Review

The renewables sector accounted for bulk of the 220 deals closed
over H1 2010 coming in at 91, followed by social infrastructure,
power and transport. The total represents a decline from the 247
deals noted during H109 and 250 noted over H209; a far cry from
the H108 figure of 380 deals. Of the total deals noted over H1 2010,
68 were PPPs valued at US$27.45 billion.

12 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review Oil & Gas
Top 10 by Value
Name Value (US$m) Financial Close Location
ExxonMobil PNG LNG Phase I 18,200 16/03/2010 Papua New Guinea

Nord Stream Gas Pipeline Phase I 7,631 16/03/2010 Russia / Germany

Ruby Pipeline Long-Term Financing 2,910 05/05/2010 United States

Castor UGS Gas Storage 1,901 10/06/2010 Spain

Perenco RBL faciltiy 1,721 18/05/2010 France

Tobolsk Polypropylene Plant Project 1,490 22/01/2010 Russia

Gas Natural Madrid Network Sale 1,041 12/03/2010 Spain

Tupi FPSO Project 800 30/03/2010 Brazil

PetroRig III 661 30/04/2010 Mexico

Chicontepec Oil Field 600 31/03/2010 Mexico

Oil & gas transactions totalled US$38.93 billion during H1 2010 up Another interesting development is the emergence of shale gas.
markedly from US$9.95 billion in H109. However the number of It was ignored as a hydrocarbon by-product by oil & gas majors
transactions dipped from 23 to 20. In fact, the number of deals has prior to 2007 as they believed it to be too expensive to develop
been steadily declining from H107 wherein 47 transactions were on a larger scale. Gas prices then rose and shale development on
recorded. Before, during and indeed after the credit squeeze, the a much wider scale not only increased investment but in turn also
oil & gas infrastructure investment market has seen a tricky few cut project costs to an extent that it seems to be commonplace
years. now for major oil companies to be driving shale gas investment.

It is widely acknowledged that the price of crude oil influences, Overall, ExxonMobil PNG LNG Phase I (valued at US$18.2 billion),
if not dictates infrastructure development in the sector. As the oil Nord Stream Gas Pipeline (US$7.63 billion) and Ruby Pipeline Long-
price touched the dizzy heights of US$147 a barrel prior to and Term financing (US$2.91 billion) were the three leading projects by
during the first phase of the global financial crisis, when investors valuation to reach financial close.
distanced themselves from plummeting financial markets and
poured capital into the commodities market - investment in oil The remainder of the current fiscal year could see gas projects
& gas infrastructure improved. The crude price made extraction drive growth in sector much more aggressively than oil projects.
from zones perceived as “difficult to extract from” seem attractive. The importance of gas projects cannot be understated. However,
Following that over much of 2008 and 2009, crude prices reversed IJ analysts would not go as far as to suggest “big gas” would
the gains of the last couple of years. overtake “big oil” over the next couple of years. A longer term shift
in hydrocarbon investment priorities is the more likely outcome.
This is clearly mirrored in IJ’s half yearly project valuation data. In
H207, oil & gas transaction valuation came in at US$38.43 billion Leading Players – H1 2010
with 46 transactions, rising to US$49.5 billion with 56 transactions by
H108. However, by H109 this had plummeted to US$9.95 billion. As • Crédit Agricole Group (MLA)
the oil price is being seen as stabilising above US$70 a barrel for • Société Générale (Financial Adviser)
much of 2010 and with many commentators suggesting it would • Clifford Chance (Legal Adviser)
end the year around or at the US$90 a barrel mark – an improved • Stone & Webster (Technical Adviser)
investment scenario may be witnessed. • ExxonMobil (Sponsor)

13 © Copyright 2010 Emap Limited

Power Global Infrastructure
Finance Review

Top 10 by Value
Name Value (US$m) Financial Close Location
Exeltium Power Purchase Financing 2,685 12/04/2010 France

Riyadh PP11 IPP 2,253 25/06/2010 Saudi Arabia

Paiton 3 IPP 1,519 08/03/2010 Indonesia

513MW Boyabat Hydroelectric Power Plant 1,214 15/01/2010 Turkey

Mannheim Block 9 CHP Coal-Fired Expansion 1,090 24/02/2010 Germany

GNPower Mariveles Coal-Fired Plant 1,000 29/01/2010 Philippines

TrAIL Refinancing 800 20/01/2010 United States

AEI Jaguar Energy 758 01/04/2010 Guatemala

GVK Goindwal Sahib Power Plant 693 01/02/2010 India

International Power Hazelwood Refi 678 21/01/2010 Australia

Total valuation of power projects for H1 2010 came in at US$16.78 On completion, Belo Monte would be the world’s third largest
billion down from US$23.04 billion noted over H109 and US$26.51 hydroelectric station after China’s Three Gorges and Itapu,
billion for H108. IJ data on total valuations indicates that volumes another Brazilian power project. Its peak wattage of 11200MW
have been in terminal decline since H107 when a figure of US$37.83 would appreciate Brazil’s existing generating capacity by about
billion was noted; the highest since IJ commenced the present 10 per cent.
data series in 2005.
Away from Latin America, France’s Exeltium Power Purchase
Volumes in North America, Western Europe and Asia Pacific financing (valued at US$2.69 billion), Saudi Arabia’s Riyadh PP11
contracted the most, but Latin America led by Brazil weathered IPP (US$2.53 billion) and Indonesia’s Paiton 3 IPP (US$1.52 billion)
the finance lull of 2009 and emerged stronger over H1 2010. Brazil’s topped the field by valuation. Of these Exeltium stands out, as it
performance can be explained by the proactive involvement of follows a unique model in that it finances a future power plant by
the Brazilian development bank (BDNES) in helping some major going to end-users and asking them to raise money to forward-
projects reach financial close in 2009, most notably in the power purchase power long-term at consistent prices from the utility
sector. Its two main beneficiaries last year were the US$5.15 which wants to build an expensive nuclear plant.
billion Jirau hydropower project and US$5.4 billion Santo Antonio
hydroelectric plant. The US$3.7 billion loan made available to Jirau Riyadh PP11 follows the trend of Middle Eastern power market which
marked the largest ever loan made by the BDNES. delivered big ticket projects in 2009. Concurrently, Guatemala’s
AEI Jaguar Energy project valued at US$758 million which reached
These power projects are crucial for Brazil’s growing electricity financial close in April also deserves a special mention given that
needs. Hydroelectricity accounts for over 90 per cent of power it was in a difficult jurisdiction and was creatively financed by local
generated in Brazil. The trend continued in H1 2010, as the Brazilian institutions when international lenders had pulled out.
government approved the controversial 11GW Belo Monte
Hydroelectric project. In April, following clearance from local Overall, the of number of deals actually rose from the 21 noted
courts, its energy agency awarded the contract to Norte Energia, over H109 to 27 by end-June 2010, but nowhere near the high of 48
with Companhia Hidro Elétrica do São Francisco (CHESF) as the deals noted in H107. Looking at previous data for the whole year,
leading contractor. the total number of deals fell to 47 in 2009 from 88 in 2008. Looking
ahead, the present fiscal year may not be able to match the highs
Belo Monte has never been short of controversy with concerns of 2008, but could cap the performance of 2009.
about the regional environment and welfare of indigenous tribal
inhabitants. Some of the country’s leading infrastructure players,
such as Camargo Correa and Odebrecht, pulled out of the Leading Players – H1 2010
auction, over rumours that power rates will be capped at BRL83
(US$47) per MWh; a rate deemed too low to assure a decent • Crédit Agricole Group (MLA)
return on investment. Surprisingly, the winning consortium - Norte • Natixis (Financial Adviser)
Energia - offered an even lower rate of BRL78 (US$44.4) per MWh. • Latham & Watkins (Legal Adviser)
• Fichtner (Technical Adviser)
• International Power (Sponsor)

See conventional power and renewable energy graphic on page 16.

14 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review Renewables
Top 10 by Value
Name Value (US$m) Financial Close Location
Eneop 2 Wind Portfolio 480MW Phase I 1,197 29/01/2010 Portugal

206MW Collgar Wind Farm 680 31/03/2010 Australia

Termosolar Astexsol 2 523 05/03/2010 Spain

Eurus 250MW Wind Farm 514 04/06/2010 Mexico

150MW Alta Wind I Long-Term Debt 477 03/03/2010 United States

192MW Waubra Wind Farm 448 18/02/2010 Australia

49.9MW Hudson Ranch Power I 390 13/05/2010 United States

Duke Energy Wind Portfolio Refinancing 377 24/05/2010 United States

150MW Cedro Hill Wind project 374 10/03/2010 United States

50MW Helioenergy II 372 06/05/2010 Spain

The renewables sector saw a lot of activity over the first half of 2010 However a potential problem for renewables could arise in the
with 91 deals reaching financial close valued at US$13.69 billion. shape of a “buy American” drive. In March, US Senator Charles
The latest half-yearly performance marked an improvement Schumer (Democrat-NY) and a group of Democratic Senators
over H109 wherein 78 deals to the tune of US$12.93 billion were introduced S. 3069, the American Renewable Energy Jobs Act.
recorded. How the year 2010 may end is contingent upon the USA’s The Act would amend the existing Treasury grant rules to make
renewable energy drive which saw it overtake Western European the award of grants discretionary, to make grants subject to
markets such as Germany and Spain in 2009. Additionally, China’s “buy American” requirements, and to make the award of grants
enthusiasm for renewable energy could very well trump the US contingent on the applicant’s creation and or preservation of
market over the next couple of years. American jobs.

Renewables finished 2009 with a total value of US$28.3 billion The rise of non-western wind turbine manufacturers - particularly
down 24 per cent from US$37.3 billion noted at the end of 2008. Chinese ones - is probably a main reason behind efforts in the US
Data projections suggest 2010 may match or even cap the to extend “buy American” legislation to the wind turbine sector,
performance of 2009, given that following global financial crisis, although such local-content rules do not appear to be imminent.
stimulus packages of a number of governments include renewable Paradoxically, it could harm those US firms that have so far banked
energy initiatives. on cost advantages inherent in manufacturing in low-cost China.

Overall, four US projects featured among the top ten deals to By making the award of grants discretionary, the Schumer
reach financial close. However, Portugal’s Eneop 2 Wind Portfolio Proposal raises serious concerns for potential financing parties and
480MW Phase I (valued at US$1.2 billion), Australia 206MW Collgar developers. As a result, there has been a strong lobbying effort
Wind Farm (US$680 million) and Termosolar Astexsol 2 in Spain against it. If adopted, it is uncertain how this would impact the
(US$523 million) were the top three projects by valuation to reach development and cost effectiveness of US renewable energy
financial close. projects.

Elsewhere in the table, a key Latin American project to reach In summation, a US-China push could herald an exciting year
financial close was Mexico’s Eurus 250MV wind farm. However, the ahead for the renewables projects. If India belatedly closes some
continent clearly has a lot of catching up to do and its largest of its projects rumoured to be in the pipeline, 2010 could be a
market – Brazil’s penchant for large-scale hydroelectric power is bumper year yet for the sector.
certainly not helping.
In terms of the type of renewable energy projects, a break-up of
In a complete contrast, the North American landscape has figures suggests that wind power dominates the market; as it has
been dominated over the last couple of years by the US market, been consistently doing since IJ commissioned the present data
especially for wind farm projects. Of the 36 North American series in 2005. In H1 2010, wind power projects accounted for 29.2
renewables projects to reach financial close in 2009, 31 were in per cent of all renewables projects reaching financial close up
the USA valued at US$6.91 billion. Of these projects 24 were wind from 19.6 per cent in H1 2009.
farm initiatives. At the time of writing this report, the USA is deemed
the market leader in wind power according to the Global Wind Next in line were PV solar energy (7.6 per cent) and Thermal solar (4.2
Energy Council. In 2009, along with China, it added the most wind per cent) for the year to end-June. Interestingly, the gap between
capacity thereby overtaking Germany. At end-2009, the total US conventional power and renewable energy project finance
Wind Power capacity stood at 34,863 MW, according to the US market share also appears to be narrowing though the former still
Department of Energy’s National Renewable Energy Laboratory leads. During H109 conventional power projects accounted for 64
(NREL). per cent of the market against 36 per cent for renewables. This
narrowed over H1 2010 to 55.1 per cent for conventional power
Altogether, the USA accounted for 22.3 per cent of total wind versus 44.9 per cent for renewable power.
power capacity that existed globally in 2009. Chinese investment
may alter this dynamic over the coming years, but US wind energy
is likely to hold its own for the remainder of 2010 at the very least. Leading Players – H1 2010
The US government has been furthering wind power by awarding
federal cash grants in lieu of the 30 per cent investment tax credit • BBVA (MLA)
(ITC), under the American Recovery and Reinvestment Act (2009), • Deloitte (Financial Adviser)
to projects wherein construction begins on or before December • Garrigues (Legal Adviser)
31, 2010 and those projects that are completed before specified • Garrad Hassan (Technical Adviser)
outside date(s) up and until January 1, 2013. • Acciona (Sponsor)

See renewable energy nreakdown graphic on page 16.

15 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review

16 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review Transport
Top 10 by Value
Name Value (US$m) Financial Close Location
Lyndon B Johnson Freeway Managed Lanes P3 2,661 22/06/2010 United States

Portugal High Speed Rail Poceirao to Caia PPP 2,142 07/05/2010 Portugal

Moscow-St Petersburg Toll Road PPP - Section 1 2,133 26/04/2010 Russia

Pinhal Interior Shadow Toll Road PPP 1,873 28/04/2010 Portugal

R3-R5 ‘Accesos de Madrid’ Radiale Refi PPP 1,124 28/04/2010 Spain

Peninsula Link PPP 781 05/02/2010 Australia

Autopistas del Sol - Malaga - Guadiaro Refinancing 666 19/04/2010 Spain

New Brunswick Route 1 Gateway P3 569 08/04/2010 Canada

Eje Diagonal Shadow Toll Road PPP 561 18/03/2010 Spain

Birmingham Highways PFI 479 06/05/2010 United Kingdom

The transport sector, vital though it may be, often bears the brunt It will be the first high speed rail project in Latin America. However,
of investment constriction when governments are looking to save the drive to complete the TAV project in shortest possible time-
or reprioritise. In the aftermath of the global financial crisis this is frame is questionable. Officially, the tendering process should have
exactly what has transpired. Data suggests that over H1 2010 a been completed early in 2010 and the contract signed by June
total of 25 transactions reached financial close valued at US$17.49 2010.
billion versus 41 transactions valued at US$24.63 billion recorded
over H109. This represents a 29 per cent drop in valuation terms Construction work is scheduled to begin in the second half of 2010
between the corresponding half-yearly assessment periods of 2009 with completion slated for 2014 in time for the soccer World Cup.
and 2010. However, none of the target dates have been met so far. Local
media reports suggest the plan is now to have the project ready
Furthermore, the valuation and number of transactions are in time for Rio de Janeiro’s hosting of the Olympic Games in 2016.
nowhere near the levels of H108 when 61 transactions valued at Elsewhere in Latin America, Peru’s Red Vial n°4 Concession PPP
US$34.2 billion were recorded. However, that was before the credit valued at US$335 million was the leading transport project to reach
constriction really gripped the money markets. Overall, the transport financial close.
sector ended 2009 with a total value of US$37 billion – down 35 per
cent from US$56.7 billion recorded in 2008. It is doubtful that end- Away from Latin America, Australia’s Peninsula Link PPP which
2010 would see similar levels of project finance. That said, some reached financial close in February valued at US$781 million is
big-ticket transport projects are in the pipeline. another noteworthy project. A key project in the Indian subcontinent
which closed in March was India’s NH3/Ma1 Highway PPP valued
The biggest transport deal to real financial close globally was the US$314 million.
Lyndon B Johnson Freeway Managed Lanes P3 valued at US$2.66
billion. However, only one other North American project made to Altogether, a number of ambitious projects are in the pipeline
the top ten projects list by valuation – Canada’s New Brunswick across Asia Pacific and the Indian subcontinent but doubts persist
Route 1 Gateway P3 valued at US$569 million. The bulk of the about the ability of project financiers to ensure that these reach
activity was noted in Europe with Portugal, Spain, Russia and UK financial close. On a related note, project delays and suspensions
leading the way. Among these, the projects which standout are are likely to impact activity in Western and Eastern Europe as well.
Portugal’s High Speed Rail Poceirao to Caia PPP valued at US$2.14
billion and Russia’s Moscow-St Petersburg Toll Road PPP Section I
valued at US$2.13 billion. Leading Players – H1 2010

Looking ahead, while sector investment in Europe is uncertain for • Espirito Santo Investment (MLA)
2010, Latin America led by Brazil could emerge as a growth driver. • KPMG (Financial Adviser)
In 2009, Brazil closed the biggest deal in the region by valuation • Clifford Chance (Legal Adviser)
– the US$1.27 billion Rodoanel Oeste (Western Section). Among its • Arup (Technical Adviser)
current noteworthy initiatives is the Trem de Alta Velocidade (TAV) • Iridium (Sponsor)
Rio de Janeiro to São Paulo High Speed rail link. BNDES, is expected
to provide 60 per cent of the finance. A break-up of published
figures suggests the agency is planning to provide BRL21 billion of
the total BRL34.6 billion for the construction of 518 km of tracks and

The Brazilian government is likely to invest BRL2.2 billion (US$1.2

billion) in claiming land and BRL1 billion (US$535 million) for the
creation of the High Speed Train Company (ETAV), to be used
for learning and incorporating the TAV technology. According to
BNDES, the government is also likely to waive BRL6 billion (US$3.2
billion) in taxes, contingent upon further negotiations, which are
presently ongoing.

See transport subsector graphic on page 19.

17 © Copyright 2010 Emap Limited

Social Infrastructure Global Infrastructure
Finance Review

Top 10 by Value
Name Value (US$m) Financial Close Location
Flemish Schools PPP 2,831 10/06/2010 Belgium

New Karolinska Solna University Hospital PPP 1,366 30/06/2010 Sweden

Southmead Hospital PFI 1,049 25/02/2010 United Kingdom

Turin Waste-to-Energy Facility refinancing 582 22/01/2010 Italy

CRCHUM Montreal University Hospital Research Centre 431 21/05/2010 Canada

Thiene-Schio Hospital PPP 262 29/04/2010 Italy

Ararat Prison PPP 223 27/05/2010 Australia

Royal Canadian Mounted Police Regional HQ PPP 219 22/04/2010 Canada

Zoo de Vincennes PPP 194 24/02/2010 France

Adult Mater Hospital Extension PPP 184 23/03/2010 Ireland

Social infrastructure was among the few sectors to witness a rise H108 to nil in H1 2010. Government and fire & rescue segments also
in investment over H1 2010, given that both before and after the recorded nil values. Elsewhere, the data series reveals that social
credit crisis, governments poured resources into social projects as housing projects have also taken a knock falling from a transaction
part of their respective economic stimulus packages. During the volume of US$1.31 billion in H109 to a mere US$58.1 million during
year to end-June, 40 social infrastructure deals valued at US$9.74 H1 2010. The total number of transactions also fell from three to one
billion were recorded. This marked a 66 per cent rise over H109 over the stated period.
when 39 deals worth US$5.87 billion were noted.
Overall, Belgium’s Flemish Schools PPP (valued at US$2.83 billion),
Current indications are that the social infrastructure investment Sweden’s New Karolinska Solna University Hospital PPP (US$1.37
volume in 2010 will top the figure of US$12.5 billion noted at the billion) and UK’s Southmead Hospital PFI (US$1.05 billion) were the
end of 2009, though surpassing the 2008 investment volume of three leading projects by valuation. Beyond Western Europe, two
US$22.4 billion will be harder. Canadian projects and an Australian initiative also find their place
in the table.
A further break-up of figures within social infrastructure investment
suggests that akin to the last two previous half-yearly assessment Looking ahead, the UK’s prominence in the sector is likely to diminish
periods, healthcare and education lead the way. Over H1 2010, following its new Conservative & Liberal Democrat coalition
healthcare saw 14 deals to the tune of US$4.04 billion reach government’s announcement of spending cuts. Most notably
financial close up from US$1.67 billion with the same number of among these is the cancellation of the BSF programme. Impact of
transactions in H109. Concurrently, education saw 14 deals worth the British cuts would only be assessed in concrete terms once the
US$3.87 billion – up from H109 figures of US$1.11 billion and 13 government’s public spending review is published in October.
transactions – as several UK projects pushed ahead to secure
funding before the new government acted on BSF.
Leading Players – H1 2010
Western Europe, a global leader in social infrastructure public
private partnerships, lead the way – in line with IJ analysts’ • Barclays (MLA)
expectations – with the region accounting for seven of the top ten • Grant Thornton (Financial Adviser)
projects in the sector. • Addleshaw Goddard (Legal Adviser)
• Mott MacDonald (Technical Adviser)
Another noteworthy development is the decline in global defence • Carillion (Sponsor)
projects, plummeting from four deals worth US$5.55 billion during

See also social infrastructure subsector graphic on page 19.

18 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review

19 © Copyright 2010 Emap Limited

Water & Sewage Global Infrastructure
Finance Review

Top 4 by Value
Name Value (US$m) Financial Close Location
New Cairo Wastewater PPP 109 03/02/2010 Egypt

Aguas de Cascais PPP 108 31/03/2010 Portugal

Indaqua Feira Concession PPP Refinancing 86 10/02/2010 Portugal

Post Trasvase Jucar - Vinalopo Pipeline 61 08/03/2010 Spain

The overall trend in the Water & Sewage sector during H1 2010 Leading Players – H1 2010
has been one of decline in investment levels. This is reflected both
in the transaction volumes as well as the number of transactions • Millennium BCP / Grupo Santander (MLA)
reaching financial close. Over the year to June-end, only four • F9 Consulting / Grupo Santander (Financial Adviser)
water & sewage projects reached financial close, a marked fall • DLA Piper / Gide Loyrette Nouel / Baker & McKenzie /
from the ten projects noted during H109, 12 for H108 and 18 for Zulficar & Partners (Legal Adviser)
H107. • Orascom Construction Industries / Aqualia (Sponsor)

Transaction volume for the first half of 2010 came in at US$0.36

billion well below the US$1.07 billion noted over H109. This signifies
a year over year decline of 66 per cent. The sector ended 2009
and 2008 with total volumes of US$5.9 billion and US$3.2 billion
respectively. It is difficult to fathom how the sector could replicate
volumes near enough these levels for 2010.

Spain closed five water transactions in 2009 worth US$366 billion,

and the market makes its mark in H1 2010 data as well with the
Post Trasvase Jucar – Vinalopo Pipeline valued at US$61 million
reaching financial close in March. Investment activity has also
been recorded widely across the Middle East – some of which
may reach financial close over the remainder of 2010.

Overall, the three leading projects in the sector were Egypt’s New
Cairo Wastewater PPP valued at US$109 million and Portugal’s
Aguas de Cascais PPP and Indaqua Feira Concession PPP
Refinancing initiative valued at US$108 billion and US$86 billion

Top 4 by Value
Name Value (US$m) Financial Close Location
Helios Towers Nigeria Expansion 150 04/02/2010 Nigeria

MTS Mobile Networks Financing 97 29/03/2010 Russia

Kalimantan Fibre Optic Financing 60 26/03/2010 Indonesia

Hautes-Pyrenees High-Speed Network PPP 49 18/02/2010 France

Telecoms totalled a mere US$0.36 billion during H1 2010, down from Leading Players – H1 2010
US$2.61 billion over H109. However, valuation volumes aside, the
number of deals have gradually risen in single figures from a single • Crédit Agricole Group (MLA)
deal during H108 to 3 and 4 over H109 and H1 2010 respectively. • Rothschild / RBC Capital Markets / Grant Thornton
(Financial Adviser)
The biggest deal by transaction volume came from Nigeria where • Allen & Overy (Legal Adviser)
the Helois Towers Expansion project reached financial close valued • Atkins / Cistra (Technical Adviser)
at US$150 million. Russia’s MTS mobile networks financing (US$97 • AXA Private Equity / Vinci / SFR (Sponsor)
billion) and Indonesia’s Kalimantan Fibre Optic financing (US$60
billion) were other noteworthy telecoms deals to reach financial

Overall, the sector’s performance has been disappointing,

especially given the fact that telecoms finished 2009 with a total
value of US$6.8 billion, an annualised appreciation of 39 per cent
over 2008 when a total value of US$4.9 billion was recorded. Looking
ahead to H2 2010, there remains a very real possibility that rollouts
of broadband projects in Asia Pacific and Russia may improve
transaction volumes and number of deals, thereby recuperating
the sector’s performance as a whole.

20 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review Mining & Metals
Top 5 by Value
Name Value (US$m) Financial Close Location
Pueblo Viejo Mine 1,040 30/04/2010 Dominican Republic

Lumwana Copper Mining Refinancing 400 09/03/2010 Zambia

Boguchansky Bridge Loan Facility Refinancing 260 15/03/2010 Russia

Kooragang Island terminal Expension 232 14/05/2010 Australia

Mineral Park Mine Refinancing 130 26/04/2010 United States

The mining sector’s downslide in valuation terms continues well So the outlook for Australia and by default for the wider Asia
into the year coming in at US$2.36 billion for H1 2010 down from Pacific region remains mixed. IJ expects the market to stabilise
US$4.34 billion noted in H109; a depreciation of 46 per cent on following the Australian general election outcome as it would end
an annualised basis. IJ’s latest data follows on from 2008 when uncertainty at the very least. However, growth is not expected until
sector valuation stood at US$14.9 billion for the whole year which at least until H1 2012.
subsequently fell to US$6.8 billion for 2009; an annualised fall of 54
per cent. Financiers’ preference for smaller deals as opposed to capital
intensive ones, which the mining sector demands, also knocked
The number of deals in the sector has also been steadily falling from investment. In terms of specific projects, Dominican Republic’s
23 in H108 to a mere 9 in H1 2010. The relative drop in commodities Pueblo Viejo Mine (valued at US$1.04 billion), Zambia’s Lumwana
prices has contributed to the decline in investment in the sector Copper Mining Refinancing (US$400 million) and Boguchansky
as activity in Asia Pacific and the Indian subcontinent contracted Bridge Loan Facility Refinancing (US$260 million) were the three
and knocked the sector as a whole. Allied factors also contributed leading deals by valuation to reach financial close.
to the lack of investment, especially in the case of Australia.

Former Australian Prime Minister Kevin Rudd’s Resource Super Profits Leading Players – H1 2010
Tax (RSPT) proposal levied a 40 per cent tax on mining companies.
Following his ejection from office, his successor Julia Gillard has • Société Générale (MLA)
proposed a lower Mineral Resource Rent Tax (MRRT) pegged at 30 • Royal Bank of Scotland / Rothschild (Financial Adviser)
per cent, ahead of the country’s general election scheduled for 21 • Clifford Chance (Legal Adviser)
August. The new proposals also indicate that smaller iron ore and • Lahmeyer International (Technical Adviser)
coal companies, with annual profits below Aus$50 million (US$41.9 • Barrick Gold Corporation (Sponsor)
million), will not be required to pay the new tax. However, both the
intricacies of the proposal as well as the outcome of the Australian
election are far from certain.

21 © Copyright 2010 Emap Limited

League Tables
Global Infrastructure
Finance Review

Project Finance - H1 2010

Global MLA (Top 10 by Underwritten Value)

Rank Company Total US$ m Transactions Market Share (%)

1 BNP Paribas 5,372.41 28 9.77
2 Crédit Agricole Group 3,864.05 34 7.02
3 Société Générale 3,640.50 28 6.62
4 Grupo Santander 1,934.21 28 3.52
5 SMBC 1,715.98 21 3.12
6 Caja Madrid 1,686.73 19 3.07
7 Bank of Tokyo-Mitsubishi UFJ 1,549.15 19 2.82
8 Intesa San Paolo 1,458.62 8 2.65
9 UniCredit Group 1,345.30 16 2.45
10 BBVA 1,168.56 30 2.12

Global Legal Adviser (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 Allen & Overy 30,765.84 18 9.76
2 Latham & Watkins 26,744.44 15 8.49
3 Allens Arthur Robinson 19,942.18 7 6.33
4 Sullivan & Cromwell 18,200.00 1 5.78
= Blake Dawson 18,200.00 1 5.78
6 Clifford Chance 16,729.44 22 5.31
7 White & Case 13,810.95 12 4.38
8 Linklaters 11,231.97 15 3.56
9 Freshfields 7,668.96 6 2.43
10 Milbank 7,199.08 9 2.28

Global Financial Adviser (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 Société Générale 28,026.12 4 18.74
2 Royal Bank of Scotland 9,582.17 4 6.41
3 KPMG 8,806.91 15 5.89
4 Commerzbank 8,721.60 2 5.83
5 PwC 8,455.79 13 5.65
6 UniCredit Group 7,631.45 1 5.10
7 Grant Thornton 4,870.77 10 3.26
8 Caixa Geral de Depósitos 4,379.15 3 2.93
9 RBC Capital Markets 4,244.19 5 2.84
10 Espirito Santo Investment 3,805.56 4 2.54

IJ’s project finance League Tables show market activity to the best of
our knowledge at the time of publication. For a copy of our criteria and
methodology please contact IJ staff by email at leaguetables@ijonline.com.

22 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review

Global Sponsor (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 ExxonMobil 6,042.40 1 6.16
2 Oil Search 5,278.00 1 5.38
3 Gazprom 3,892.04 1 3.97
Independent Public Business
4 3,021.20 1 3.08
5 Exeltium 2,684.92 1 2.74
6 Santos 2,457.00 1 2.50
7 Vinci 1,931.84 3 1.97
8 Cintra 1,916.57 2 1.95
9 Perenco 1,721.00 1 1.75
10 Sibur Holding 1,490.00 1 1.52

Global Technical Adviser (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 Stone & Webster 7,631.45 1 14.80
2 Arup 7,364.69 3 14.28
3 Atkins 4,178.06 5 8.10
4 Mott MacDonald 3,695.77 8 7.17
5 Fichtner 2,689.83 4 5.22
6 Bridgefarmer & Associates 2,661.00 1 5.16
= LBJ Mobility Coordinator 2,661.00 1 5.16
8 Garrad Hassan 2,570.38 8 4.98
9 Lenpromstroyproekt 2,132.84 1 4.14
10 Cistra 1,633.72 1 3.17

23 © Copyright 2010 Emap Limited