ppp financing - workshop 02 (19 april)
DESCRIPTION
PPP financing - Workshop 02 2012 PPP ClubTRANSCRIPT
PPP FinancingRMITApril 2012
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Speaker
Lindel JamesAssociate Director, Infrastructure AdvisoryTel: +61 3 9288 8551Fax: +61 3 8650 7705Email: [email protected]
Lindel James is an Associate Director with Ernst & Young’s Infrastructure Advisory Group in
Melbourne and has over ten years experience working in both Government and the private sector
around infrastructure procurement, financial management and budgetary policy. Lindel joined Ernst & Young in 2009
from
the origination team in Plenary Group, a boutique PPP infrastructure investment house ,and brings a well developed
understanding of PPPs from both the public sector and bidder perspectives.
Lindel’s PPP experience includes advising Government clients on alternative financing structures for PPPs, the $1 billion
Victorian Comprehensive Cancer Centre that reached financial close in December 2011, the new Royal Adelaide
Hospital Project ($2.5bn 2011), Partnerships Victoria in Schools and other projects. Her private sector PPP
experience includes bids for the Bendigo Hospital PPP, AgriBIO, new Royal Children’s Hospital, Royal North Shore
Hospital redevelopment and Canadian PPP Projects.
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No
but...Finance is the glue
Valuefor Money
Is FINANCE the most important part of a PPP?
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What is Value for Money?
Risk
Quality
Time CostValue
forMoney
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Quality & Cost
► Whole of Life
► Innovation
Royal Children’s Hospital
New Royal Adelaide Hospital
Partnerships Victoria in Schools
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Cost & Risk
► Fixed Price
► No Service = No $$$
Federation Square (non-PPP)
Desalination Plant
AgriBIO
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Time & Cost
► Time is Money!! Eastlink
Desalination Plant Royal North Shore Hospital
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Risk & Time
► Fixed Time
► Incentive to deliver
Desalination Plant
Partnerships Victoria in Schools
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Who provides the glue?
► Debt
► Banks
► Bonds
► Superannuation Funds
► Equity
► Superannuation Funds
► Infrastructure Investment Funds
► Builder or Operator
► Stockmarket
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What does the financing process look like?
► Expression of Interest
► Initial consortium formation
► Indicative letters of support from debt financiers and third party equity
► Request for Proposal
► Due diligence
► Constructor & FM Provider presentations
► Briefings on the technical solution/design etc
► Technical due diligence reports
► Negotiation of risk allocation
► Security and bank guarantees
► Other protections such as reserve accounts
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What does the financing process look like?
► Request for Proposal continued
► Credit Committee approvals
► Pricing Committee approvals
► Commitment Letter
► Financial Close
► Finalisation of risk allocation and contracts
► Updated due diligence reports
► Updated credit committee approvals if necessary
► Set interest rates
► Fund
12
How much does this glue cost?
Financing terms – debt margins on recent Australian PPPs
Source: Ernst & Young (2011)
Pre-GFC
Post-GFC
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Recap
► Is Finance the most important element?
► No
► Is Finance a critical component of a PPPs success?
► Absolutely