Project Finance for PPP Projects

An in-depth, 4-day training programme on project structuring and financing, bringing the world's best PPP practices together in a case-driven, highly interactive format.


This intensive 4-day Project Finance for PPP Projects financial training course will enable you to:

  • Examine international best practice from over 25 key case studies
  • Understand PPP sectors and project types
  • Identify considerations for the tender / bidding process
  • Evaluate risk and implement risk allocation structures
  • Apply quantitative analysis techniques to PPP projects
  • Manage political risk in international projects
  • Analyse financing structures and key ratios
  • Explore insurance considerations and the 'owner-controlled insurance programme'

Course objectives

Public Private Partnerships (PPPs) have become established as a proven procurement method for financing and delivering public infrastructure projects. By mid-2004, there totalled $115 billion of projects in development in Europe alone. Local funding has always been accessed for these projects, but the restructuring of the banking market, driven by Basel II and tougher EU accounting practices will open up the market to new opportunities for international providers.
 
The Project Finance for PPP Projects course delivers an in-depth training programme on project structuring and financing, by bringing the world's best PPP practices together in a case-driven, highly interactive format. The comprehensive range of case studies will provide a practical backdrop to the financing analysis of each type of PPP: Supply Contracts, Service Contracts, Management Contracts, Leasing, BOO, BOOT and Privatisation, and covers sectors including roads, tollways, hospitals, schools, bridges and prisons. Team assignments provide hands-on practice to ensure delegates develop the skills required to source the best funding and structure.

Featured case study

Detailed assessment of insurance levels required, through worksheets and risk matrices UK PFI Hospital 'Brownfield' hospital site, where the contract includes medical equipment and phased project hand-over

UK PFI School

Mix of estate of new construction and refurbishment and includes interim services and Information Technology (IT) services

Who should attend?

  • Project Finance Executives
  • Project Analysts
  • Financial Advisors
  • Investment Analysts
  • Project Sponsors, Contractors and Bankers
  • Project Finance Lawyers
  • Privatisation Specialists
  • Government Agencies/Negotiators
DAY 1: Project Finance for PPP Projects
FIT OF PROJECT FINANCE TO THE PPP SPECTRUM OF 8
  • Privatisation
  • BOO
  • BOT
  • Leasing/Affermage
  • Management Contracts
  • Service Contracts
  • Supply Contracts · Cooperatives
 
PPP SECTORS AND PROJECT TYPES
  • Privatisation
  • BOO (and variants)
  • BOT (and variants)
  • Leasing/Affermage
  • Management Contracts
  • Service Contracts
  • Supply Contracts
  • Cooperatives
 
PPP SECTORS AND PROJECT TYPES
  • Transport Infrastructure
  • Social Infrastructure
  • Public/Military Infrastructure
  • Best Sectors
  • Which Trends are Current?
  • Difficult Deals
  • But Not Impossible
 
PPP PROCESSES AND STAGES/TIMING
  • Policy Formulation
  • International Comparisons
  • Processes
  • Competition Policy
  • Role of the Regulator
  • Unsolicited Projects
 
PPP INTERFACES
  • Grantor/ Government
  • Construction Contractor
  • Operator/ Facility Manager
  • Government/ Regulator
  • Purchaser/ User
  • Inputs Provider
  • Maintenance Company
 
Role of the Government PPP Unit
Does the One-Stop-Shop really work?
What policies and procedures need to be in place to make the PPP Unit work?
What is the interface of the PPP Unit with Local Authorities?
 
Case Studies:
PICKO-PIMAC/KDI, South Korea
Korea has set in place probably the most aggressive government co-spend among all the PPP programs. See which sectors and what programs are in mind.
 
Philippines BOT Law
See why this simple Act spawned sufficient private-sector investment to
take the country from a chronic power supply deficit to a power-supply surplus in less than 10 years. The BOT conditions allow the government to repurchase the assets if not needed of if other plans/expansions emerge.
 
Partnerships Victoria
Although originally closely aligned to the UK PFI model, Partnerships Victoria is
the Australian leader, by far. What new policies and strategies have been developed especially in the social services arena?
 
Commence Team Assignments for Day 4
  • M2 Tollway (Extendable BOT), Australia
  • TelecomAsia (Exclusive BTO),Thailand
  • STAR (BOT with Government ‘Put’), Malaysia
  • Endeavour SCH (Credit-Enhanced PFI), UK
  • Road Management Consolidated (Credit-Enhanced DBFO), UK

    PPP TENDER/BIDDING
  • Outline Business Case
  • Risk Control
  • Value Management
  • Output Specifications
  • Standard Concession Terms and Conditions
  • Consortium Bidding Dynamics
  • Invitation to Qualify
  • The ABN Amro Model
  • Invitation to Tender
  • One/Two Envelopes?
  • Bid Evaluation Procedures
  • Risk Tradeoffs/Matrix
  • Preferred Bidder(s)
  • Reserve Bidder(s)
  • Project Finance Offer
  • Concession Finalisation
  • Project Finance Close
 
Case Studies: Indian Highways
Learn why this is the simplest output specification yet anywhere in the world How
does the Annuity Payment work? Tolled vs Untolled?
 
DAY 2: Project Finance for PPP Projects
QUANTITATIVE ANALYSIS FOR PPP PROJECTS

  • The Key Debt Ratios
  • Trends in the Marketplace
  • The Pitfalls of the PV Ratios
  • The Bizarre Behaviour of CPI-linked Calculations
  • Value-for-Money/Public Sector Comparator#
  • Recommended Procedures
  • Sample Calculations
  • Cost: Benefit Analysis
  • Economic Rate of Return
  • Net Project Cost
  • The Investor’s Measures
  • IRR
  • NPV
  • Cashflow Forecasting
  • Key Input Assumptions
  • Usage of Financial Models
  • Simulation approaches
  • Simulation Limitations
  • Distributions
  • How to Choose Sensitivities
  • Key Ratio Targets
  • Contrast to Sponsors' IRR, NPV, Valuation Analyses
  • Calculate Liquidated Damages / Overrun / Retention Requirements
  • Integration with the Pre-Completion Support
 
RISKS AND STRUCTURING
  • The 6 Risk Systems
  • The 16 Risk Categories
  • The 59 Means of Risk Identification
  • Risk Negotiation/Allocation
  • Risk Matrices
  • Analysis
  • Documentation
  • Insurances
  • The 174 Risk Structures
  • Risk Trade-offs/Trade-ons
 
FUNDING PPP PROJECTS
  • Sources
  • Debt
  • Local Currency
  • Cross-Border
  • Mezzanine
  • Standby/Contingent
  • Equity
  • Preference capital
  • Convertibles
  • IPOs/Floats for PPP Project Companies
  • Government
  • Credit Guarantees
  • Buy-Back/Put Options
  • Renationalisation Rights
  • Leasing/Leveraged Leasing
  • Monoline Insurers/Credit Wraps
 
Case Studies: Noida Bridge, India
India’s first BOT toll bridge brought out some world-leading financial structures
from IL&FS and IDFC. It also mobilized India’s 10(23)G tax concession in three
ways to the benefit of investors and financiers .See the full risk profile
analysed from Richard Tinsley’s latest book, Project Finance in Asia: Practical
Case Studies, published by Euromoney Books in 2002.
 
N3 Tollway, South Africa
This Buy-Build-Maintain-Transfer deal has an in-built springing capex requirement for
a tunnel in year 10-14 of the concession, depending on the traffic performance. The
government’s debt was repaid by the concessionaire. Why were the governments’ and the banks’ traffic studies so poorly conceived and what solution was brought to bear?
 
RATINGS FOR PPP PROJECT FINANCINGS
  • How to get one from Moodys / Standard & Poors/Fitch
  • The 6 Key Ratings Factors
  • Bond Finance Ratios vs Banks
  • Why Risk isn’t Priced in A Project Financing
  • Impact on PPP Refinancings
  • Credit Derivatives
 
Case Studies: Autopistas del Sol (OMT), Argentina
Even with the threat of currency mismatches, the expected traffic easily
made up for the devaluation difference – or did it? This is one of the best traffic
outcomes of all tollroad bond issues.
 
Greenwich Hospital, UK
This landmark CPI indexed-linked issue set the pace for UK PFI hospital
financings. How were the facilitiesmanagement aspects handled?
 
Subic Bay Power (144A), Philippines
The genius of this 15-year power BOT notes issue is that it is unrated; there is
no political-risk coverage; and there is no residual/tail. Learn how the notes/bond investors accepted the deal without a rating in a country rescheduling its sovereign debt.
 
DAY 3: Project Finance for PPP Projects
INSURANCES/RISK MATRIX
  • Schools
  • Hospitals
 
Owner-Controlled Insurance Program (OCIP)
  • Delay-in-Startup
  • Hybrid Force Majeure
 
Case Studies: UK PFI Hospital
‘Brownfield’ hospital site. PFI contract includes medical equipment and phased project hand-over.
 
UK PFI School
Mix of estate of new construction and refurbishment and includes interim
services and Information Technology(“IT”) services. JLT will guide the course participants through the detailed assessment of and
levels of insurances required for these cases through worksheets and risk matrices..
 
DOCUMENTATION CONTRACTUAL ARCHITECTURE
  • Concession Agreements
  • Material Adverse Events Matrix
  • Equity
  • Agree to Negotiate
  • Extend Concession
  • Adjust Tariffs
  • Staunch IRR
  • Special Purpose Vehicles (the 6 types)
  • Operations/Management (O&M) Contracts
  • Bonus/Penalties
  • LDs
  • Turnkey Construction Contract
  • Delayed Completion and Systems
  • Performance Insurances
  • Facilities Management Contracts
  • Indirect/Tripartite and Support Agreements
  • Government Guarantees/Puts
  • Standard PPP Documentation
  • UK
  • South Africa
 
Case Studies: Penang Bridge (OMT)Malaysia
In this, the fifth-longest bridge in the world, the government specifically retains
the right to re-nationalise the bridge as part of its planning for a second crossing
later in the concession life. The concession price included the existing debt level which acts as a compensation cap for this re-nationalisation. The toll also has a split above a threshold level with the concessionaire. This bridge was funded by Islamic bonds.
 
Manguang Prison, South Africa
The project received its approval based on the comparisons with other (overcrowded) prisons. The prison is so successful, that prisoners re-offend so that they don’t get transferred there
 
Mildura Base Hospital
Some 230 quality criteria were imposed on this elaborate PPP concession, which included the provision of clinical services. Why was the preferred consortium ‘fired’ during the last-minute negotiations.
 
FUNDING DOCUMENTATION

  • Loan Agreements
  • Joint Venture/Shareholder Agreement
  • Security Documentation
  • Assignment of Contracts/Insurances
  • Offshore Proceeds Account
  • Swaps
  • Securitisation
  • Information Memorandum
 
Case Study: Laem Chabang Port (BOMT), Thailand
The government attracted the latest technologies to an existing port by way of the first BOMT concession which equipped the port for Post-Panamax container traffic. How important was the shipping Alliance to the credit assessment? How were FX changes handled during the Asian currency crisis? What is the political resolve for the other government supports?
 
INDEPENDENT REVIEWS
  • How to Scope the Review
  • Fit to Credit Approval
  • The “Bankable” Feasibility Study
 
Case Studies: Standard & Poors
If any study can be labelled ‘landmark’ then this study of 32 tollroads to as certain the start-up traffic and ramp-up levels is the most significant in the history of toll-road financings. Even better, the results are consistent with an earlier study of 14 toll-roads by JPMorgan.
 
ROLE OF THE ADVISOR(S)
  • When to involve advisors
  • How to keep the costs down
  • Who are the advisers?
  • Independent Engineer (?)
  • Traffic Studies/Market Risk
  • Legal reviews
  • Opinions
  • Enforcement
  • Due Diligence
  • Tax
  • Audit/Accounting
  • Environmental
  • Construction Cost Audit
  • Technical
  • Value Management
  • Value Engineering
  • Value Planning
  • Value review/Business Process Improvement
 
Case Studies: Highway 407, Canada
How did Value Engineering contribute so much to this 2-step program? What tactics were adopted by the Canadian Provincial authority to maximise their return/value?
 
GSZ East Superhighway, China
This project would have failed without the real-estate component. How was the significant overrun handled? Under what circumstances could the Sponsor refinance its equity by way of a 144A subordinated bond? A59 Tollway, Netherlands This Design-Build-Finance- maintain (DBFM) looks for a 14% savings over the Public Sector Comparator. Continued maintenance access has been built in as extras during construction.
 
WHY PROJECTS GO WRONG?
  • Will we ever learn (?):
 
Case Studies: Dulles Greenway
How could the first privately-funded tollroad transaction in the USA default right away? Surely the traffic studies and marketing skills of the USA would make this road attractive to the car-adoring US drivership?
 
Airport CityLink
Put in place after an extensive bidding contest (yet just in time for the state election) this heavy-rail link foundered except for the two weeks of the Sydney Olympics. The project never worked even though the Public Participation was unusually high at 73% of total project costs.
 
DAY 4: Project Finance for PPP Projects
Team Presentations
  • M2 Tollway, Australia
  • TelecomAsia, Thailand
  • STAR, Malaysia
  • Endeavour SCH, UK
  • Road Management Consolidated, UK
 
INTERNATIONAL PROJECTS – POLITICAL RISK
Export Credit Agencies (“ECA”)/Bilateral Agencies
  • Tactics for approaching the ECAs
 
Multilateral Agencies
  • World Bank
  • Multilateral Investment Guarantee Agency(MIGA)
  • International Finance Corp (IFC)
  • Inter-American Development Bank (IADB)
  • African Development Bank (AfDB)
  • European Bank for Reconstruction & Development (EBRD)
  • Asian Development Bank (ADB)
  • European Investment Bank (EIB)
  • How to Approach the Multilaterals
  • IFC “B” and “C” Loans
  • World Bank Partial Risk/Credit Facilities
  • EBRD Parallel/Joint Financings
 
Case Studies: Maynilad Water, Philippines
This Operating Concession was won at a bid price half of the next bidder.
However, the FX component of the financing could not be passed through to the Concessioning Authority, despite the political risk cover via an ADB CFS Loan,
Coface-guaranteed, and EIB loans. What happens when the Non-Revenue Water estimate is incorrect?
 
Chengdu No. 6 Water (Tolling), China
EIB’s assumption of Political Risk had to be meshed with ADB’s Preferred-Creditor
status. This is the first Chinese municipality risk taken on in a PPP Project Financing.
 
Other Political Risk Cover Structures
  • Captive Insurers
  • Political Risk Insurances
  • Offshore Proceeds Accounts
 
Development Finance Agency PPP
  • Social/Environmental Mandates
  • Sector/Legislative Reform
  • Regulations
  • Competition
  • Regulation/Governance
 
New Horizons for PPP Projects and Funding Sources
  • Specialist PPP Funds
  • “Green” funds
  • Development Funders
  • Emerging-Market Funds
  • Tax structures
  • Infrastructure Funds
  • Capital Markets
  • Credit Derivatives

Course ends at approximately 16.00 hours