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EBRD ANCE SEMINAR POLAND

EBRD ANCE SEMINAR POLAND. Jolanta Gabriel Senior Banker EBRD Warsaw Resident Office. What is the EBRD?. Established in 1991 AAA-rated IFI Operates in 29 countries from central Europe to central Asia 2,596 signed projects (353 in 2007) €36. 9 bln commitments

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EBRD ANCE SEMINAR POLAND

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  1. EBRDANCE SEMINAR POLAND Jolanta Gabriel Senior Banker EBRD Warsaw Resident Office

  2. What is the EBRD? • Established in 1991 • AAA-rated IFI • Operates in 29 countries from central Europe to central Asia • 2,596 signed projects (353 in 2007) • €36.9 bln commitments • Attracted co-investors for €80.5 bln • Total project value €117 bln Cumulative commitments €36.4 billion As of 31 December 2007

  3. A network of 36 offices in 29 countries

  4. EBRD: Foundations of Operation • Apply sound banking principles to every project • We do not subsidise • Advance the transition to a full market economy • Priority to promote competition and market expansion • Support, but not replace, private investors (additionality) • Catalyst for higher and riskier private sector involvement • Strong environmental mandate

  5. EBRD: Parameters of Financing • Can invest up to 35% of project cost • Typical minimum investment amount of €5mln (maximum approx. € 200 mln) • Flexible investment type: debt, mezzanine, equity. Local currency products • Minority institutional equity investor

  6. Operational priorities • Develop an efficient financial sector • Foster entrepreneurship • Promote infrastructure development • Assist enterprise restructuring • Support private equity investment • Promote a sound investment climate • Improve living conditions

  7. Financing instruments: • Equity • Common stock or preferred shares • Minority position only • Minimum investment €3 million Loans • Senior, subordinated, convertible • Maturities 5 - 15 years (grace periods available) • Denominated in major foreign or local currencies • Minimum size € 5 million (staggered pay-out possible) EBRD financing up to 35% of total project cost or long-term capitalisation

  8. EBRD is lender of record for the entire loan BUT Commits only to “A” loan Participation agreement transfers all risks to commercial lenders Banks benefit from EBRD’s Preferred Creditor Status (no rescheduling, no provisions) EBRD as lender of record in syndicated loans Borrower EBRD’s “B” loan EBRD’s “A” loan

  9. EBRD in Poland

  10. Poland - EBRD’s second largest market after Russia • As of end February 2008 EBRD financed 247 projects in the amount of €3.75 billion • The total value of the projects amounted to € 14.7 billion • Value of working assets as of end 2007 amounted to € 424 million

  11. EBRD Portfolio in Poland

  12. EBRD’s commitments in Poland by sector

  13. EBRD – Strategy in Poland • The role of EBRD is changing in the advanced economies, including Poland • EBRD aims at supporting cross-border transactions by Polish enterprises abroad • Focus on more risky financial instruments, including equity and mezzanine

  14. EBRD IN PROPERTY & TOURISM ALLCOUNTRIES OF OPERATIONS

  15. EBRD Involvement in the Property Sector • Total commitments as of end of March 2008: • €1.575 billion to 95 projects (including equity participation in funds) • €5.6 billion total project value • 2 projects per year refinanced by commercial banks • 1 project per year: equity exit to co-shareholders or other investors

  16. EBRD Portfolio – Geographic Distribution As of 31 March 2008

  17. Current Portfolio by type of financing As of 31 March 2008

  18. Property Commitments by sector As of 31 March 2008

  19. EBRD Real Estate • WHAT? • Office Buildings • Retail / Shopping centres • Warehouses • Mixed-use facilities • Hotels and resorts • Property Funds, Joint-Ventures • Residential • Healthcare • WITH WHOM? • Real Estate Developers • Real Estate Funds • Operators • WHICH FINANCIAL INSTRUMENTS? • Senior Debt • Mezzanine / Quasi-Equity • Equity

  20. What is on the Market with EBRD

  21. Typical EBRD financing to real estate • Financing tailored to the needs and risk nature of each project • Long-term (12 years+) • Local / foreign currency • Target gearing varies • Competitive pricing (but no soft loans) • Clear and fair distribution of risks and returns between different financing partners • Alignment of each financing feature (timing of disbursement / repayment, level of return, etc.) with the underlying risk nature • Financing predominantly for new developments; acquisition financing limited to date

  22. Project makes economic sense - no “soft loans” Substantial equity contributions by the project sponsor, incl. cash For commercial projects, need for private investment Usual need for B lender Limited refinancing EBRD: general project features

  23. Senior, subordinated debt, convertible Syndication Denominated in major currencies Tailor-made security package EBRD Financing Instruments Equity / Mezzanine Debt • Common stock or preferred shares • Minority positions only • Flexible exit strategies • Mezzanine loans

  24. Financing structures Classic Debt Project Financing EBRD Sponsor • A-loan (maximum 35% of total project costs) • Limited recourse to sponsor • Security on real estate • Majority ownership + property management control Debt / Equity Project Company Equity • May be divided into operating and real estate entities Minority equity partner(s) Co-financing Banks • Possible EBRD equity (a small % of debt amount) • B-lender or parallel lender Note: details are simplified for case study 24

  25. Financing structures Equity Financing Sponsor OrdinaryEquity / Portage Equity / Mezzanine Ordinary Equity Project Company EBRD Majority ownership and management control • EBRD exit through a put to Sponsor with pricing in a range depending on performance of the Company. • Alternative is full risk equity or secured debt after certain “Project Completion” financial targets are met by Project Company or mezzanine financing. • EBRD risk can be limited to specified (such as political risk) events with guarantee from Sponsor to apply in other cases. Minority partner Note: details are simplified for case study 25

  26. How to best attract EBRD financing? General principles, applicable to all sectors • Sound integrity • Transparency / early dialogue • Proven track record and market knowledge • Equity cash exposure • Clear business plan • Robust creditworthiness • Equity investors – key driver: ROE • Lenders - key driver: Project cash flows / DSCR

  27. Geographical shift from Central Europe towards: Balkans Russia - regional cities Ukraine Caucasus & Central Asia How is EBRD’s market evolving? • Increasing risk appetite from existing investors • Property funds moving to Ukraine, Russia and Central Asia • Product shift • From debt to equity in the more mature markets Fundamentals do not change but… …more projects with local clients

  28. Property and Tourism in Poland • Warsaw Financial Centre(prime office building in Warsaw, €21m senior debt) • Alfa Properties (office, commercial, €9.4m convertible debt) • GTC (IPO, equity, €17.1m) • Regional Property Funds: Europolis, Heitman, Accession, • Property Funds based on Polish law – Arka,BPH • Dom Development (residential, €30 m mezzanine)

  29. EBRD - Shift of Regional Focus

  30. MUNICIPAL AND ENVIRONMENTAL INFRASTRUCTURE – STATE OF PORTFOLIO • Loans and equity investments totalling about EUR 2.6 billion for projects of combined value of EUR 9.0 billion (of which about half in water sector) • About EUR 340 million in Poland • In 2007 EBRD provided €318 million to finance projects in municipal infrastructure. Over 90% was in the private sector or on a non-sovereign basis in the public sector • Presence in 17 countries and 125 municipalities

  31. EBRD Role in Municipal Infrastructure Sector • Sub-sectors: water supply, waste management, district heating, public transport, traffic management, solid waste • Financing through: • Municipal lending • Utility lending • PPPs • Privatisation • Multi-project and regional facilities • Co-financing with ISPA, Cohesion/Structural Funds • Commercial and IFI co-financing • Support in project structuring and preparation

  32. EBRD – Examples of projects Co-financed with pre- and post-accession EU funds in Poland • Co-financed with ISPA • Bydgoszcz Water/Sewerage Programme • Wroclaw Water Supply/Sewerage • Krakow Plaszow Waste Water Treatment Plant • Rybnik Waste Water Collection Programme • Gliwice Environmental Investment Programme • Co-financed with Cohesion and Structural Funds • Bydgoszcz Revenue Bond • Gdansk Infrastructure Company • Krakow District Heating • Gdansk Public Transport II • Bytom Municipal Services (under preparation) • Warsaw Czajka Waste Water Treatment Plant (under preparation)

  33. Thank you for your attention! Contacts: Jolanta Gabriel, Senior Banker, Warsaw Resident Office Tel: +48 22 520 5700 E-mail: gabrielj@waw.ebrd.com Business Development and project proposals Tel: +44 20 7338 7168 / fax: +44 20 7338 7380 www.ebrd.com

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