“INTESA SANPAOLO GROUP PPP FINANCING:
CASE STUDY“
Bulgaria – Italy Bilateral Cooperation Project
“Models and Strategies for Public-Private Partnership”
Rome, 5th February 2008
“Intesa San Paolo Group PPP Financing”
1. Public & Infrastructure Finance in
Intesa Sanpaolo
2. Public Private Partnership
3. Project Finance
4. Case studies
“Intesa San Paolo Group PPP Financing”
Intesa Sanpaolo Group - Overview
„ Intesa Sanpaolo is a new banking group resulting from the merger between Banca
Intesa and Sanpaolo IMI.
„ Intesa Sanpaolo is among the top banking groups in the euro zone, with a market
capitalisation exceeding 74 billion euro*, and the undisputed leader in Italy, with
an average market share of approximately 20% in all business areas (retail,
corporate and wealth management).
„ The Group has a selected presence in the countries of Central-Eastern Europe and in
the Mediterranean basin, with approximately 7 million customers in 12 countries.
„ Intesa Sanpaolo has the most widespread international network of all Italian banks:
with presence in 35 countries.
„ The Group is quoted both on the Milan Stock Exchange as well as the New York
Stock Exchange and is a member of DJ Eurostoxx 50 and FTSE EUROTOP 100.
* As at January 2, 2007
“Intesa San Paolo Group PPP Financing”
The merger between Sanpaolo IMI and Banca Intesa has also involved the Merger of
the two public finance specialized banks of the Group, Banca Intesa Infrastrutture e
Sviluppo and Banca OPI.
Banca Infrastrutture Innovazione e Sviluppo S.p.A. (BIIS) is the leading bank in Italy
and one of the leading European banks in public finance, exclusively dedicated to all
the players providing essential public services and involved in public spending.
BIIS will supply its clients, i.e. Central Governments, Public Entities, Local
Authorities, Public Utilities and General Contractors with a wide range of financial
products, both traditional and structured (short, medium and long term lending,
Project Financing, Securitization, Asset-Liabilities Management and Financial
Advisory.
“Intesa San Paolo Group PPP Financing”
Product Offering
ADVISORY
STRATEGIC &
INDUSTRIAL
ƒ Market entry
strategy
ƒ Regulation and
tariff advice
ƒ Commercial
negotiation
ƒ Price and value
analysis
ARRANGING
Review tender
documentation
Funding strategy
Senior debt
Leasing
Bonds
Equity
Security Structure
FINANCING
FINANCIAL
ƒ Financial
modelling
ƒ Contractual
Structures
ƒ Funding options
ƒ Risk sharing and
mitigation
Project financing
Bond financing
Stand alone
Acquisition /
Bridge financing
Bridge to capital
market financing
Term debt
Underwriting debt
DEAL CLOSURE
Documentation
Leading /
managing the
due diligence
process
Legal
Technical
Insurance
Modelling
Hedging
Syndication
“Intesa San Paolo Group PPP Financing”
Clients
PUBLIC
ADMINISTRATION
Our
customers
are based
both in Italy
and overseas
and include:
State
Government
Departments
Central government
authorities
Regional and Local
authorities
Social security and
insurance entities
State and local
service-providing
entities (research,
health, housing,
culture, education,
etc)
PROJECT
COMPANIES
PUBLIC SECTOR
COMPANIES
Utilities
(gas, water,
Transport,
renewables)
Companies in
which the State is
a majority and/or
controlling
shareholder
Companies
controlled by
Regional or Local
authorities
Public and
Private
concessionaires
of public services
Special purpose
vehicles
Public-Private
Partnerships
Consortia of
concession
bidders
CONTRACTORS
Private
Sector
Contractors
Construction
Companies
“Intesa San Paolo Group PPP Financing”
1. Public & Infrastructure Finance in
Intesa Sanpaolo
2. Public Private Partnership
3. Project Finance
4. Case studies
“Intesa San Paolo Group PPP Financing”
Public Private Partnership vs. Project Finance
Public Private Partnership (PPP) is a contractual form of
co-operation between the public and the private sector
to build infrastructures and to manage public utilities
Public Private Partnership (PPP) is a partnership
between the public and private sector for the purpose of
delivering a project or service
Project Finance (PF) is a financial technique to finance
the construction and/or operation of an infrastructure
and/or service developed as a PPP
“Intesa San Paolo Group PPP Financing”
PPP: The Italian Procedure to Select a Concessionaire the “Private Initiative” (D.lgs. 163/2006 art. 153)
Authorities’
Authorities’
Planning
Planning
Authoritiesmake
make
Authorities
theirPlanning
Planning
their
over
over
3-yearperiod
period
aa3-year
Privateparties
parties
Private
submit
submit
theirProposal
Proposal
their
Project Design
Selection of the
Infrastructures
to be build
Selectionof
ofthe
the
Selection
bestproposal
proposal
best
Tender
Tender
Tuning of the
Project
Documents
Tender on the
basis of the
Promotore’s
Proposal
Business Plan
Public Tender
to select
the Promotore
Concession
Agreement
(DRAFT)
Selection of
the PROMOTORE
Grant of the
Concession
“Intesa San Paolo Group PPP Financing”
PPP: The Italian Procedure to Select a Concessionaire the “Public Initiative” (D.lgs. 163/2006 art. 143)
PublicTender
Tender
Public
Due Diligence
Authorities
prepare all the
Project
Documents
Business Planl
Design and
Concession
Agreement
Afterthe
theselection
selectionof
ofthe
thebidder
bidder
After
Legal
Public Tender
on the basis
of the Project
Documents
Risk Analysis
Financing
Technical
Insurance
TermSheet
Sheet
Term
EPC
Financial
Contracts
O&M
Others
“Intesa San Paolo Group PPP Financing”
The PPP market in Italy in 2007 (1/3)
PPP IN ITALY - SECTORS
Utilities & Telecommunications
Projects
(n.) 2007
Total
Total
investment
Projects (n.) investment
costs
2006
costs (€/mln)
(€/mln)
2007
2006
Average
Average
Investment
Investment
costs
costs (€/mln)
(€/mln)
2006
2007
226
204
1.150
4.352
5,1
27,7
40
50
506
312
12,6
22,3
Public spaces/ Green areas
237
260
194
118
0,8
0,5
Cemeterial Buildings
107
128
364
479
3,4
3,7
10
17
99
164
9,9
9,7
Sporting Centres
244
168
617
564
2,5
3,4
Parkings
149
137
686
628
4,6
4,6
Urban renovation
67
69
1.020
479
15,2
6,9
Healthcare/ Hospitals
48
37
694
778
14,5
21,0
Education
51
32
272
105
5,3
3,3
Transports
27
17
8.537
9.079
316,2
534,0
Tourism
51
24
116
37
2,3
1,5
230
193
941
706
4,1
3,7
1.487
1.336
15.196
17.802
10,2
13,3
Turistic Harbours
Waste Management/Disposal
Others (1)
Total
(1) trade, arts&craft, multipurpose buildings, entertainment etc.
“Intesa San Paolo Group PPP Financing”
The PPP market in Italy in 2007 (2/3)
PPP IN ITALY - TYPE OF BID
Total
Projects (n.) Projects (n.) investment
2007
2006
costs (€/mln)
2007
Total
investment
costs (€/mln)
2006
Selection of proposals
488
471
9.373
8.259
Concession of Build&Operate under private initiative
140
128
4.254
3.709
Concession of Build&Operate under public initiative
227
249
1.096
1.756
Concession of services
529
364
349
3.783
Other
103
124
124
295
1.487
1.336
15.196
17.802
TOTAL
+11%
Fonte: Osservatorio Nazionale Project Financing
-15%
“Intesa San Paolo Group PPP Financing”
The PPP market in Italy in 2007 (3/3)
PPP IN ITALY - Amount of
investment costs
Total
Projects (n.) Projects (n.)
investment
2007
2006
costs (€/mln)
2007
Total
investment
costs (€/mln)
2006
Average
Investment
costs (€/mln)
2007
Average
Investment
costs (€/mln)
2006
Amount not known
361
348
-
-
-
-
up to €1.000.000
456
421
149
162
0,3
0,4
from €1.000.001 to €2.500.000
213
196
375
338
1,8
1,7
from €2.500.001 to €5.000.000
178
146
669
551
3,8
3,8
from €5.000.001 to €10.000.000
130
108
950
791
7,3
7,3
from €10.000.001 to €50.000.000
115
86
2.437
1.752
21,2
20,4
34
31
10.615
14.209
312,2
458,4
1.487
1.336
15.196
17.802
10,2
13,3
Over €50.000.000
Total
+11%
Fonte: Osservatorio Nazionale Project Financing
-15%
“Intesa San Paolo Group PPP Financing”
1. Public & Infrastructure Finance in
Intesa Sanpaolo
2. Public Private Partnership
3. Project Finance
4. Case study
“Intesa San Paolo Group PPP Financing”
The “Bankability”
“Bankability is, as it sounds, the acceptability or
otherwise of a project’s structure as the basis of a
project financing. …Bankability is an art, not a
science. It is a very fluid concept, changing rapidly
as market practice and sentiment change. It can
also be a very deal-specific concept: what is an
acceptable balance of risks for one project may
not be acceptable for another project with
slightly different strengths and weaknesses”
(Graham D. Vinter)
“Intesa San Paolo Group PPP Financing”
Project Financing General Structure
Securities
Banks
Shareholders
(sponsor)
Credit
Agreement
Interest
and capital
Operator
Dividends
O&M
Agreement
perfomance
€
€
Contractor
Shareholder
Funding
Agreement
Project
Company
€
Insurance
Goods,
services
EPC Contract
Insurances
€
Royalty rents
Grantor
Concession
Agreement
Market
appalto di servizio
o convenzione
Final Users
Municipalities
“Intesa San Paolo Group PPP Financing”
Main Commercial Contracts in a Project Financing
• Concession Agreement
• Construction Contract
• O&M Contract
“Intesa San Paolo Group PPP Financing”
Main Financial Contracts in a Project Financing
• Facility Agreement
• Equity Contribution Agreement
• Security Agreements
• Accounts Agreement
• Intercreditor Agreement
“Intesa San Paolo Group PPP Financing”
III.3
Risk Allocation Matrix
Constructor
Operator
SPV
Banks
Change
in Law
Construction
Risk
x
x
x
Technological
Risk
Financial
Risk
Country
Risk
Insurer
x
Commercial
Risk
Authorisation
Risk
Grantor
x
x
x
x
x
x
x
x
x
“Intesa San Paolo Group PPP Financing”
Due Diligences
ˆ
Technical: aimed at evaluating the overall project risk framework,
including design, construction delivery, capital expenditure,
operation and maintenance, contractual framework, environmental
matters and electricity sales and assessing and commenting the risk
implications for the Lenders and the Project as a whole;
ˆ
Legal: aimed at reviewing the Project’s documents and the
legal&tax framework, drafting and negotiating the financing and
security documents, assisting to closing formalities, assessing and
commenting the risk implications for the Lenders and the Project as
a whole;
ˆ
Insurance: aimed at defining the proper insurance package for the
project.
“Intesa San Paolo Group PPP Financing”
The Concession Agreement:
Main Clauses in the View of Bankability
‰ Financial Re-equilibrium procedure
‰ Banks’ Step-in right in the Project Documents in case of
Concessionaire Default
‰ Indemnities in case of Termination of the Concession Contract
for Grantor Default or Concessionaire Dafault (Termination
Payment)
“Intesa San Paolo Group PPP Financing”
Small Is Really “Beautiful”?
Three issues about the Project Size
¾ Is it possible to Simplify the Contractual Structure?
¾ Are Due Diligences still necessary ?
¾ Can Costs be afforded?
“Intesa San Paolo Group PPP Financing”
1. Public & Infrastructure Finance in
Intesa Sanpaolo
2. Public Private Partnership
3. Project Finance
4. Case studies
DUC Bologna s.p.a. New Building of Municipality of Bologna (Italy)
DUC Bologna spa
Project financing
€ 89.700.000
Mandated Lead Arranger
Year 2004
Rationale
New building for the
Municipality, without
increasing its own debt.
¾Project financing for the funding of the Design, Build, Operate
and Transfer of the “New Building of the Municipality of Bologna”
under a PPP scheme with a 30 years Concession Agreement.
¾Borrower: DUC Bologna spa (the “Concessionaire”), a special
vehicle company (or the “Project Company”) established for the
purpose of implementing the project by the winners of the
bidding process.
¾Total innvestment cost € 98 mln, of which about € 68 mln are
construction costs. The Cocessionaire will enter into a
Construction Agreement with a Contractor on a lump sum, fixed
price basis.
¾ The Concessionaire enter into an Operating Agreement with
the Operator for the facility management services.
¾The Municipality of Bologna will pay a rent to the
Concessionaire for the all life of the Concession allowing the
Concessionaire to repay the debt and to payout dividends to the
project company’s shareholders.
DUC Bologna s.p.a. New Building of Municipality of Bologna (Italy)
Project Structure
CCC
Manutencoop Facility
Management Spa
Adanti
COGEI
CER
CEA Scarl
Nuovo Comune Scrl
Adanti
Consortium Servizi Scrl
Adanti
COGEI
COGEI
Equity
CEA Scarl.
Contratto di
Appalto di
Servizi
Contratto di
Costruzione
CEA Scarl.
C.E.S.I. (CCC)
CER
Coop. Costruzioni
(CCC)
Contratto di
Progettazione
ATI di Progettisti
(MCA, Open Project,
BETA, NIER, CMR)
Banche
Contratto di
Finanziamento
Polizze
Compagnie
Assicuratrici
DUC Bologna
SpA
(SPV)
Canone annuale
di locazione
Contratto di
Locazione
Manutencoop Facility
Management SpA
(CCC)
Contributo
una tantum
Convenzione
Comune di
Bologna
Autorizzazioni,
Permessi
Pubblica
Amministrazione
Locatari delle
Aree
Commerciali
Frullo Energia e Ambiente Srl - Waste to Energy Project
in Granarolo dell’Emilia (Bo)
Frullo Energia e Ambiente Srl
Project financing
€ 144.606.000
June 2002
Rationale
‰ More funds available for
investment.
‰ Better value for money.
‰ Accelerate the delivery of
projects.
‰ Use of private sector
expertise.
¾The Project consists in design, construction and
operation of the new waste-to-energy plant with a
capacity of 22 Mwe located in Province of Bologna
and moreover, until the new plant will go in
operation, the existing old plant handling.
¾Now existing plant, made up in 1973, has a
capacity of solid waste treatment of 380 t/day. So
New Plant will be able to reach the originally
capacity of the older plant (600 t/day) with a total
annual capacity of solid waste treatment of
180,000 t/y but with more production of energy.
¾New Plant will produce gross electricity
generation for 131.000.000 kWh/y and 47.500.000
kCal/y of heat.
Frullo Energia e Ambiente Srl - Waste to Energy Project
in Granarolo dell’Emilia (Bo)
Shareholders:
Saebo S.p.A.
Actelios S.p.A
Project Structure
51%
49%
Guarantees
USW Suppliers
Saebo S.p.A.
Shareholders
Undertaking
USW supply
Lenders
(Project Financing)
Tarif (€/ton)
Facility Agreement
USW Suppliers
Hospital
HW supply
Frullo
Frullo Energia
Energia ee
Ambiente
Ambiente S.r.l.
S.r.l.
Tarif (€/ton)
Heat Purchase Agreement
Power Purchase Agreement
Energy
produced
Insurance
Agreement
CIP6/92 tariff
(€Kwh)
Insurance Company
Works
supply &
guarantees
Heat
produced
€
Performance
& guarantees
Contractor
Construction
Contract
€
O&M
Agreement
Energy off taker
(GRTN S.p.A.)
Heat off taker
(Seabo S.p.A.)
Tariff
(€kcal)
Seabo S.p.A & Protecma S.p.A.
(Maintenance)
Seabo S.p.A & Actelios S.p.A.
(Operation)
Banca Infrastrutture Innovazione e Sviluppo SpA
Infrastructure and Project Finance
Via Monte di Pietà
Pietà, 8 – 20121 Milano
Maurizio Pagani
Executive Director
Phone: +39 02 87965490
Fax: + 39 02 87962500
[email protected]
Carlo Bongianni
Giancarlo Carnelli
Filippo Granara
Phone: +39 02 8796 2669
Phone: +39 02 8796 2055
Phone: +39 06 5959 3613
Fax: + 39 02 8796 3689
Fax: + 39 02 8796 2080
Fax: + 39 06 5959 3665
[email protected]
[email protected]
[email protected]
Viale Monte di Pietà, 8
Viale Monte di Pietà, 8
Viale dell’Arte, 21
20121 Milano
20121 Milano
00144 Roma