Challenges and lessons
in financing major
infrastructure projects
Robert Vartevanian,
Partner, Head of M&A and Financing
Deal Advisory, CIS
May 21st, 2015
The Global Challenge
YEAR
PEOPLE (bln)
6
1900
1950
2015
2050
1.6
9-11
2.5
7.3
C
12.011
+ 1.6 million people per week
© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
1
Infrastructure pipeline in Kazakhstan
Silk road
project – 2017
Aktobe power transmission
lines – 2005
Petropavlovsk
clinic – 2016
Astana parking
– 2016
188 USD mln
11 USD mln
Construction of parking
lots and bus stations in
Astana
4.5 USD bln
Kostanay
Uralsk
Aktobe
UralskKamenka road
– 2017
Semey
Astana
Karaganda jail –
2016
Kandyagash gas
turbine power
palnt – 2016
111 USD mln
Aktau port
Aktau
85 USD mln
Hospitals and clinics in
Uralsk, Aktobe, Kyzylorda,
Merke – 2016–2017
85 USD mln
Karaganda
hospital – 2016
Semey hospital
– 2017
6.5 USD mln
78 USD mln
Kyzylorda
Ust-Kamenogorsk
Karaganda
38 USD mln
30 USD mln
200 USD mln
Kindergartens
in Karaganda, Temirtau,
Ust-Kamenogorsk, Semey
ZyryanovskMakapshagay
railway – 2020
2.1 USD bln
UstKamenogorsk
hospital – 2016
74 USD mln
Alamty ring
road– 2019
557 USD mln
Almaty
Shar–UstKamenogorsk
railway – 2005
231 USD mln
Taraz
Aktau Airport – 2008
Aktau bus
terminal – 2018
31 USD mln
20 USD mln
Yeralievo-Kuryk
railway – 2015
44 USD mln
Shymkent
Alamty Light
rail – 2018
520 USD mln
Almaty hospital
100 USD mln
Source: Kazakhstan PPP Center, KPMG analysis
© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
2
Capital is not only cash
© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
3
Funding is different to Financing
Equity
Taxes
Direct
payment
Funding
Debt
Financing
© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
4
Risk allocation is the key to attracting private capital
Public
Private
Legislation risk
Construction risk
Currency risk
Operational risk
Tariff policy
Financing risk
Demand risk
Availability risk
Private capital invests in what it wants to, not
necessarily what you want it to
© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
5
Learning and credibility curve
Basis
points
PPP projects risk premium
Risk free rate
Deals
1st year
2nd year
3rd year
4th year
5th year
6th year
Timeline,
years
Every country must go through the learning &
credibility curve
© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
6
Legislation
Do not over legislate
Create enabling
legislative framework,
and then regulate
Market conditions change,
financial instruments and
structures evolve
© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
7
Contacts
Robert Vartevanian
Finally, good luck –
KPMG are here to
help!
Partner, Head of M&A and Financing
Deal Advisory
KPMG
Presnenskaya nab., 10, Block C
Moscow, 123317 Russia
Tel.:
+7 (495) 937 44 77
Mob.: +7 (916) 210 88 36
RobertVartevanian@kpmg.ru
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© 2015 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a
member firm of the KPMG network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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