Global Infrastructure Finance Review

H1 2010
Researched and published in July/August 2010 for Infrastructure Journal and Emap Ltd
by Muhabbat Mahmudova, Gaurav Sharma and Yoann Rey

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Contents

Headline Figures – Project Finance 1

Regional Analysis 4

Africa & the Middle East 5

Asia Pacific 6
North America 7
Latin America 8
Eastern Europe 9
Western Europe 10
Indian Subcontinent 11

Sector Analysis 12

Oil & Gas 13

Power 14
Renewables 15
Transport 17
Social Infrastructure 18
Water & Sewage 20
Telecoms 20
Mining & Metals 21

League Tables 22
Project Finance First Half 2010

Global Volume: Deal Count: Total Debt:

US$100bn 220 US$65bn

Previous Years
2009 volume: US$176bn H209 volume: US$92bn H109 volume: US$84bn
2008 volume: US$284bn H208 volume: US$127bn H108 volume: US$157bn
2007 volume: US$312bn H207 volume: US$168bn H107 volume: US$144bn

2009 deal count: 497 H209 deal count: 250 H109 deal count: 247
2008 deal count: 677 H208 deal count: 297 H108 deal count: 380
2007 deal count: 693 H207 deal count: 351 H107 deal count: 342

2009 total debt: US$120bn H209 total debt: US$68bn H109 total debt: US$52bn
2008 total debt: US$217bn H208 total debt: US$100bn H108 total debt: US$117bn
2007 total debt: US$256bn H207 total debt: US$133bn H107 total debt: US$123bn

Figures rounded to the

nearest billion.
Changes from H1 2009 to H1 2010

Global volume (total debt plus total equity) up 18%

Deal count down 11%
Debt (limited-recourse loans and bonds) up 24%

Leading players Sectors (closed deals, global volume)

Oil & Gas Transport
First Half 2010
2010 – 20, US$38.93bn 2010 – 25, US$17.49bn
• BNP Paribas (MLA) H109 – 23, US$9.95bn H109 – 44, US$24.63bn
H209 – 32, US$27.53bn H209 – 20, US$14.62bn
• RBC Capital Markets (Bond Arranger)
• Société Générale (Financial Adviser)
• Allen & Overy (Legal Adviser)
Power Renewables
• Stone & Webster (Technical Adviser)
• ExxonMobil (Sponsor)
2010 – 27, US$16.78bn 2010 – 91, US$13.69bn
H109 – 20, US$23.04bn H109 – 93, US$12.93bn
H209 – 27, US$18.56bn H209 – 97, US$15.90bn

Second Half 2009

Social Infra Mining & Metals
• Calyon (MLA)
• Credit Suisse (Bond Arranger) 2010 – 40, US$9.74bn 2010 – 9, US$2.36bn
• Royal Bank of Scotland (Financial Adviser) H109 – 42, US$5.87bn H109 – 11, US$4.34bn
• Allen & Overy (Legal Adviser) H209 – 52, US$6.71bn H209 – 9, US$2.50bn
• Mott MacDonald (Technical Adviser)
• Global Infrastructure Partners (Sponsor)
Water & Sewage Telecoms

2010 – 4, US$0.36bn 2010 – 4, US$0.36bn

First Half 2009 H109 – 11, US$1.07bn H109 – 6, US$2.61bn
H209 – 7, US$4.80bn H209 – 6, US$4.14bn
• Grupo Santander (MLA)
• FI-FGTS (Bond Arranger)
PPP/PFI* * Includes deals in all
• Itau-Unibanco (Financial Adviser)
sectors that qualify as a PPP
• Linklaters (Legal Adviser)
or PFI transaction
• Mott MacDonald (Technical Adviser) 2010 – 68, US$27.45bn
• Reliance Power (Sponsor) H109 – 79, US$25.64bn
Arrows show changes from
H209 – 70, US$21.53bn
H1 2009 to H1 2010

1 © Copyright 2010 Emap Limited

Flat growth in an age of austerity
Infrastructure investment has begun to recover, but struggles to gain in
the new era of public spending cuts
Following the global financial crisis, public debate over infrastructure
investment – its usage and funding dynamic – has turned hugely
political; more so in nations and states facing massive budget
deficits. This of course is on top of the funding squeeze witnessed in
the aftermath of the credit constriction triggered by the crisis itself.
Infrastructure Journal’s project finance league table results for the
first half of 2010 bear testimony of such a sentiment. Over H1 2010,
the total number of project finance deals to reach financial close
came in at 220 with a total valuation of US$99.7 billion versus the
H109 figure of 247 deals with a valuation of US$84.4 billion. While
this hitherto constitutes an improvement over H109, the figures
represent a steady decline from H108 and H107 wherein deal
counts came in at 380 and 342 respectively with valuations of
US$157.1 billion and US$143.9 billion.
However, a recovery or at the very least a flat growth trajectory
is on the cards for remaining half of 2010. A break-up of the total
valuation figure for the first half of the year by source of funding (see
chart on next page) is also indicative of an interesting movement
and is perhaps the real noteworthy development to emerge from
the figures.
Of the total of US$99.7 billion, equity accounted for US$17.4 billion
while US$2.28 billion was financed by bonds. Loans accounted
for US$62.31 billon and government plus multilateral agency
support was US$17.88 billion. Contrast this with H207 when out of
a total funding valuation of US$168.68 billion, equity came in at
US$28.82 billion, bonds at US$16.8 billion, loans at US$120 billion and
government plus multilateral agency support at US$3.06 billion.
2 © Copyright 2010 Emap Limited
IJ’s data over a 24-month period commencing H108 makes it
apparent that bond markets have taken a chastening and access
to commercial debt continues to be restricted, despite some
improvement. Commercial lending peaked over H207 with a total
of US$117.5 billion in underwritten debt. Since then, the first half-
yearly underwriting of Mandated Lead Arrangers (MLAs) has been
in decline.
For H108, MLAs underwrote US$104.4 billion which plummeted to
a mere US$45.7 billion for H109. It has since recovered marginally
to US$55 billion for H1 2010, but is nowhere near the levels last
seen in 2007. British banking majors are near conspicuous by their
absence in the top ten MLA league table for H1 2010, which is
being led by a trio of French banks – BNP Paribas, Crédit Agricole
Group and Société Générale (in that order) – followed by Spain’s
Grupo Santander and Japan’s SMBC. Dutch bank ING and UK’s
Royal Bank of Scotland – both of which were hit hard by the
credit crisis – finished just outside the top ten in 11th and 12th spots
respectively.
Government agencies have moved in to attempt to fill the
funding gaps elsewhere. Lending from development banks
and export credit agencies has grown steadily. This comes with
an additional dilemma for governments with deficits – one of
prioritising investment under the duress of falling tax receipts for
their respective exchequers as fragile economies recover from the
crisis. Nevertheless, development banks and export credit agencies
are likely to remain central to many infrastructure projects over the
next two fiscal years and the remainder of 2010 at the very least.
Global Infrastructure
Finance Review

Deal Activity
Month 2010 2009 2008
January 30 25 54
February 33 35 63
March 60 46 61
April 39 36 61
May 29 38 58
June 29 67 83
July -- 57 81
August -- 16 54
September -- 34 54
October -- 43 39
November -- 44 35
December -- 54 34

3 © Copyright 2010 Emap Limited


Regional Analysis
Overall regional uncertainties about the health of the market,
including weak economic growth, sovereign and currency risks,
new bank regulations and the drying up of government stimulus
continue to persist.
However, project financing is recovering from the fall-away seen
in early 2009, buoyed by growth in Asia and some other markets.
That said, not all markets have performed equally well in terms of
closing deals. In the first half of this year – the volume of deals that
reached financial close was considerably higher in Asia Pacific
and Europe and held-up strongly in North America.
Volumes were dramatically down this half year in the Indian
Subcontinent, Middle East and Africa. Latin America also saw a
slight dip in investment volume of deals that raised project finance
funding in H1 2010.
Indian Subcontinent started the year on a weak footing as deals
struggled to proceed beyond the procurement stage. Middle East,
previously the second largest region for project investments, saw a
sharp dip in volumes courtesy of the fluctuation in oil prices and the
economic woes that hit the region’s European lenders especially
for the first three months of 2010.
Presently industry observers say the challenge for developers is to
look at a mix of funding options for their schemes as the atmosphere
in the market is different with banks slowly starting to underwrite
deals. The syndication market is not yet an option, but multilaterals
and other types of financiers are entering as fully active players.
4 © Copyright 2010 Emap Limited
Global Infrastructure
Finance Review
The developers that faced difficulties in securing favourable project
finance loan terms were prompted to look at capital markets
to fill the funding gap, either to complement bank financing or
refinance expensive loans with more attractive bonds. In the H1
2010 there were as many as 12 projects with bond financing in their
debt structure.
Growth in project finance will be driven by the increased use of
public-private partnerships schemes, particularly in Western Europe,
and the growth of investments in the renewable energy sector. The
long-term financing for infrastructure will depend on the ability of
international lenders to lend on domestic transactions as well as
the ability of local lenders to raise funding. The cost of funds may
also be an issue as some domestic lenders source dollars in order
to lend into deals.
Capital markets are still insufficient to support project finance. In
the future, it is likely that local pension funds will become more
active participants in infrastructure finance as sovereign wealth
funds are already today.
Governments need to create an appropriate legal and regulatory
framework for infrastructure that is favourable to debt financing and
fosters private sector investment. This may include decreasing risks
to lenders and developers, as well as attractive return incentives to
lure investment from the emerging class of regional infrastructure
and private equity funds.
 Global Infrastructure
Finance Review
Sector Value (US$m) Top Deal
Power 2,253 Riyadh PP11 IPP
Oil & Gas 650 Accugas Pipeline
Mining & Metals 525 Lumwana Copper Mining Refinancing
Telecoms 150 Helios Towers Nigeria Expansion
Dakar Container Terminals
Transport 128
Concessions
Water & Sewage 109 New Cairo Wastewater PPP
Africa & the Middle East finished the first half of 2010 with a project
finance volume of US$3.82 billion – down 78 per cent from US$17.28
billion in the second half of 2009. Comparison with the equivalent
period shows that the volume was down by 50 per cent.
However, deal activity shows that for the first time in the project
finance market there were more transactions in Africa than in the
Middle East – 7 deals out of 9 in total. Nigeria was the most active
country in the region with four project finance transactions raising
the total of US$369 million in commercial and multilateral debt. As
in the previous years, the MEA region was dominated by energy
projects.
Activity in the Middle East was led by the US$2.25 billion Riyadh
PP11 IPP, the only other deal that closed there was US$109 million
Egyptian New Cairo Wastewater PPP. Government funding
especially in Gulf Cooperation Council (GCC) countries, which
increased rapidly over 2007-2008 especially for PPP projects, has
now subsided. With the fall of oil prices many governments cut the
long-term financing into deals.
Project finance in the region was short of social infrastructure and
renewable energy projects.
*Leading Players – H1 2010
• Credit Agricole Group (MLA)
• Citigroup / Credit Agricole Group (Financial Adviser)
• Norton Rose (Legal Adviser)
• Fichtner (Technical Adviser)
• Saudi Electricity Co (Sponsor)
Outlook
From the start of the year, many African countries saw active
investment opportunities in infrastructure. Despite the global
recession, African economies will go through gradual recovery
with average growth reaching 4.5 per cent in 2010 and 5.2 per
cent in 2011, according to African Development Bank.
The infrastructure gap in Africa is vast, and to drive recovery the
region needs to address policy gaps, institutional capacity gaps as
well as financing. Funding is available to help boost investments in
African infrastructure.
The African Development Bank (AfDB) is expected to nearly double
its infrastructure funding to the region over the next five years to
US$10 billion to accelerate economic growth. The AfDB approved
a loan of US$40 million for Burkina Faso to fund a rural electrification
project. China is an active investor in several African countries - it
will lend Congo around US$700 million to build a hydroelectric dam
in the north Sangha region.
*Leading Players identified in this report are determined by the number of
closed transactions completed in a sector or region and taken from IJ’s first
half 2010 league tables. Total value is used to break a tie.
5 © Copyright 2010 Emap Limited
Africa & the Middle East
Location Value (US$m) Financial Close
Saudi Arabia 2,253 25/06/2010
Nigeria 250 29/06/2010
Zambia 400 09/03/2010
Nigeria 150 04/02/2010
Senegal 128 30/03/2010
Egypt 109 03/02/2010
The International Finance Corporation (IFC) is investing US$100
million in the second Africa Infrastructure Investment Fund (AIIF2),
which was aimed at promoting the development of basic
infrastructure on the African continent.
The UK and South Africa have signed a memorandum of
understanding committing the UK to provide £67 million to help the
regional economic communities improve transport infrastructure
in eight countries. India has approved a total of US$125 million in
credit for Zambia, part of it to finance a key power project – the
120MW Itezhi-tezhi hydroelectric project, worth US$240 million. The
Indian Export and Import Bank (Exim) will contribute US$50 million
to the project.
Recently, the governments of Mozambique and Botswana signed
a memorandum of understanding to develop a deep water port at
Techobanine point, in Mozambique. Additionally, the government
of Mozambique will build a new bridge across the Zambezi River to
allow for a giant coal mining project in the interior Tete province.
The USAID programme will launch four tenders worth over US$300
million late this year to rebuild roads and improve water and
sanitation in Mozambique. In Egypt, there are plans to build a US$1
billion tunnel under the Suez Canal at Port Said.
Ethiopia’s government announced plans to target infrastructure
development to drive growth. Even in small countries, like Lesotho
for instance, the authorities plan to start construction of their new
Metolong dam and raw water pumping station in early 2011.
Ghana will fast-track construction of a deep sea oil port and
revamp a major rail link in 2010 to help exploit its energy and
minerals. In the Middle East, the governments are targeting areas
such as high-speed rail, water and renewables. Middle Eastern
governments have committed over US$100 billion on rail projects
in the coming years. Renewable energy is on the rise, with Saudi
Arabia developing large solar projects on the rooftop of King
Abdullah University (KAUST) and UAE developing a massive 100MW
solar plant outside of Abu Dhabi – Shams 1.
Asia Pacific Global Infrastructure
Finance Review

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Oil & Gas 18,565 ExxonMobil PNG LNG Phase I Papua New Guinea 18,200 16/03/2010

Power 4,758 Paiton 3 IPP Indonesia 1,519 08/03/2010

Renewables 1,341 206MW Collgar Wind Farm Australia 680 31/03/2010

Transport 840 Peninsula Link PPP Australia 781 05/02/2010

Kooragang Island terminal

Mining & Metals 283 Australia 232 14/05/2010
Expension

Social Infrastructure 223 Ararat Prison PPP Australia 223 27/05/2010

Telecoms 60 Kalimantan Fibre Optic Financing Indonesia 60 26/03/2010

Asia Pacific finished H1 2010 with a project finance volume of Outlook

US$26.07 billion – up 84 per cent from US$4.3 billion in the same
period last year, and overall exceeding the annual project finance
investment volume in Asia Pacific last year.
The region’s dramatic rise was primarily due to US$18.2 billion PNG
LNG Phase I deal in Papua New Guinea, which accounted for over
70 per cent of total investments in the region. However, the overall
deal count was also up as 22 deals closed from the start of the
year, compared to 17 in the same period last year.
Active sectors in Asia Pacific in terms of the volume of investments
included oil & gas (US$18.6 billion) and power (US$4.8 billion).
In terms of the number of deals, the most active sectors were
conventional (eight deals) and renewable power sectors (five
deals).
Renewable energy projects are picking up in the region, in Australia
and South Korea as well as China. All three countries announced
more investments in renewables this year. South Korea will invest
around US$18.6 billion in renewable energy over the next three
years as announced by the government in July.
One social infrastructure deal closed in Australia – the US$227.78
million Ararat Prison PPP. In transport, two transactions worth
US$840.3 million reached financial close in Australia – Peninsula Link
PPP and the refinancing of the port of Portland.
Asian infrastructure will remain dynamic for the remainder of the
year. Almost all regional governments have announced massive
infrastructure spending. Record growth in the value of investments
shows that energy sector will be driving force for infrastructure
investments in this region. Chinese and other Asian governments
pledged more than US$600 billion to invest and develop the
regional infrastructure.
Market experts are of the opinion that Asia has to develop its
consumer markets and expand its consumption base in order to
reduce their vulnerability from the exposure to the markets of other
regions.
One of the largest multilateral investors in the region is Asian
Development Bank (ADB) which loaned about US$10 billion last
year and will increase its lending to about US$12 billion this year.
According to ADB, developing Asia with the annual investment
of around US$800 billion in transport, communication, and energy
infrastructure during 2010-2020, is likely to reap welfare gains of
US$1,616.3 billion (in 2008 prices) in 2020, or 10 per cent of the
regional projected aggregate gross domestic product.

Leading Players – H1 2010

• SMBC (MLA)
• PwC (Financial Adviser)
• Allens Arthur Robinson (Legal Adviser)
• International Power (Sponsor)

6 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review
Sector Value (US$m) Top Deal
Renewables 4,324 150MW Alta Wind I Long-Term Debt
Lyndon B Johnson Freeway Managed
Transport 3,230
Lanes P3
Oil & Gas 3,189 Ruby Pipeline Long-Term Financing
Power 1,450 TrAIL Refinancing
CRCHUM Montreal University
Social Infrastructure 649
Hospital Research Centre
Mining & Metals 130 Mineral Park Mine Refinancing
North America finished H1 2010 with a project finance volume of
US$12.97 billion – roughly the same volume of investments as in the
first half of 2009 (US$12.4 billion). Deal count in the first half was 32,
a few short of the results in the same period last year.
The region continues to be dominated by energy, notably the
renewable energy sector. At the same time, the volume of
investments in oil and gas and power diminished.
Renewables was the region’s largest sector this half year supported
by the US Government’s policy to encourage investments in
renewable energy. The sector saw total investments of US$4.3 billion.
The renewable sector was followed by oil & gas and transport.
Despite reduction in the number of deals, oil & gas attracted a
high volume of investments, particularly, Ruby Pipeline’s US$2.9
billion long-term financing. Transport volumes were boosted by a
big-ticket Lyndon B Johnson Freeway Managed Lanes P3 project
worth US$2.66 billion. Transport could see more investments going
to high-speed rail projects as the political support grows around
this a much hyped but under-delivered asset class.
The US project finance market is expected to grow this year
supported by tax credits and government grants (see Renewables
section). Canadian social infrastructure remains consistent, but a
shift in focus towards renewable energy was also noted over H1
2010; two PV solar parks and a wind farm with the total capacity of
142MW secured funding since the start of the year.
Leading Players – H1 2010
• Bank of Tokyo-Mitsubishi UFJ (MLA)
• Credit Suisse (Financial Adviser)
• Latham & Watkins (Legal Adviser)
• RW Beck (Technical Adviser)
• Meridiam (Sponsor)
Outlook
Canadian and US markets are intensely involved in developing
infrastructure domestically as well as through an action plan
to strengthen infrastructure via an integrated cross-border
approach.
There is strong political support for infrastructure projects, including
PPP projects and renewable energy. The US government aims to
boost job creation, long-term economic growth and sustainability
of recovery from the global economic crisis.
7 © Copyright 2010 Emap Limited
North America
Location Value (US$m) Financial Close
United States 477 03/03/2010
United States 2,661 22/06/2010
United States 2,910 05/05/2010
United States 800 20/01/2010
Canada 431 21/05/2010
United States 130 26/04/2010
In the US, the financial crisis has caused a flight to safety, making
infrastructure investment more attractive than it used to be.
Although economic recovery in the US is fragile, many infrastructure
sectors are being driven by stimulus funding, which will result in
positive growth in the near-term future. Between 2010 and 2014,
infrastructure is forecast to grow by 3.4 per cent on average per
year.
The US Government is allocating tens of billions in funds to a
number of infrastructure and construction projects – especially
high speed rail projects, large loan guarantees for power plants,
and renewable energy projects. Many PPP projects in the transport
sector are seen moving forward.
In Canada, the outlook for infrastructure investments is positive as
is the level of activity in the market so far into 2010. Renewable
energy projects and social infra projects are underway across the
country. However, domestic reports are indicative of project delays
that could potentially cost Canadians millions of dollars in federal
infrastructure spending aimed at stimulating the economy.
Canada’s Infrastructure Stimulus Fund was set up in 2009. The fund
works in the following way - cities and provinces have to identify
projects and then apply to obtain money to help pay for part of
the project. The fund will share the costs of those local projects but
one of the key conditions for federal funding is that the project has
to be completed by 31 March 2011.
The country’s Parliamentary watchdog states that currently
there are delays and only 25 per cent of CAD4 billion has been
allocated to individual projects, running a risk that many projects
may not start or be completed by the deadline. Besides the delays
in realisation of the stimulus programme, there is also the issue of
what may happen when the two-year stimulus programme ends,
which is a growing point of concern for Canadian politicians.
Latin America
Sector Value (US$m) Top Deal
Oil & Gas 2,586 Tupi FPSO Project
Power 1,397 AEI Jaguar Energy
Renewables 1,115 Eurus 250MW Wind Farm
Mining & Metals 1,040 Pueblo Viejo Mine
Transport 335 Red Vial n°4 Concession PPP
Social Infrastructure 131 Ixtapaluca Hospital PPP
Latin America finished H1 2010 with a project finance volume of
US$6.6 billion; a depreciation of 67 per cent from US$20.1 billion
H1 2009.
Fewer transactions have closed in the region in the first half of
this year. The largest decline in activity was noted in the transport
sector but some energy sectors – power, renewables and mining
also suffered. The number of deals that made it to financial close
fell to 13 down from 28 transactions in the same period last year.
There was a decline in project finance activity throughout the
whole of Latin America. A devastating earthquake in Chile brought
project financing to a halt. This affected the overall investment
volume in the region, as Chile has always been one of the major
markets for project finance investments in Latin America. A sharp
decline in Brazil, from the record activity witnessed last year, saw
two project financed deals in the oil & gas industry making to
financial close – viz. Tupi FPSO and Sevan Driller II.
The start of the year brought improvement to the Mexican project
finance market. Mexico closed five deals across oil and gas, power,
renewable and social infrastructure sectors.
Leading Players – H1 2010
• SMBC (MLA)
• Royal Bank of Scotland / Rothschild (Financial Adviser)
• Shearman & Sterling (Legal Adviser)
• Garrad Hassan (Technical Adviser)
• Ashmore Energy International (Sponsor)
Outlook
Latin America experienced a dramatic drop in the private sector
capital flows starting from the second half of last year. Despite the
low figure of project finance investments in the first half of the year,
market experts are optimistic about the prospects for the region.
However, the latest data does not back this optimism in the project
finance market.
There are strong regional disparities in terms of infrastructure
development. However, the annual investment needed to close
infrastructure gaps in the region amount to US$114 billion, or 2.8 per
cent of regional GDP.
The governments of several countries announced measures
to mitigate the effects of the economic crisis by stimulating
infrastructure investments through national infrastructure
programmes, budgetary investments, guarantees, and new laws
that offer flexible legal framework for public private partnerships.
Mexico and Brazil are leading the region in terms of value and
number of deals.
8 © Copyright 2010 Emap Limited
Global Infrastructure
Finance Review
Location Value (US$m) Financial Close
Brazil 800 30/03/2010
Guatemala 758 01/04/2010
Mexico 514 04/06/2010
Dominican Republic 1,040 30/04/2010
Peru 335 11/02/2010
Mexico 131 25/02/2010
Brazil is the largest market with infrastructure needs estimated at
US$85 billion over the next decade in transportation and energy,
according to Banco do Brasil. Two major global sporting events (i.e.
2014 Soccer world cup and the 2016 Olympics), offshore oilfield
development and expansion of the domestic housing programme
will boost infrastructure spending in the years to come.
From the start of the year, there was an increased activity in
consolidating private equity and setting up funds focused
on investments in Latin American infrastructure. In March,
Corporacion Andina de Fomento (CAF) committed US$40 million
to a Peru-focused infrastructure fund managed by Brookfield
Asset Management of Canada and local private equity firm AC
Capitales, with commitments totalling US$500 million, targeting
investments in Peru’s transportation, energy, water and sewage
and telecoms sectors. The US$150 million Central American
Mezzanine Infrastructure Fund (CAMIF) formed at the end of last
year is currently offering long term funding in 10 countries in Central
America, Mexico, Colombia, and the Dominican Republic.
In January, Macquarie launched Macquarie Mexican Infrastructure
fund (MMIF) with Ps$5.2 billion (US$408 million) in initial commitments
from 7 Mexican pension funds. FONADIN (Mexico’s national
infrastructure fund) and Macquarie solely focused on investment in
infrastructure projects including roads, rail, airports, ports, water and
wastewater, energy as well as social infrastructure and telecoms.
In the tight credit markets, Export Credit Agencies are also trying
to fill the financing gap. ECAs increased their support to Latin
America by 16 per cent, over US$10 billion in sectors such as
airports, railroads, water, oil & gas, and manufacturing.
Ex-Im Bank of the United States accounts for about 20 per cent of all
activities in Latin America. Export Development Canada recently
opened its fourth office in Peru to explore opportunities in the
mining, energy, infrastructure, and telecom sectors. China, South
Korea and Japan have also been investing actively in the region.
China is also making substantial sovereign wealth investments in
regional energy resources, as well as other infrastructure.
 Global Infrastructure
Finance Review Eastern Europe

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Oil & Gas 9,121 Nord Stream Gas Pipeline Phase I Russia / Germany 7,631 22/01/2010

Moscow-St Petersburg Toll Road-

Transport 2,318 Russia 2,133 26/04/2010
Section 1

Power 2,220 513MW Boyabat Hydroelectric Turkey 1,214 15/01/2010

146MW Polish Wind Farm

Renewables 280 Poland 168 29/03/2010
Refinancing

Boguchansky Bridge Loan Facility

Mining & Metals 260 Russia 260 15/03/2010
Refinancing

Telecoms 97 MTS Mobile Networks Financing Russia 97 29/03/2010

Eastern Europe ended H1 2010 with a project finance volume of
US$14.3 billion – up from US$3.6 billion in H1 2009, thereby exceeding
the annual PF investment volume of last year.
The region was the third largest in terms of the total project finance
investments after Western Europe and Asia Pacific. It closed 13
transactions up from 9 in the same period last year.
Big-ticket deals included the US$7.6 billion Nord Stream Gas
Pipeline, benchmark transport deals in Russia and the US$1.2 billion
Bayabat Hydroelectric Power Plant in Turkey. In the last few years,
the region has been experiencing unprecedented levels of activity
aimed at modernising transport, energy and social infrastructure.
The governments’ of Romania, Bulgaria, Slovakia, Poland and
Turkey are all supporting the implementation of PPP through a
series of policy initiatives to provide stimulus to their respective
economies.
Last year, energy sector projects attracted most of the investments
in the region, particularly power, oil and gas and mining. However,
renewable energy is picking up as well. Poland and Turkey are
leading the way for renewables in Eastern Europe, especially
wind energy. Poland closed two wind farms from the start of this
year, and Turkey project financed 41MW Cataltepe Kuyucak wind
farm.
With an estimated €500 billion in total infrastructure investment
needed, the issue of financing is prevalent. Commercial debt
has so far been the primary source of finance with the market
dominated primarily by western European banks. However, the
global financial crisis in the European continent overall adds
pressure on Eastern Europe’s ability to obtain necessary funding.
Public sector budget consolidation across many countries in the
region will continue, and credit tightening will ease slowly.
Several Eastern European countries such as the Russian Federation,
Slovak Republic, Slovenia, and Romania have entered the
municipal bond market to finance large infrastructure projects.
Other available sources of financing are EU money as well
multilateral development funding from the EBRD, EIB and the World
Bank, which have all already been active in financing infrastructure
initiatives in the region.
The countries where investment opportunities are the most
plentiful are Poland, Hungary, Czech Republic, Slovakia and
Romania. Besides shoring up public finances and addressing
funding constraints, many countries in the region have yet to
establish proper legal frameworks to use the PPP model for future
infrastructure investments.

Leading Players – H1 2010

• Garanti Bank (MLA)

• Société Générale (Financial Adviser)
• Clifford Chance (Legal Adviser)
• Stone & Webster (Technical Adviser)
• Gazprom (Sponsor)

Outlook

Eastern Europe requires significant infrastructure investments. Last

year governments in the region were prompt to enact a series of
anti-crisis measures, adjust national procurement process, as well
as guarantee the provision of government support to developers in
the form of up-front payments, co-lending and direct guarantees.
Infrastructure projects in energy and transportation are set to
grow. Most Eastern European countries will see moderate growth
in electricity consumption over the decade of 2010-2020 due to
increase in personal income and demand for electricity. This will
increase clean power and renewable energy development and
more investments in transmission and grid development in the
region.

9 © Copyright 2010 Emap Limited

Western Europe Global Infrastructure
Finance Review

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close
Oil & Gas 12,450 Nord Stream Gas Pipeline Phase I Russia / Germany 7,631 22/01/2010

Portugal High Speed Rail Poceirao

Transport 10,323 Portugal 2,142 07/05/2010
to Caia PPP

Social Infrastructure 8,737 Flemish Schools PPP Belgium 2,831 10/06/2010

Eneop 2 Wind Portfolio 480MW

Renewables 6,615 Portugal 1,197 29/01/2010
Phase I

Power 3,876 Exeltium Power Purchase Financing France 2,685 12/04/2010

Water & Sewage 255 Aguas de Cascais PPP Portugal 108 31/03/2010

Mining & Metals 50 Minas de Aguas Tenidas Spain 50 30/03/2010

Hautes-Pyrenees High-Speed
Telecoms 49 France 49 18/02/2010
Network PPP

Western Europe finished H1 2010 with a project finance volume of Outlook

US$34.72 billion up 35 per cent from US$25.7 billion in H109, and also
higher by 66 per cent from the second half of last year.
The deal count was 125 transactions, five deals short from the results
of the same period in 2009 but the same as in the second half of
last year. The regional market shows an overall improvement on
an annualised basis but the market sentiment is still one of caution.
The region continues to be the largest project finance region
– accounting for 35 per cent of the global volume – with a long
track record and experience closing deals.
Spain once again led the Western European market with the
highest number of transactions (46) and had the largest volume
(US$9.9 billion). The Spanish renewable energy market continues to
dominate project finance activity in the region – with investments
of US$3 billion on 29 PV and thermal solar and wind transactions.
France is the second largest market with investments totalling
US$7.4 billion over 18 deals. France closed a number of big-ticket
transactions in transport and power. French renewable energy
investments grew almost five times over the same period last year
and stand at US$705 million.
The UK closed 25 transactions worth US$3.4 billion – slightly below 28
deals in H109 – with the capital value of deals not exceeding US$200
million excepting Birmingham Highways and Southmead Hospital
projects. The UK also saw two renewable energy projects secure
funding – the 48MW Hill of Towie wind farm and the refinancing of
the 40MW Bicker Fen & Walkway wind farm.
Leading Players – H1 2010
• La Caixa (MLA)
• KPMG (Financial Adviser)
• Garrigues (Legal Adviser)
• Mott MacDonald (Technical Adviser)
• Building Schools for the Future Investments (Sponsor)
Overall, economic recovery in Europe will be underpinned
by measures taken across the region for the development
of infrastructure. In the next 2 to 3 years, improved transport
connections are expected to boost the region – requiring increased
capacity for ports (boosted by the increase in container traffic), toll
roads (albeit at a modest pace compared to previous years) and
airport traffic.
Europe will lead in the provision of privately financed transport
infrastructure. The increased investments will be supported by
various regulatory measures such as tolls and congestion charges.
Overall, the rating agencies predict a stable outlook for the
infrastructure industry in the region. Moody’s notes that the
generally benign debt capital market conditions for infrastructure
are expected to continue over the coming 12 to 18 months.
Nevertheless, it believes that periods of turbulence can be
expected.
The most critical infrastructure will be required to meet growing
demand for electricity and water. Earlier this year a study by PwC
found that Europe and North Africa could source 100 per cent of
its energy needs from renewable sources. This will require updating
the regional power systems to a shared system. Europe is now
engaging in a number of alternative energy projects; the biggest
of which is a plan to build a €400 billion super-grid to link both
Europe and the Middle East so the continents can benefit from
their respective power sources.
However, the private sector is right to demand a clear framework
for getting paid before committing to an investment drive.
Currently there is regulatory and policy uncertainty over how to
proceed with such ambitious plans. The risks should be identified
and the rewards need to be tailored to take the risks into account.
Just as wind and solar were incentivised to get them going, the
early builders of, for instance, the first leg of the Supergrid, should
be allowed, and be clearly seen to be making good money from
the investment.

10 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review
Sector Value (US$m) Top Deal
Power 826 GVK Goindwal Sahib Power Plant
Transport 314 NH3/Ma1 Highway PPP
Mining & Metals 68 GVK Tokisud Coal Mine
Indian Energy Theni Wind 16.5MW
Renewables 15
Phase I
The Indian Subcontinent finished H1 2010 with a project finance
volume of US$1.22 billion – down 88 per cent from US$10.4 billion
in H1 2009.
During H1 2010 the number of deals fell to four, down from the 14
in the corresponding period last year. There was also one project
in Pakistan – a US$23.5 million expansion of Karach Gas-fired power
plant expansion.
The downward trend of investments in the Indian project finance
market last year and the beginning of this year is due to delays
in procurement, as well as the structural issues that the Indian
financial market faces. The power sector was sluggish as a result
of cancelations of some coal power projects on environmental
grounds, and delays in supplies of equipment, especially since the
introduction of restriction on the import of Chinese equipment and
labour.
Despite the slowdown of project financing, India introduced a
number of policy changes, including a landmark Solar Mission,
as well as set feed-in-tariffs to boost investments in PV solar and
wind energy. As a result India’s renewable energy market volumes
surged since the end of 2009.
Leading Players – H1 2010
• IDBI Bank (MLA)
• SBI Capital Markets (Financial Adviser)
• SJ Law (Legal Adviser)
• Lahmeyer International (Technical Adviser)
• GVK Power & Infrastructure (Sponsor)
Outlook
In 2010, India is likely to see significant investment activity in
infrastructure. The asset class is expected to progress at a faster rate
than ever before as it is heavily backed by government legislation.
The Indian government is going ahead with several initiatives to
boost investments in infrastructure - the Jawaharlal Nehru National
Solar Mission Programme, ambitious wind energy targets 22GW
by 2022, feed-in-tariffs for wind and solar, tax incentives, Viability
Gap Funding Scheme to promote PPP scheme for infrastructure
development.
11
Indian Subcontinent
Location Value (US$m) Financial Close
India 693 01/02/2010
India 314 31/03/2010
India 68 27/04/2010
India 15 29/04/2010
Local assessment suggests that Indian infrastructure needs
investment levels of US$90 billion over the next five years. Half of
this money will come via the private sector followed by multilateral
agencies, pension funds, and sovereign wealth funds.
India is keen to develop its infrastructure to support its economic
growth. It is the second-fastest growing major economy after
China. To achieve double digit growth, India needs massive
investments in various infrastructure projects and industries such
as power generation, ports and roads, renewable energy and
communication. So far investments were heavily subsidised by
the Indian government but the way ahead is for reduced level of
subsidies as the government seeks to attract private sector and
foreign direct investment.
Most of the future power generation capacity in India will
come from coal. It is the government’s plan to increase power
generation capacity by 55GW from the current level of 159GW by
2012. Although India is the world’s third-largest producer of coal,
domestic supplies and transportation networks are yet to keep
pace with demand growth. The country will continue to rely on
imports to cap the supply-demand gap.
Although India’s reliance on conventional power is vast, it also
announced a National Action Plan on Climate Change. According
to plan, the contribution of renewable energy resources to power
generation would be increased to 10 per cent by 2015 and 15 per
cent by 2020, as opposed to the current level of 4 per cent.
Market experts forecast that government’s focus on infrastructure
and the rural economy, the surge in industrial production, and
service sector will sustain GDP growth at around 7.5 per cent in
2010-11.
Overall, this year will be one of consolidation that is likely to lay the
foundation for the years to come. A large part of the infrastructure
expenditure is expected to start paying dividends between 2011
and 2013. Government and the Reserve Bank of India will continue
to play a very important role in shaping the economic future of
India in 2010.
© Copyright 2010 Emap Limited
 Sector Analysis
Global Infrastructure
Finance Review

The renewables sector accounted for bulk of the 220 deals closed
over H1 2010 coming in at 91, followed by social infrastructure,
power and transport. The total represents a decline from the 247
deals noted during H109 and 250 noted over H209; a far cry from
the H108 figure of 380 deals. Of the total deals noted over H1 2010,
68 were PPPs valued at US$27.45 billion.

12 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review Oil & Gas
Top 10 by Value
Name Value (US$m) Financial Close Location
ExxonMobil PNG LNG Phase I 18,200 16/03/2010 Papua New Guinea

Nord Stream Gas Pipeline Phase I 7,631 16/03/2010 Russia / Germany

Ruby Pipeline Long-Term Financing 2,910 05/05/2010 United States

Castor UGS Gas Storage 1,901 10/06/2010 Spain

Perenco RBL faciltiy 1,721 18/05/2010 France

Tobolsk Polypropylene Plant Project 1,490 22/01/2010 Russia

Gas Natural Madrid Network Sale 1,041 12/03/2010 Spain

Tupi FPSO Project 800 30/03/2010 Brazil

PetroRig III 661 30/04/2010 Mexico

Chicontepec Oil Field 600 31/03/2010 Mexico

Oil & gas transactions totalled US$38.93 billion during H1 2010 up
markedly from US$9.95 billion in H109. However the number of
transactions dipped from 23 to 20. In fact, the number of deals has
been steadily declining from H107 wherein 47 transactions were
recorded. Before, during and indeed after the credit squeeze, the
oil & gas infrastructure investment market has seen a tricky few
years.
Another interesting development is the emergence of shale gas.
It was ignored as a hydrocarbon by-product by oil & gas majors
prior to 2007 as they believed it to be too expensive to develop
on a larger scale. Gas prices then rose and shale development on
a much wider scale not only increased investment but in turn also
cut project costs to an extent that it seems to be commonplace
now for major oil companies to be driving shale gas investment.

It is widely acknowledged that the price of crude oil influences,
if not dictates infrastructure development in the sector. As the oil
price touched the dizzy heights of US$147 a barrel prior to and
during the first phase of the global financial crisis, when investors
distanced themselves from plummeting financial markets and
poured capital into the commodities market - investment in oil
& gas infrastructure improved. The crude price made extraction
from zones perceived as “difficult to extract from” seem attractive.
Following that over much of 2008 and 2009, crude prices reversed
the gains of the last couple of years.
This is clearly mirrored in IJ’s half yearly project valuation data. In
H207, oil & gas transaction valuation came in at US$38.43 billion
with 46 transactions, rising to US$49.5 billion with 56 transactions by
H108. However, by H109 this had plummeted to US$9.95 billion. As
the oil price is being seen as stabilising above US$70 a barrel for
much of 2010 and with many commentators suggesting it would
end the year around or at the US$90 a barrel mark – an improved
investment scenario may be witnessed.
Overall, ExxonMobil PNG LNG Phase I (valued at US$18.2 billion),
Nord Stream Gas Pipeline (US$7.63 billion) and Ruby Pipeline Long-
Term financing (US$2.91 billion) were the three leading projects by
valuation to reach financial close.
The remainder of the current fiscal year could see gas projects
drive growth in sector much more aggressively than oil projects.
The importance of gas projects cannot be understated. However,
IJ analysts would not go as far as to suggest “big gas” would
overtake “big oil” over the next couple of years. A longer term shift
in hydrocarbon investment priorities is the more likely outcome.
Leading Players – H1 2010
• Crédit Agricole Group (MLA)
• Société Générale (Financial Adviser)
• Clifford Chance (Legal Adviser)
• Stone & Webster (Technical Adviser)
• ExxonMobil (Sponsor)

13 © Copyright 2010 Emap Limited

Power Global Infrastructure
Finance Review

Top 10 by Value
Name Value (US$m) Financial Close Location
Exeltium Power Purchase Financing 2,685 12/04/2010 France

Riyadh PP11 IPP 2,253 25/06/2010 Saudi Arabia

Paiton 3 IPP 1,519 08/03/2010 Indonesia

513MW Boyabat Hydroelectric Power Plant 1,214 15/01/2010 Turkey

Mannheim Block 9 CHP Coal-Fired Expansion 1,090 24/02/2010 Germany

GNPower Mariveles Coal-Fired Plant 1,000 29/01/2010 Philippines

TrAIL Refinancing 800 20/01/2010 United States

AEI Jaguar Energy 758 01/04/2010 Guatemala

GVK Goindwal Sahib Power Plant 693 01/02/2010 India

International Power Hazelwood Refi 678 21/01/2010 Australia

Total valuation of power projects for H1 2010 came in at US$16.78
billion down from US$23.04 billion noted over H109 and US$26.51
billion for H108. IJ data on total valuations indicates that volumes
have been in terminal decline since H107 when a figure of US$37.83
billion was noted; the highest since IJ commenced the present
data series in 2005.
Volumes in North America, Western Europe and Asia Pacific
contracted the most, but Latin America led by Brazil weathered
the finance lull of 2009 and emerged stronger over H1 2010. Brazil’s
performance can be explained by the proactive involvement of
the Brazilian development bank (BDNES) in helping some major
projects reach financial close in 2009, most notably in the power
sector. Its two main beneficiaries last year were the US$5.15
billion Jirau hydropower project and US$5.4 billion Santo Antonio
hydroelectric plant. The US$3.7 billion loan made available to Jirau
marked the largest ever loan made by the BDNES.
These power projects are crucial for Brazil’s growing electricity
needs. Hydroelectricity accounts for over 90 per cent of power
generated in Brazil. The trend continued in H1 2010, as the Brazilian
government approved the controversial 11GW Belo Monte
Hydroelectric project. In April, following clearance from local
courts, its energy agency awarded the contract to Norte Energia,
with Companhia Hidro Elétrica do São Francisco (CHESF) as the
leading contractor.
Belo Monte has never been short of controversy with concerns
about the regional environment and welfare of indigenous tribal
inhabitants. Some of the country’s leading infrastructure players,
such as Camargo Correa and Odebrecht, pulled out of the
auction, over rumours that power rates will be capped at BRL83
(US$47) per MWh; a rate deemed too low to assure a decent
return on investment. Surprisingly, the winning consortium - Norte
Energia - offered an even lower rate of BRL78 (US$44.4) per MWh.
On completion, Belo Monte would be the world’s third largest
hydroelectric station after China’s Three Gorges and Itapu,
another Brazilian power project. Its peak wattage of 11200MW
would appreciate Brazil’s existing generating capacity by about
10 per cent.
Away from Latin America, France’s Exeltium Power Purchase
financing (valued at US$2.69 billion), Saudi Arabia’s Riyadh PP11
IPP (US$2.53 billion) and Indonesia’s Paiton 3 IPP (US$1.52 billion)
topped the field by valuation. Of these Exeltium stands out, as it
follows a unique model in that it finances a future power plant by
going to end-users and asking them to raise money to forward-
purchase power long-term at consistent prices from the utility
which wants to build an expensive nuclear plant.
Riyadh PP11 follows the trend of Middle Eastern power market which
delivered big ticket projects in 2009. Concurrently, Guatemala’s
AEI Jaguar Energy project valued at US$758 million which reached
financial close in April also deserves a special mention given that
it was in a difficult jurisdiction and was creatively financed by local
institutions when international lenders had pulled out.
Overall, the of number of deals actually rose from the 21 noted
over H109 to 27 by end-June 2010, but nowhere near the high of 48
deals noted in H107. Looking at previous data for the whole year,
the total number of deals fell to 47 in 2009 from 88 in 2008. Looking
ahead, the present fiscal year may not be able to match the highs
of 2008, but could cap the performance of 2009.
Leading Players – H1 2010
• Crédit Agricole Group (MLA)
• Natixis (Financial Adviser)
• Latham & Watkins (Legal Adviser)
• Fichtner (Technical Adviser)
• International Power (Sponsor)

See conventional power and renewable energy graphic on page 16.

14 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review Renewables
Top 10 by Value
Name Value (US$m) Financial Close Location
Eneop 2 Wind Portfolio 480MW Phase I 1,197 29/01/2010 Portugal

206MW Collgar Wind Farm 680 31/03/2010 Australia

Termosolar Astexsol 2 523 05/03/2010 Spain

Eurus 250MW Wind Farm 514 04/06/2010 Mexico

150MW Alta Wind I Long-Term Debt 477 03/03/2010 United States

192MW Waubra Wind Farm 448 18/02/2010 Australia

49.9MW Hudson Ranch Power I 390 13/05/2010 United States

Duke Energy Wind Portfolio Refinancing 377 24/05/2010 United States

150MW Cedro Hill Wind project 374 10/03/2010 United States

50MW Helioenergy II 372 06/05/2010 Spain

The renewables sector saw a lot of activity over the first half of 2010
with 91 deals reaching financial close valued at US$13.69 billion.
The latest half-yearly performance marked an improvement
over H109 wherein 78 deals to the tune of US$12.93 billion were
recorded. How the year 2010 may end is contingent upon the USA’s
renewable energy drive which saw it overtake Western European
markets such as Germany and Spain in 2009. Additionally, China’s
enthusiasm for renewable energy could very well trump the US
market over the next couple of years.
However a potential problem for renewables could arise in the
shape of a “buy American” drive. In March, US Senator Charles
Schumer (Democrat-NY) and a group of Democratic Senators
introduced S. 3069, the American Renewable Energy Jobs Act.
The Act would amend the existing Treasury grant rules to make
the award of grants discretionary, to make grants subject to
“buy American” requirements, and to make the award of grants
contingent on the applicant’s creation and or preservation of
American jobs.

Renewables finished 2009 with a total value of US$28.3 billion
down 24 per cent from US$37.3 billion noted at the end of 2008.
Data projections suggest 2010 may match or even cap the
performance of 2009, given that following global financial crisis,
stimulus packages of a number of governments include renewable
energy initiatives.
The rise of non-western wind turbine manufacturers - particularly
Chinese ones - is probably a main reason behind efforts in the US
to extend “buy American” legislation to the wind turbine sector,
although such local-content rules do not appear to be imminent.
Paradoxically, it could harm those US firms that have so far banked
on cost advantages inherent in manufacturing in low-cost China.

Overall, four US projects featured among the top ten deals to
reach financial close. However, Portugal’s Eneop 2 Wind Portfolio
480MW Phase I (valued at US$1.2 billion), Australia 206MW Collgar
Wind Farm (US$680 million) and Termosolar Astexsol 2 in Spain
(US$523 million) were the top three projects by valuation to reach
financial close.
By making the award of grants discretionary, the Schumer
Proposal raises serious concerns for potential financing parties and
developers. As a result, there has been a strong lobbying effort
against it. If adopted, it is uncertain how this would impact the
development and cost effectiveness of US renewable energy
projects.

Elsewhere in the table, a key Latin American project to reach
financial close was Mexico’s Eurus 250MV wind farm. However, the
continent clearly has a lot of catching up to do and its largest
market – Brazil’s penchant for large-scale hydroelectric power is
certainly not helping.
In a complete contrast, the North American landscape has
been dominated over the last couple of years by the US market,
especially for wind farm projects. Of the 36 North American
renewables projects to reach financial close in 2009, 31 were in
the USA valued at US$6.91 billion. Of these projects 24 were wind
farm initiatives. At the time of writing this report, the USA is deemed
the market leader in wind power according to the Global Wind
Energy Council. In 2009, along with China, it added the most wind
capacity thereby overtaking Germany. At end-2009, the total US
Wind Power capacity stood at 34,863 MW, according to the US
Department of Energy’s National Renewable Energy Laboratory
(NREL).
Altogether, the USA accounted for 22.3 per cent of total wind
power capacity that existed globally in 2009. Chinese investment
may alter this dynamic over the coming years, but US wind energy
is likely to hold its own for the remainder of 2010 at the very least.
The US government has been furthering wind power by awarding
federal cash grants in lieu of the 30 per cent investment tax credit
(ITC), under the American Recovery and Reinvestment Act (2009),
to projects wherein construction begins on or before December
31, 2010 and those projects that are completed before specified
outside date(s) up and until January 1, 2013.
In summation, a US-China push could herald an exciting year
ahead for the renewables projects. If India belatedly closes some
of its projects rumoured to be in the pipeline, 2010 could be a
bumper year yet for the sector.
In terms of the type of renewable energy projects, a break-up of
figures suggests that wind power dominates the market; as it has
been consistently doing since IJ commissioned the present data
series in 2005. In H1 2010, wind power projects accounted for 29.2
per cent of all renewables projects reaching financial close up
from 19.6 per cent in H1 2009.
Next in line were PV solar energy (7.6 per cent) and Thermal solar (4.2
per cent) for the year to end-June. Interestingly, the gap between
conventional power and renewable energy project finance
market share also appears to be narrowing though the former still
leads. During H109 conventional power projects accounted for 64
per cent of the market against 36 per cent for renewables. This
narrowed over H1 2010 to 55.1 per cent for conventional power
versus 44.9 per cent for renewable power.
Leading Players – H1 2010
• BBVA (MLA)
• Deloitte (Financial Adviser)
• Garrigues (Legal Adviser)
• Garrad Hassan (Technical Adviser)
• Acciona (Sponsor)

See renewable energy nreakdown graphic on page 16.

15 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review

16 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review Transport
Top 10 by Value
Name Value (US$m) Financial Close Location
Lyndon B Johnson Freeway Managed Lanes P3 2,661 22/06/2010 United States

Portugal High Speed Rail Poceirao to Caia PPP 2,142 07/05/2010 Portugal

Moscow-St Petersburg Toll Road PPP - Section 1 2,133 26/04/2010 Russia

Pinhal Interior Shadow Toll Road PPP 1,873 28/04/2010 Portugal

R3-R5 ‘Accesos de Madrid’ Radiale Refi PPP 1,124 28/04/2010 Spain

Peninsula Link PPP 781 05/02/2010 Australia

Autopistas del Sol - Malaga - Guadiaro Refinancing 666 19/04/2010 Spain

New Brunswick Route 1 Gateway P3 569 08/04/2010 Canada

Eje Diagonal Shadow Toll Road PPP 561 18/03/2010 Spain

Birmingham Highways PFI 479 06/05/2010 United Kingdom

The transport sector, vital though it may be, often bears the brunt
of investment constriction when governments are looking to save
or reprioritise. In the aftermath of the global financial crisis this is
exactly what has transpired. Data suggests that over H1 2010 a
total of 25 transactions reached financial close valued at US$17.49
billion versus 41 transactions valued at US$24.63 billion recorded
over H109. This represents a 29 per cent drop in valuation terms
between the corresponding half-yearly assessment periods of 2009
and 2010.
Furthermore, the valuation and number of transactions are
nowhere near the levels of H108 when 61 transactions valued at
US$34.2 billion were recorded. However, that was before the credit
constriction really gripped the money markets. Overall, the transport
sector ended 2009 with a total value of US$37 billion – down 35 per
cent from US$56.7 billion recorded in 2008. It is doubtful that end-
2010 would see similar levels of project finance. That said, some
big-ticket transport projects are in the pipeline.
The biggest transport deal to real financial close globally was the
Lyndon B Johnson Freeway Managed Lanes P3 valued at US$2.66
billion. However, only one other North American project made to
the top ten projects list by valuation – Canada’s New Brunswick
Route 1 Gateway P3 valued at US$569 million. The bulk of the
activity was noted in Europe with Portugal, Spain, Russia and UK
leading the way. Among these, the projects which standout are
Portugal’s High Speed Rail Poceirao to Caia PPP valued at US$2.14
billion and Russia’s Moscow-St Petersburg Toll Road PPP Section I
valued at US$2.13 billion.
It will be the first high speed rail project in Latin America. However,
the drive to complete the TAV project in shortest possible time-
frame is questionable. Officially, the tendering process should have
been completed early in 2010 and the contract signed by June
2010.
Construction work is scheduled to begin in the second half of 2010
with completion slated for 2014 in time for the soccer World Cup.
However, none of the target dates have been met so far. Local
media reports suggest the plan is now to have the project ready
in time for Rio de Janeiro’s hosting of the Olympic Games in 2016.
Elsewhere in Latin America, Peru’s Red Vial n°4 Concession PPP
valued at US$335 million was the leading transport project to reach
financial close.
Away from Latin America, Australia’s Peninsula Link PPP which
reached financial close in February valued at US$781 million is
another noteworthy project. A key project in the Indian subcontinent
which closed in March was India’s NH3/Ma1 Highway PPP valued
US$314 million.
Altogether, a number of ambitious projects are in the pipeline
across Asia Pacific and the Indian subcontinent but doubts persist
about the ability of project financiers to ensure that these reach
financial close. On a related note, project delays and suspensions
are likely to impact activity in Western and Eastern Europe as well.
Leading Players – H1 2010

Looking ahead, while sector investment in Europe is uncertain for • Espirito Santo Investment (MLA)
2010, Latin America led by Brazil could emerge as a growth driver. • KPMG (Financial Adviser)
In 2009, Brazil closed the biggest deal in the region by valuation • Clifford Chance (Legal Adviser)
– the US$1.27 billion Rodoanel Oeste (Western Section). Among its • Arup (Technical Adviser)
current noteworthy initiatives is the Trem de Alta Velocidade (TAV) • Iridium (Sponsor)
Rio de Janeiro to São Paulo High Speed rail link. BNDES, is expected
to provide 60 per cent of the finance. A break-up of published
figures suggests the agency is planning to provide BRL21 billion of
the total BRL34.6 billion for the construction of 518 km of tracks and
tunnels.

The Brazilian government is likely to invest BRL2.2 billion (US$1.2

billion) in claiming land and BRL1 billion (US$535 million) for the
creation of the High Speed Train Company (ETAV), to be used
for learning and incorporating the TAV technology. According to
BNDES, the government is also likely to waive BRL6 billion (US$3.2
billion) in taxes, contingent upon further negotiations, which are
presently ongoing.

See transport subsector graphic on page 19.

17 © Copyright 2010 Emap Limited

Social Infrastructure Global Infrastructure
Finance Review

Top 10 by Value
Name Value (US$m) Financial Close Location
Flemish Schools PPP 2,831 10/06/2010 Belgium

New Karolinska Solna University Hospital PPP 1,366 30/06/2010 Sweden

Southmead Hospital PFI 1,049 25/02/2010 United Kingdom

Turin Waste-to-Energy Facility refinancing 582 22/01/2010 Italy

CRCHUM Montreal University Hospital Research Centre 431 21/05/2010 Canada

Thiene-Schio Hospital PPP 262 29/04/2010 Italy

Ararat Prison PPP 223 27/05/2010 Australia

Royal Canadian Mounted Police Regional HQ PPP 219 22/04/2010 Canada

Zoo de Vincennes PPP 194 24/02/2010 France

Adult Mater Hospital Extension PPP 184 23/03/2010 Ireland

Social infrastructure was among the few sectors to witness a rise
in investment over H1 2010, given that both before and after the
credit crisis, governments poured resources into social projects as
part of their respective economic stimulus packages. During the
year to end-June, 40 social infrastructure deals valued at US$9.74
billion were recorded. This marked a 66 per cent rise over H109
when 39 deals worth US$5.87 billion were noted.
Current indications are that the social infrastructure investment
volume in 2010 will top the figure of US$12.5 billion noted at the
end of 2009, though surpassing the 2008 investment volume of
US$22.4 billion will be harder.
A further break-up of figures within social infrastructure investment
suggests that akin to the last two previous half-yearly assessment
periods, healthcare and education lead the way. Over H1 2010,
healthcare saw 14 deals to the tune of US$4.04 billion reach
financial close up from US$1.67 billion with the same number of
transactions in H109. Concurrently, education saw 14 deals worth
US$3.87 billion – up from H109 figures of US$1.11 billion and 13
transactions – as several UK projects pushed ahead to secure
funding before the new government acted on BSF.
Western Europe, a global leader in social infrastructure public
private partnerships, lead the way – in line with IJ analysts’
expectations – with the region accounting for seven of the top ten
projects in the sector.
Another noteworthy development is the decline in global defence
projects, plummeting from four deals worth US$5.55 billion during
H108 to nil in H1 2010. Government and fire & rescue segments also
recorded nil values. Elsewhere, the data series reveals that social
housing projects have also taken a knock falling from a transaction
volume of US$1.31 billion in H109 to a mere US$58.1 million during
H1 2010. The total number of transactions also fell from three to one
over the stated period.
Overall, Belgium’s Flemish Schools PPP (valued at US$2.83 billion),
Sweden’s New Karolinska Solna University Hospital PPP (US$1.37
billion) and UK’s Southmead Hospital PFI (US$1.05 billion) were the
three leading projects by valuation. Beyond Western Europe, two
Canadian projects and an Australian initiative also find their place
in the table.
Looking ahead, the UK’s prominence in the sector is likely to diminish
following its new Conservative & Liberal Democrat coalition
government’s announcement of spending cuts. Most notably
among these is the cancellation of the BSF programme. Impact of
the British cuts would only be assessed in concrete terms once the
government’s public spending review is published in October.
Leading Players – H1 2010
• Barclays (MLA)
• Grant Thornton (Financial Adviser)
• Addleshaw Goddard (Legal Adviser)
• Mott MacDonald (Technical Adviser)
• Carillion (Sponsor)

See also social infrastructure subsector graphic on page 19.

18 © Copyright 2010 Emap Limited

Global Infrastructure
Finance Review

19 © Copyright 2010 Emap Limited

Water & Sewage Global Infrastructure
Finance Review

Top 4 by Value
Name Value (US$m) Financial Close Location
New Cairo Wastewater PPP 109 03/02/2010 Egypt

Aguas de Cascais PPP 108 31/03/2010 Portugal

Indaqua Feira Concession PPP Refinancing 86 10/02/2010 Portugal

Post Trasvase Jucar - Vinalopo Pipeline 61 08/03/2010 Spain

The overall trend in the Water & Sewage sector during H1 2010
has been one of decline in investment levels. This is reflected both
in the transaction volumes as well as the number of transactions
reaching financial close. Over the year to June-end, only four
water & sewage projects reached financial close, a marked fall
from the ten projects noted during H109, 12 for H108 and 18 for
H107.
Leading Players – H1 2010
• Millennium BCP / Grupo Santander (MLA)
• F9 Consulting / Grupo Santander (Financial Adviser)
• DLA Piper / Gide Loyrette Nouel / Baker & McKenzie /
Zulficar & Partners (Legal Adviser)
• Orascom Construction Industries / Aqualia (Sponsor)

Transaction volume for the first half of 2010 came in at US$0.36

billion well below the US$1.07 billion noted over H109. This signifies
a year over year decline of 66 per cent. The sector ended 2009
and 2008 with total volumes of US$5.9 billion and US$3.2 billion
respectively. It is difficult to fathom how the sector could replicate
volumes near enough these levels for 2010.

Spain closed five water transactions in 2009 worth US$366 billion,

and the market makes its mark in H1 2010 data as well with the
Post Trasvase Jucar – Vinalopo Pipeline valued at US$61 million
reaching financial close in March. Investment activity has also
been recorded widely across the Middle East – some of which
may reach financial close over the remainder of 2010.

Overall, the three leading projects in the sector were Egypt’s New
Cairo Wastewater PPP valued at US$109 million and Portugal’s
Aguas de Cascais PPP and Indaqua Feira Concession PPP
Refinancing initiative valued at US$108 billion and US$86 billion
respectively

Telecoms
Top 4 by Value
Name Value (US$m) Financial Close Location
Helios Towers Nigeria Expansion 150 04/02/2010 Nigeria

MTS Mobile Networks Financing 97 29/03/2010 Russia

Kalimantan Fibre Optic Financing 60 26/03/2010 Indonesia

Hautes-Pyrenees High-Speed Network PPP 49 18/02/2010 France

Telecoms totalled a mere US$0.36 billion during H1 2010, down from
US$2.61 billion over H109. However, valuation volumes aside, the
number of deals have gradually risen in single figures from a single
deal during H108 to 3 and 4 over H109 and H1 2010 respectively.
The biggest deal by transaction volume came from Nigeria where
the Helois Towers Expansion project reached financial close valued
at US$150 million. Russia’s MTS mobile networks financing (US$97
billion) and Indonesia’s Kalimantan Fibre Optic financing (US$60
billion) were other noteworthy telecoms deals to reach financial
close.
Leading Players – H1 2010
• Crédit Agricole Group (MLA)
• Rothschild / RBC Capital Markets / Grant Thornton
(Financial Adviser)
• Allen & Overy (Legal Adviser)
• Atkins / Cistra (Technical Adviser)
• AXA Private Equity / Vinci / SFR (Sponsor)

Overall, the sector’s performance has been disappointing,

especially given the fact that telecoms finished 2009 with a total
value of US$6.8 billion, an annualised appreciation of 39 per cent
over 2008 when a total value of US$4.9 billion was recorded. Looking
ahead to H2 2010, there remains a very real possibility that rollouts
of broadband projects in Asia Pacific and Russia may improve
transaction volumes and number of deals, thereby recuperating
the sector’s performance as a whole.

20 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review Mining & Metals
Top 5 by Value
Name Value (US$m) Financial Close Location
Pueblo Viejo Mine 1,040 30/04/2010 Dominican Republic

Lumwana Copper Mining Refinancing 400 09/03/2010 Zambia

Boguchansky Bridge Loan Facility Refinancing 260 15/03/2010 Russia

Kooragang Island terminal Expension 232 14/05/2010 Australia

Mineral Park Mine Refinancing 130 26/04/2010 United States

The mining sector’s downslide in valuation terms continues well
into the year coming in at US$2.36 billion for H1 2010 down from
US$4.34 billion noted in H109; a depreciation of 46 per cent on
an annualised basis. IJ’s latest data follows on from 2008 when
sector valuation stood at US$14.9 billion for the whole year which
subsequently fell to US$6.8 billion for 2009; an annualised fall of 54
per cent.
The number of deals in the sector has also been steadily falling from
23 in H108 to a mere 9 in H1 2010. The relative drop in commodities
prices has contributed to the decline in investment in the sector
as activity in Asia Pacific and the Indian subcontinent contracted
and knocked the sector as a whole. Allied factors also contributed
to the lack of investment, especially in the case of Australia.
So the outlook for Australia and by default for the wider Asia
Pacific region remains mixed. IJ expects the market to stabilise
following the Australian general election outcome as it would end
uncertainty at the very least. However, growth is not expected until
at least until H1 2012.
Financiers’ preference for smaller deals as opposed to capital
intensive ones, which the mining sector demands, also knocked
investment. In terms of specific projects, Dominican Republic’s
Pueblo Viejo Mine (valued at US$1.04 billion), Zambia’s Lumwana
Copper Mining Refinancing (US$400 million) and Boguchansky
Bridge Loan Facility Refinancing (US$260 million) were the three
leading deals by valuation to reach financial close.

Former Australian Prime Minister Kevin Rudd’s Resource Super Profits
Tax (RSPT) proposal levied a 40 per cent tax on mining companies.
Following his ejection from office, his successor Julia Gillard has
proposed a lower Mineral Resource Rent Tax (MRRT) pegged at 30
per cent, ahead of the country’s general election scheduled for 21
August. The new proposals also indicate that smaller iron ore and
coal companies, with annual profits below Aus$50 million (US$41.9
million), will not be required to pay the new tax. However, both the
intricacies of the proposal as well as the outcome of the Australian
election are far from certain.
Leading Players – H1 2010
• Société Générale (MLA)
• Royal Bank of Scotland / Rothschild (Financial Adviser)
• Clifford Chance (Legal Adviser)
• Lahmeyer International (Technical Adviser)
• Barrick Gold Corporation (Sponsor)

21 © Copyright 2010 Emap Limited

 League Tables
Global Infrastructure
Finance Review

Project Finance - H1 2010

Global MLA (Top 10 by Underwritten Value)

Rank Company Total US$ m Transactions Market Share (%)

1 BNP Paribas 5,372.41 28 9.77
2 Crédit Agricole Group 3,864.05 34 7.02
3 Société Générale 3,640.50 28 6.62
4 Grupo Santander 1,934.21 28 3.52
5 SMBC 1,715.98 21 3.12
6 Caja Madrid 1,686.73 19 3.07
7 Bank of Tokyo-Mitsubishi UFJ 1,549.15 19 2.82
8 Intesa San Paolo 1,458.62 8 2.65
9 UniCredit Group 1,345.30 16 2.45
10 BBVA 1,168.56 30 2.12

Global Legal Adviser (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 Allen & Overy 30,765.84 18 9.76
2 Latham & Watkins 26,744.44 15 8.49
3 Allens Arthur Robinson 19,942.18 7 6.33
4 Sullivan & Cromwell 18,200.00 1 5.78
= Blake Dawson 18,200.00 1 5.78
6 Clifford Chance 16,729.44 22 5.31
7 White & Case 13,810.95 12 4.38
8 Linklaters 11,231.97 15 3.56
9 Freshfields 7,668.96 6 2.43
10 Milbank 7,199.08 9 2.28

Global Financial Adviser (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 Société Générale 28,026.12 4 18.74
2 Royal Bank of Scotland 9,582.17 4 6.41
3 KPMG 8,806.91 15 5.89
4 Commerzbank 8,721.60 2 5.83
5 PwC 8,455.79 13 5.65
6 UniCredit Group 7,631.45 1 5.10
7 Grant Thornton 4,870.77 10 3.26
8 Caixa Geral de Depósitos 4,379.15 3 2.93
9 RBC Capital Markets 4,244.19 5 2.84
10 Espirito Santo Investment 3,805.56 4 2.54

IJ’s project finance League Tables show market activity to the best of
our knowledge at the time of publication. For a copy of our criteria and
methodology please contact IJ staff by email at leaguetables@ijonline.com.

22 © Copyright 2010 Emap Limited

 Global Infrastructure
Finance Review

Global Sponsor (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 ExxonMobil 6,042.40 1 6.16
2 Oil Search 5,278.00 1 5.38
3 Gazprom 3,892.04 1 3.97
Independent Public Business
4 3,021.20 1 3.08
Corp
5 Exeltium 2,684.92 1 2.74
6 Santos 2,457.00 1 2.50
7 Vinci 1,931.84 3 1.97
8 Cintra 1,916.57 2 1.95
9 Perenco 1,721.00 1 1.75
10 Sibur Holding 1,490.00 1 1.52

Global Technical Adviser (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 Stone & Webster 7,631.45 1 14.80
2 Arup 7,364.69 3 14.28
3 Atkins 4,178.06 5 8.10
4 Mott MacDonald 3,695.77 8 7.17
5 Fichtner 2,689.83 4 5.22
6 Bridgefarmer & Associates 2,661.00 1 5.16
= LBJ Mobility Coordinator 2,661.00 1 5.16
8 Garrad Hassan 2,570.38 8 4.98
9 Lenpromstroyproekt 2,132.84 1 4.14
10 Cistra 1,633.72 1 3.17

23 © Copyright 2010 Emap Limited