Paolo Scordino


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Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.

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Paolo Scordino

  1. 1. Strictly confidential Sustainable Infrastructure Investing - The new fixed income? Paolo Scordino Chief Executive Officer Zurich - November 15th, 2013
  2. 2. Agenda Sustainable infrastructure Prelios SGR & Renewable Energies Projects Company Profile
  3. 3. Infrastructure Market & Sustainable Projects INFRASTRUTURE MARKET  The OECD forecast that global infrastructure SUSTAINABLE INFRASTRUCTURE  The concept of sustainability is a confluence of investment requirement by 2030 for transport, solutions that support environmental as well electricity generation, transmission and as social and economic needs and benefits — distribution, water and telecommunications will the so-called "triple bottom line" goal. be $70 trillion (€50 trillion)  Infrastructure Projects are the core of the European plan to drag the “old continent” from one of the most intensive periods of crisis.  During the last months we have assisted at a  The engineering profession has been delivering technically superior solutions to meet Society' needs and to protect the environment.  In recent years, there has been growing recognition of: strong impetus by the government of  finiteness of natural resource bases different European Countries to attract private investments in the infrastructure sector through  increasing demands for services by a growing population ad hoc legislation.  need to support aging infrastructure  New Fixed Income products based on infrastructure projects could attract large institutional investors (i.e. Project Bond).  higher levels of regulatory requirements  limitations on funding sources for critical and necessary infrastructure investments.
  4. 4. A Sizeble Market EU INFRASTRUCTURE MARKET  Over the next 10 years Europe will need a huge injection of capital into the continent’s infrastructure network  The European Commission estimates an investment requirement of €1.5 trillion and €2 trillion by the year 2020
  5. 5. An Attractive Market WHY TO INVEST  WHO INVEST Social and responsible Investments 18%  One of the rare asset classes capable of offering high quality long term predictable and stable cash flows 16% 14%  Long term nature of investments allows for a matching of investors’ long term liabilities  10% New investment products to attract institutional investors (i.e. Project Bond)  Superior risk-adjusted return based on low default and high recovery rates  Low correlation to other corporate loans investment strategies, offering valuable diversification  12% Favorable market conditions and timing for institutional investors to enter the market 8% 6% 4% 2% 0% 34% of institutional investors in infrastructure are pension funds.
  6. 6. Fixed Income and Infrastructure Investments Key movements in the infrastructure debt market  Banks have dramatically decreased their available lending capacity due to the increased capital costs  Large market in need of significant debt supply which historical traditional lenders are no longer capable of providing  Outside the bank financing there are new providers and instruments for infrastructure debt  During the last months we have assisted at a strong impetus by the government of different European Countries to attract private investments in the infrastructure sector through ad hoc legislation  “Project Bonds” and Debt Products are a very interesting asset class for investors with a long term horizon and keen on stable cash flows  Key investors for those instruments are: Insurance Companies, Pension Funds, Sovereign Wealth Fund:  Margins on infrastructure debt are at a historically high point and will remain elevated for the foreseeable future due to regulatory pressures faced by the banking community  Power is in the hands of the debt providers: Opportunities to negotiate debt tranches with better covenant and security packages, as well as interest rate and amortization profiles suited to the institutional investors community  Asset class with strong attributes complementing institutional investors fixed-income investment portfolios
  7. 7. Make a Project development Sustainable Lead with creative, positive and SUSTAINABLE solutions Developing a corporate sustainability culture Engage investors, as asset manager, making them aware of the importance of the impact. Negative impact creates risk that far exceeds any possible tolerance (lawsuits, regulatory risk, reputational risk) Building a teams that will develop tomorrow’s infrastructure
  8. 8. Agenda Sustainable infrastructure Prelios SGR & Renewable Energies Projects Company Profile
  9. 9. Prelios SGR & Reneweable Energies Projects Project Renewable Assets The project consists in the setting up of a new real estate fund specializing in investments in the renewable energy sector and reserved to qualified investors. First contribution of 19 plants, already implemented and financed, connected to the electrical grid and benefiting from the government incentive tariffs. The assets are currently owned by TerniEnergia and have a total value of approx. € 75 million with a debt level of approx. 76% (€ 58 million). The investment pipeline, expected the contribution, during the first half of 2014, additional plants for approx. € 120 million financed at 74% approx. (€ 89 million). Following the transfer, Terni will be the conductor of the assets, and will place the units to third parties. Obton Fund Obton is an Italian closed ended real estate fund reserved to qualified investors (Ministerial Decree 228/1999). The Fund invests primarily in real estate assets and real property rights on real estate, functional to the production of electricity from renewable energy sources. The Fund investment strategy provides a leverage of 70%, in line with the provisions of the Rules of the Fund (maximum level of debt permitted up to 90% of the real estate), and a minimum target yield of the Fund in terms of IRR equal to 10%. The target size of the Fund's investments is set at approximately € 50 million (approx. 15 MW) and the duration of the fund is equal to 21 years.
  10. 10. Agenda Sustainable infrastructure Prelios SGR & Renewable Energies Projects Company Profile
  11. 11. Prelios SGR Prelios SGR (90% Prelios, 10% Intesa Sanpaolo) is one of the leading real estate asset management companies in Italy.  The company is active in promoting, setting up and managing real estate investment funds, in real estate advisory and in third-party separate account management.  Prelios SGR currently manages 23 funds1, of which two are listed in the MIV segment of the Milan Stock Exchange.  As of June 2013, it has total AUM2 of ~ €3.8 Bn and NAV of ~ €1.5 Bn.  It has a successful track record with best in class results. o Average Dividend Yield3 for ordinary funds of about 7% o Average Internal Rate of Return (IRR)3 for ordinary funds of approximately 9%  The company subscribes to high standards of transparency, governance and risk management.  Prelios SGR has received the certification for Quality Management System, ISO 9001: 2008, from the independent certification body, IMQ, confirming the SGR’s continuing commitment to international best practice. 1 Prelios SGR also manages a third-party separate account 2 Total AUM includes a third-party SPV, managed by Prelios SGR 3 From initial date of operation to June 30th 2013 AUM BREAK DOWN BY TYPE OF FUND
  12. 12. Prelios Group Through independent operating companies, the Prelios Group is the first platform for real estate finance and specialty services for the management and value enhancement of third-party portfolios. PRELIOS DE ITALY* SGR INTEGRA** AGENCY Real estate fund management Integrated property management services Real estate brokerage and advisory VALUATIONS Valuations and real estate trading portal INTEGRATED SERVICES ITALY CREDIT SERVICING Management of performing & nonperforming loans PRELIOS PL COMMERCIAL RESIDENTIAL RE SERVICES Services for commercial portfolios Services for residential portfolios Integrated property management services RE SERVICES GERMANY *Includes a start-up Asset Management business unit **Includes Facility Management services As of 30/06/2013, the Prelios Group has Assets Under Management of approximately €9.5 Bn (including NPL of approximately €1 Bn) with assets localized in Italy and Germany
  13. 13. Prelios Group Shareholder Structure Below, a glance at the current shareholder structure of the Company after the capital increase: Shareholder Base after Capital Increase (main shareholders)1 Camfin Assicurazioni Generali 10.4% Pirelli2 2.2% Unicredit2 Intesa San Paolo2 15.5% 7.4% 19% Mediobanca 1.8% Other3 9.7% Feidos 112 8.5% 25.5% Industrial Shareholders Financial Shareholders Shareholders already in (1) Based on the economic stake and without assuming the impact of potential further debt conversion in equity. (2) Stake owned also through the vehicle, “Fenice,” which holds 19.8%, represented by non-voting share capital. (3) Includes the Italian banks BPM (2.9%), BPS (1.1%), MPS (2.9%), UBI (0.6%), BPER (1.1%), CARIGE (1.1%). Market
  14. 14. Main Institutional Investors Insurance companies Institutions, pension funds, public bodies Financial institutions, foundations, sovereign wealth funds and investment funds
  15. 15. Quality Management Certification ISO 9001:2008 Prelios SGR recently received the ISO 9001:2008 certification for Quality Management Systems from the independent accreditation body, the IMQ. It confirms the company’s continuous commitment to international best practice. In compliance with the certification standards, SGR has adopted rules and practices for ensuring: • Best client satisfaction • Best market competitiveness • Improved, effective communication and product development processes • The application of ISO quality management principles of continual improvements in management systems and processes, and the use of quality indicators
  16. 16. … And Recognition • FIPRS FUND: PRIZE WINNER AT THE IPD EUROPEAN PROPERTY INVESTMENT AWARDS 2012 • FIPRS, Fondo Immobiliare Pubblico Regione Siciliana, a real estate fund established by contribution of public properties, received the Specialist Fund Award for achieving the highest yield recorded over the last three years to date. • CLARICE FUND: PRIZE WINNER AT THE IPD EUROPEAN PROPERTY INVESTMENT AWARDS 2011 • Clarice Fund – Light Industrial, a real estate fund established by private contribution, was the 2011 winner for Italy for the Specialist Fund Awards, for the highest yield recorded over the last three years to date. • CLOE FUND: PRIZE WINNER AT THE IPD EUROPEAN PROPERTY INVESTMENT AWARDS 2010 • Cloe, a real estate fund established by private contribution, was the prize winner for Italy for the Specialist Fund Awards, for achieving the highest yield recorded over the last three years to date.