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Aslı Erden Öztürk
Principal Banker
EBRD
Project Financing for
Infrastructure/PPP Projects in Turkey
Investing in Turkey an...
AAA/Aaa rated multilateral development
bank, promotes transition to market
economies in 35 countries from central
Europe t...
 The EBRD has been investing in
Turkey since 2009 and today, in
terms of annual business volume,
Turkey has become the la...
 Our operational priorities in Turkey:
 developing sustainable energy (including support to on-going
reforms of the ener...
How we deliver results ?
Development of
strong institutional
and regulatory
frameworks
Donor funded
technical
cooperation ...
 Strong, internationally recognized partner
 Higher risk appetite than other lenders
 Long established policy dialogue ...
Wide experience in PPP structures
 Assistance to public/authorities:
 Provide general advice on acceptable process.
 EB...
Extensive offer of tailored financial products
Debt Equity
 Loans to the private sector (up to 35%
syndicating the rest),...
EBRD-participated PPP Projects in Infrastructure in
Turkey
9
PPP Loan Loan EBRD Tenor
Year Project Type Type Amount (m) Am...
EBRD-participated other Infrastructure Projects in Turkey
10
Arkas, Senior Corporate Loan, EUR 21.4 million, 2010;
Bursa...
Republic of Turkey - Plans for Infrastructure
11
EUR 200 – 400 bn in infrastructure investments over the next 10 years;
Ex...
Turkey’s Plans for Infrastructure- Con’t
12
• Istanbul airport.
• High speed train Istanbul to Ankara
• North Marmara High...
Hospital Facilities Management PPP projects
currently mandated
The EBRD Board has pre-approved a financing framework of
Eu...
Hospital Facilities Management PPP project
example-Ankara Etlik Hospital PPP
• Intended to service central Anatolia’s 12 m...
Financing of Turkish Hospital PPPs
 EBRD debt size: max 35% of total financing.
 A loan: € 50-100 million ticket size.
...
Financing Issues
 The projects are sizable and require significant debt and equity tickets.
 Sponsors expectations are t...
Integrated Approach to Hospital PPPs
 The EBRD believes that the healthcare PPP programme launched by
the Ministry of Hea...
Monitoring KPIs for various payment streams
Monitoring
Unit focus
18
Conclusions
 EBRD has successful experience in financing PPP projects in the
region and in Turkey.
 EBRD supports author...
Contact
Jean Patrick Marquet
Director – Turkey
t: + 90 212 386 1138
marquetj@ebrd.com
20
James Hyslop
Director – Municipal...
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Investing in Turkey: Asli Ozturk, Project Financing for Infrastructure/PPP Projects in Turkey

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Asli Erden Ozturk
Principal Banker
EBRD

Investing in Turkey and the Growing Economy
Half-day MEA Conference
Wednesday 18th March 2015

Published in: Business
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Investing in Turkey: Asli Ozturk, Project Financing for Infrastructure/PPP Projects in Turkey

  1. 1. Aslı Erden Öztürk Principal Banker EBRD Project Financing for Infrastructure/PPP Projects in Turkey Investing in Turkey and the Growing Economy London, 18 March 2015 © European Bank for Reconstruction and Development 2014 | www.ebrd.com
  2. 2. AAA/Aaa rated multilateral development bank, promotes transition to market economies in 35 countries from central Europe to central Asia and the Southern and Eastern Mediterranean – SEMED region) In 2014, the EBRD welcomed Cyprus and Libya as a recipient country and member respectively. • Owned by 65* countries and two inter- governmental institutions. • Capital base of €30 billion. • Invested over €95 billion in more than 4,000 projects since 1991 *Libya is yet to become a fully ratified member of the EBRD • Results in 2014: • €8.85 billion invested in 377 projects • Private sector accounted for 70% share The EBRD snapshot 2 Cumulative business volume of €95bn
  3. 3.  The EBRD has been investing in Turkey since 2009 and today, in terms of annual business volume, Turkey has become the largest country of EBRD operations.  In 2014 the EBRD invested more than € 1.5 billion for 40+ projects in Turkey.  As of today, total number of projects reached 136 with a portfolio more than € 4billion.  In the resident offices in Istanbul, Ankara and Gaziantep EBRD employs 35 professional bankers. EBRD in Turkey 3
  4. 4.  Our operational priorities in Turkey:  developing sustainable energy (including support to on-going reforms of the energy sector through policy dialogue);  promoting the development of micro, small and medium enterprises (MSMEs);  enhancing the competitiveness of Turkish industry;  promoting market approaches toward investment in infrastructure;  support the Turkish government’s privatisation programme in the enterprise and financial institutions sector. Operational Priorities in Turkey 4
  5. 5. How we deliver results ? Development of strong institutional and regulatory frameworks Donor funded technical cooperation to overcome barriers and facilitate implementation Projects & Investments Policy Dialogue Technical Cooperation Wide range of financing instruments for public and private clients 5
  6. 6.  Strong, internationally recognized partner  Higher risk appetite than other lenders  Long established policy dialogue with Government and Regulators  Unparalleled presence in the region provides mitigation of political and regulatory risks.  Preferred creditor status in all countries of operations.  Catalysts to access additional finance  Flexible deal structures and products  Dedicated team with expertise in a variety of sectors and countries  Donor-funded technical assistance to develop projects EBRD’s Value-Added: a unique offering 6
  7. 7. Wide experience in PPP structures  Assistance to public/authorities:  Provide general advice on acceptable process.  EBRD Policy for Concessions.  Facilitate grant funded technical assistance.  Development of regulatory structures/PPP framework.  Help in preparation of the competitive tendering, projects.  Structuring the financing:  Debt  Equity  Commercial loan co-financing  Environmental, social, health and safety improvement of projects. 7
  8. 8. Extensive offer of tailored financial products Debt Equity  Loans to the private sector (up to 35% syndicating the rest), including SME  Sovereign, sovereign guaranteed and loans to state owned companies  Debt co-financing, working with commercial banks and IFIs  Project finance loans (incl. PPP)  Hard/local currency. Fixed/floating rates  Syndication under preferred creditor status  Access to capital markets  Investing with majority sponsor to reduce equity burden and add partnership value. Typically 20-25%  Common or preferred stock  Privatization and initial public offering (IPO)  Mezzanine equity and subordinated debt  Infrastructure funds  PPP 8
  9. 9. EBRD-participated PPP Projects in Infrastructure in Turkey 9 PPP Loan Loan EBRD Tenor Year Project Type Type Amount (m) Amount (m) 2014 Adana Hospital PPP DBFMO Senior Loan € 440 € 115 18 year B-Loan cover € 100 2014 Dalaman Airport TOR Senior Loan € 175 € 87.3 16 year 2013 Mersin International Port TOR Project Bond $450 $80 7 year 2013 Asyaport Greenfield, Senior Loan $267 $92 10 year concession on land 2012 TAV Izmir Airport TOR Senior Loan € 250 € 70 15 year B-Loan cover € 75 15 year 2012 Eurasia Tunnel BOT Senior Loan $960 $150 18 year 2011 Privatisation of IDO Share sale, Senior Loan $650 $150 12 year TOR on lines and piers 2010 TASK- Dilovasi Waste Water BOT Senior Loan € 13.5 € 13.5 10 year 2010 TASK- Gulluk Water BOT Senior Loan € 2.5 € 2.5 10 year € 2,940 € 881Total (million €)
  10. 10. EBRD-participated other Infrastructure Projects in Turkey 10 Arkas, Senior Corporate Loan, EUR 21.4 million, 2010; Bursa Light Rail, Municipal Loan, EUR 70 million, 2011; Bodrum Water, Municipal Loan, EUR 7.5 million, 2011; Gaziantep CNG Buses, Municipal Loan ,EUR 10 million, 2011; Mersin Wastewater, Municipal Loan, EUR 20 million, 2012; ER Denizcilik, Senior Corporate Loan, USD 39.3 million, 2012;  Izmir Ferries, Municipal Loan, EUR 33 million, 2013;
  11. 11. Republic of Turkey - Plans for Infrastructure 11 EUR 200 – 400 bn in infrastructure investments over the next 10 years; Examples of infrastructure requirements: •EUR 12 billion hospital facilities PPP programme: up to 30 projects tendered in 2 Phases; Phase 1 including 16 hospitals and EUR 6 billion investment already awarded •USD 11 billion rail network expansion over next 3 years and USD 45 billion by 2023 •Extension of dual carriageways to 36,000 km by 2023 ( 22,000km in 2012) (Expected cost of USD 80billion) •USD 6 billion highway to Izmir; Izmit Bay Crossing
  12. 12. Turkey’s Plans for Infrastructure- Con’t 12 • Istanbul airport. • High speed train Istanbul to Ankara • North Marmara Highway • PLUS: urban regeneration plan
  13. 13. Hospital Facilities Management PPP projects currently mandated The EBRD Board has pre-approved a financing framework of Euro 600m for Turkey’s Hospital Facilities Management PPP programme. • Adana Hospital PPP - signed in 2014 • Etlik Hospital PPP • Gaziantep Hospital PPP • Konya Hospital PPP • Elazig Hospital PPP • Izmir Hospital PPP • Kocaeli Hospital PPP 13
  14. 14. Hospital Facilities Management PPP project example-Ankara Etlik Hospital PPP • Intended to service central Anatolia’s 12 million • Project costs EUR 1.1 billion • DBFLT 28.5 year concession • 3,566 beds • Construction, provision of medical equipment, maintenance for the facilities • NO medical service provision • Availability Payment from the Ministry of Health (fixed, linked to CPI and FX) • Service Payment from the Ministry of Health (minimum guarantee; market testing every 5 years) • Compensation on Termination by Ministry of Health 14
  15. 15. Financing of Turkish Hospital PPPs  EBRD debt size: max 35% of total financing.  A loan: € 50-100 million ticket size.  B loan: depending on syndication to other financial institutions.  Equity investments: where appropriate.  Maturity: up to 18 years (the tenor of the EBRD A-Loan can be max 3 years more than B-Loan tenor or the tenor of parallel loans).  Pricing: market pricing linked to risk level.  Security: concession agreement, physical security, where possible, share pledge and also linked to creditworthiness.  Due diligence: to be carried out by professional advisors.  Emphasis: smaller cities where the investment’s social role is crucial. 15
  16. 16. Financing Issues  The projects are sizable and require significant debt and equity tickets.  Sponsors expectations are towards aggressive structures:  Over leverage ?  Are there prudent cover ratios ?  Is equity commitment risk of sponsors addressed ?  Calculation of FX risks associated with the tariff mechanism ?  Due diligence to be carried out by professional advisors is very important (legal, technical and financial).  Project Agreements (Direct Agreement) have been finalised with the Authorities.  Environmental, social, health and safety issues can be challenging for bigger bed-size hospitals. 16
  17. 17. Integrated Approach to Hospital PPPs  The EBRD believes that the healthcare PPP programme launched by the Ministry of Health (MoH) will have a strong demonstration effect for the rest of Turkey including other sectors and other countries in the region.  The EBRD is willing to be one of the long-term financiers.  Two key areas of support by the Bank to the Ministry of Health: a) Value for Money assessment, and b) performance and contract management 17
  18. 18. Monitoring KPIs for various payment streams Monitoring Unit focus 18
  19. 19. Conclusions  EBRD has successful experience in financing PPP projects in the region and in Turkey.  EBRD supports authorities in developing projects. TC grants partially finance project preparation, implementation and institutional development.  EBRD offers long term debt and equity financing and takes on the leading role in financing the private operator.  We have a long term engagement in Turkey and we would like to be a preferred partner for both public authorities and investors. 19
  20. 20. Contact Jean Patrick Marquet Director – Turkey t: + 90 212 386 1138 marquetj@ebrd.com 20 James Hyslop Director – Municipal & Environmental Infrastructure t: + 44 207 338 6957 hyslopj@ebrd.com Aslı Erden Öztürk Principal Banker – Municipal & Environmental Infrastructure t: +44 207 338 6871 ozturka@ebrd.com

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