ACCELERATING PORT DEVELOPMENT By Port Investor October 2011
Why is this important? Because ports are natural growth engines for their respective economies around the world. And the world needs economic growth more than ever. Because the potential is tremendous for more development. Trillions of dollars, thousands of operators, developers, cargo owners, and hundreds of concepts and models. Whichever way you measure it, the potential is huge. Because the challenge is substantial . Most have little appreciation for what infrastructure investing is about let alone port infrastructure and decision makers are scattered all around the globe
What is Port Investor doing about it? <ul><li>The Port Investor community has hundreds of ports, investors, operators, developers, cargo owners and thousands of decision makers. </li></ul><ul><li>With our initiative to accelerate port development around the globe we want to: </li></ul><ul><li>Expose you to the right people with the right proposition </li></ul><ul><li>Create commitment and engagement with high value constituents to cooperate </li></ul><ul><li>Deliver a platform that fast-tracks cooperation from engagement to investment </li></ul><ul><li>Establish a continuous process that keeps producing new opportunities </li></ul><ul><li>This is really about leverage and effectiveness. Every port has its own valuable market, customers, skills and leadership to move forward. This is about leveraging that in the most effective and complimentary manner. </li></ul><ul><li>Finally, all ports have existing relations and activities to develop, this is not a replacement for that, we only wish to accelerate not impede. </li></ul>
A brief outline of what comes next… <ul><li>The Potential </li></ul><ul><li>The Challenge </li></ul><ul><li>The Solution </li></ul><ul><ul><li>Step 0 – foundation </li></ul></ul><ul><ul><li>Step 1 – exposure </li></ul></ul><ul><ul><li>Step 2 – engagement </li></ul></ul><ul><ul><li>Step 3 – development </li></ul></ul><ul><ul><li>Step 4 – deal </li></ul></ul>Covers the vast potential for ports to attract customers, partners and investors as well as fast-tracking development and expanding scope Covers the challenges to tap this potential including global coverage and how decision makers discriminate Lays out the Port Investor solution explained as a simple 5-step process
The Potential To Develop new and expand existing segments, footprint and concepts To Fast-track and achieve your 10-year vision now To Collaborate with and create collaboration between operators, developers, investors etc. To Tap the global investment sector and the appetite for port infrastructure To Attract new customers, investors and partners
The Potential… … to attract NEW: Investors Customers Partners CARGO OWNERS Container shipping Oil shipping Bulk shipping Mineral companies Energy companies Agriculture companies Etc. OPERATORS Container terminal Oil and liquid terminal Bulk terminal Free zones Logistic zones Port property Etc. FUNDS Pension funds Insurance funds Private equity funds Sovereign wealth funds Seed investors Etc. DEVELOPERS Construction Marine infrastructure Economic zones Port industry zones Port logistic zones Etc. PARTNERS South American ports Asian ports European ports Middle Eastern ports Etc.
The Potential… … to develop Bio Fuel Cruise Dry Port Oil Storage In-Port Industries Bulk Logistic Zone Free Zone Port Property Intermodal Hub Energy Hub Trade Hub Port zones are natural growth engines for the economy. The potential to develop and expand to generate economic growth and trade for most ports far exceeds their current footprint. This includes the development of trade hub, free zone, industry zone and other concepts.
The Potential… … to collaborate MATCHING Over the course of a port infrastructure project the nature of the investment changes from stage to stage. Investors (as well as operators and developers) all have different preferences, some are more suitable for green-field whereas others look for mature facilities. Likewise each constituent brings its own set of strengths and skills to the table that amongst others can allow the undertaking of larger projects. SYNGERGIZING (1 + 1 = 3) Ultimately this is all about finding synergies between parties with different skills and needs to accelerate development that may not otherwise have been possible or less attractive. Too big, too risky, too early, too complex… Many projects and investment opportunities have never made it into the real world simply because the right match or collaborative model could not be found.
The Potential… … to tap into the global investment sector INVESTMENT FUNDS AND PRIVATE EQUITY Macquarie Infrastructure Group Brookfield Infrastructure Partners JP Morgan Infrastructure Fund Citi Capital Advisors SOVEREIGN FUNDS Abu Dhabi Investment Authority China Investment Corporation Government of Singapore Investment Corporation Malaysia Mining Corporation PENSION AND INSURANCE FUNDS Ping An (2 nd biggest Chinese insurance fund) Ontario Teachers Pension Fund ATP (biggest Danish fund) APG (biggest Dutch fund, 3 rd biggest globally) The global investment fund sector manages more than $100 trillion. Many want to “get real” (assets) and “go direct” (ownership) - they want real assets with real purpose. Ports are in an ideal position to tap into that. However, the investment sector is hard to navigate and gets bombarded with investment proposals. The potential lies in getting the right exposure to the right people with the right proposition.
The Potential… … to fast-track Some of the common answers are: BIGGER Our port zone would have a much bigger footprint with substantial more activity and impact to the economy. BETTER We would be in a much better position to service our customers. CLEANER Better use of resources, a more connected infrastructure and newer technology would have allowed us to be substantially cleaner. What difference would it make if you were where you are now 10 years ago? Where would that put you today? Investments in port infrastructure are very important and often more cumbersome than investments in other sectors. This however does not mean they have to take years, with the right process, connections and knowledge they can be fast-tracked by several years. This is about the potential to reach your 10-year goal now.
The Challenge Ports are by nature local Investors, operators, developers, cargo owners etc are global - there are thousands and they are spread all across the globe
The Challenge is very real because… … the world is a big place 7 continents 24 time zones > 50 common languages 193 countries 1,000+ investors 5,000+ ports 50,000+ decision makers
The Challenge is very real because… … decision makers discriminate “ I suggest we send a team … we have heard of substantial port development opportunities there!” “ What is it going to cost? What are you going to achieve? Does it fit the strategy? Should you focus elsewhere?” “ I can’t really tell you before I have been there…” “ Make a paper to outline all the key variables, the project cost and the potential return, then we can review…” BUT YOU CAN’T BLAME THEM, WE ALL: Like what we know Like what is close to us Like what is easy Like what is in-expensive Like what takes little time Like what is easily justifiable Like what is fast and effortless
DEVELOPERS OPERATORS INVESTORS Free Zone Marine Infra. Construction Container Oil & Liquid Dry Bulk PORT DEVELOPMENT Pension Fund Private Equity Sovereign Fund CARGO OWNERS Shipping lines Industrials Fabrication PORT PARTNERS Asia Latin America Middle East GLOBAL EXPOSURE FOR PORTS An exclusive platform that allows a port to develop investment propositions and opportunities with invited investors, operators, developers, cargo owners etc FOCUSED AND CONFIDENTIAL Invitees sign NDA’s before gaining access to an online data room and forum to create win/win constellations usually exploring opportunities with 5-10 other invitees SYNERGISTIC AND RESULT-ORIENTED Invitees gain access to a synergistic environment with exclusivity and support IMMEDIATE INVESTMENT POTENTIAL Invitees can at any time decide to proceed with an exploration agreement for a specific proposition directly with the port and/or with other members PI Port Development 2.0 A new model for ports and project owners Our solution… … bring the world to your port
Our solution… … an overview $1bn 10-20 50-100 1,000-5,000 Purpose Target Proposition Step 0 Create the foundation Step 1 Get exposure to thousands Step 2 Engage the most relevant Step 3 Deal development Step 4 Closing the deal
Step 0… … defining purpose Purpose Question : What is the purpose? Why are you looking for customers, partners and investors? Example : Expanding the port area to stimulate economy and trade in the region. The preference is for….
Step 0… … identifying the target Purpose Target Question : Who are you targeting as customers, partners and investors and how would you ideally like to see them invest and cooperate? Example : We are looking for 1 new oil storage operator, 50% increase of the bio fuel developed area etc. We expect this to require a total of 3,000m of quay, 400ha and between €1-2 billion.
Step 0… … creating the proposition Purpose Target Proposition Question : With the target investors in mind what is your proposition to them? Why should they invest in your port? Example : Highlighting all the key market, investment and concession-related items for each investor type e.g. one specialized for oil, one for bio fuel etc.
Step 1… … exposure 1,000-5,000 Purpose Target Proposition This is about creating awareness, getting your proposition out there in the right form
Step 1… … exposure Dedicated space on network website port-investor.com/Name Proposition and related material uploaded Network alerted Exposure to thousands of investors, operators, developers and cargo owners will create the foundation for a wide pull strategy
Step 2… … engagement 1,000-5,000 Purpose Target Proposition 50-100 This is about creating true engagement – a website or commercial that is available for everyone to read will not do that. Investors, operators, developers and cargo owners only take the time to get involved with projects where they feel chosen and see commitment from the other side.
Step 2… … engage Based on market interest and careful selection 5-10 investors are engaged to gauge interest NDA is signed Exclusive platform is populated with data and initial propositions based on market feedback Pull from network and non-network members as well as carefully selected connections create base for initial 5-10 serious potential investors
Step 3… … development 1,000-5,000 Purpose Target Proposition 50-100 10-20 This is about fast-tracking and developing real opportunities with investors, operators, developers, cargo owners etc. This requires creating a frame that gives all sides the tools and trust to get real intentions on the table and talk specific options.
Step 3… … development The challenge : Realizing investments requires options to the investor of significant value as well as sufficient insight to commit to an investment. The saving grace: As insight and option value increase they positively impact each other creating an increasing number of investment opportunities. Option value (no of options x value) Degree of insight (info x relevance) 1 2 3 20
Step 3… … development Creating insight: Most information has no value to investors. Only the investors themselves know what they need, a process starting without them will not create insight, only noise. Creating options: Is very much an interdependent process and requires the right proposition to the right people at the right time
Step 3… … develop <ul><li>Is available 24/7 from anywhere in the world </li></ul><ul><li>Provides full confidentiality for all material and members </li></ul><ul><li>Allows you to follow and track progress whenever you need it </li></ul>One dedicated online platform that:
Step 3… … develop INSIGHT OPTIONS Oil market Dry bulk market Container market Bio fuel market Port access Hinterland connectivity Project infrastructure Sea connectivity Container Oil Bulk A Bulk B Consortium A Consortium B Seed investor Landlord model each option and topic has a dedicated space
Step 3… … develop Port Group (owner) A B C D E F G H I J (members) Port Investor (facilitator) Options Insight Members get access on select basis to the different options All members benefit as the collective insight grows You are the owner, you decide who, what and when. We facilitate and engage.
Step 3… … develop Why does this make sense to you? All insight and options created can be leveraged continuously, creating a constant flow of opportunities. Why does this process make sense to members? Early birds have to spend more effort building insight and options, but have early access to opportunities. Subsequent joiners benefit from insight and options already created. Some investors will based on insight and options wish to proceed to invest, others will decide not to - leaving room for new participants.
Step 4… … deal 1,000-5,000 Purpose Target Proposition 50-100 10-20 $1bn Any party that has decided to go ahead and invest will continue separately outside the platform. They now know you, the market and their preferred options. Deals can close quickly. Port Investor’s role? That all depends on you, this is not about creating restraints. It is about creating opportunities and fast-tracking development.
<ul><li>Expose you to the right people with the right proposition </li></ul><ul><li>Create commitment and engagement with high value constituents to cooperate </li></ul><ul><li>Deliver a platform that fast-tracks cooperation from engagement to investment </li></ul><ul><li>Establish a continuous process that keeps producing new opportunities </li></ul>Port Development 2.0 - Summary Unique access + unique platform = more options more transparent more efficient better deals