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Sourcing Investors and Partners


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Sourcing Investors and Partners

  1. 1. SOURCING  INVESTORS  AND   STRATEGIC  PARTNERS     With  InduStreams  -­‐  June  2012
  2. 2. Summary   What   How   Why   •  Iden8fying    the   •  If  you  engage  us   •  We  have  big  and   most  relevant   we  wish  to  deliver   diverse  investor,   investors  and/or   –  so  Step  1  is   operator  and  cargo   partners   understanding   owner  network   •  Introducing  your   your  situa5on  and   •  We  have  insight  to   proposi5on  to   needs   both  the  industry   relevant   •  Step  2  is  typically   and  investor   execu5ves  and   an  engagement   communi5es   decision  makers   agreement   allowing  us  to   from  global  and   •  Step  3  fast  track   facilitate   regional  leading   process  to  find  3-­‐5   effec5vely   companies   high  relevance   •  We  have  simple   •  Facilita8ng  to   investors/partners   and  effec5ve   secure  agreement   (example)     processes
  3. 3. Introduc8on     §  There  are  thousands  of  investors,  operators  and  cargo   owners  looking  to  invest  in  and  par5cipate  in  the   development  of  ports  and  infrastructure   §  There  are  as  many  infrastructure,  port  and  asset  owners   looking  to  source  investors  and  strategic  partners   §  There  are  substan5al  challenges  in  connec5ng  from  either   side  including  lack  of  network  and  insight   §  We  have  built  the  network,  insight  and  process  to  facilitate   effec5vely  between  the  two  sides   §  In  what  follows  is  a  short  introduc5on  to  sourcing  investors   and  strategic  partners
  4. 4. Investor  appe8te  and  magnitude   §  $100+  trillion  in  the  funds   management  sector  alone   §  Big  appe5te  for  increased  alloca5on   to  infrastructure  investments   §  Pension  and  insurance  funds  alone   may  quadruple  their  infrastructure   holdings   §  No  lack  of  cash  in  the  funds  sector   §  Further  to  this  industry  operators   and  industrials  have  substan5al   funds  they  are  looking  to  allocate
  5. 5. Investor  diversity  (port  example)     OPERATORS   INVESTMENT  FUNDS  AND  PRIVATE  EQUITY   Bulk   Financial  investor   Container  terminal   Macquarie  Infrastructure  Group   Oil  and  liquid  terminal   Brookfield  Infrastructure  Partners   Container   Bulk  terminal   JP  Morgan  Infrastructure  Fund   $10+  million   Operator   Free/logis5c/property  zones   Ci5  Capital  Advisors     DEVELOPERS   SOVEREIGN  FUNDS   Greenfield   Brownfield   Construc5on   Abu  Dhabi  Investment  Authority   Marine  infrastructure   China  Investment  Corpora5on   Developer   Majority   Economic  zones   Government  of  Singapore  Investment  Corpora5on   Port  industry/logis5c  zones   Malaysia  Mining  Corpora5on   Acquisi2on   Oil  &  Liquid     CARGO  OWNERS   PENSION  AND  INSURANCE  FUNDS   Container    shipping   Ping  An  (2nd  biggest  Chinese  insurance  fund)   Oil  shipping,  Bulk  shipping   Ontario  Teachers  Pension  Fund   Logis2c  Zone   $100+  million   Mineral  companies   ATP  (biggest  Danish  fund)   Energy  companies   APG  (biggest  Dutch  fund,  3rd  biggest  globally)   Agriculture  companies     Seed  investor   Free  Zone   DEVELOPMENT  BANKS  AND  INSTITUTIONS   PARTNERS   World  Bank  and  IMF   Minority   $1+  billion   South  American,  Asian,       EU  related  development  banks  and  funds   Middle  Eastern  port  groups   IFU  and  other  niche  banks
  6. 6. Investor  diversity  (explained)   The  investor  space  and  its  many  cons5tuents  is  much  wider  and  varied  than  most   think.  They  vary  greatly  in  their  investment  objec5ves,  preferences,  size  etc.  From  big   ins5tu5onal  investment  funds  with  more  than  $100  billion  to  small  operators  and   funds  with  less  than  $50  million  to  invest.     The  diversity  in  the  target  investment  size,  investment  stage,  investment  horizon,   target  shareholding  and  investor  role,  proposi5on  to  project  owners  etc  is  vast.       On  the  one  extreme  you  have  very  short  term  focused  funds  ofen  with  high  return   requirements  (15-­‐20%)  and  on  the  other  you  have  very  long  term  focused  e.g.   pension  funds  with  fairly  low  return  requirements  (5-­‐10%),  each  seeking  to  invest  in   their  own  part  of  the  value  crea5on  chain  (refer  later  slide).     The  great  diversity  among  investors,  their  preference  and  proposi5ons  to  owners   offers  great  poten5al  to  develop,  fund  and  operate  most  projects  with  reasonable   commercial  founda5on.
  7. 7. The  value  crea8on  chain   Creating the product Scaling the – from greenfield to investment – from low Expand   operation to high yield Seed   Implement   Grow   Mature   Transform   Seeding the investment - from Creating the market - idea, opportunity or need to building the top line and Divest   attractive proposition foundation for efficiencies Continued value creation…
  8. 8. The  value  crea8on  chain  (explained)   The  diversity  in  preference  across  the  investor  value  crea5on  chain  (not  only  in   investment  types)  gives  further  opportuni5es  to  make  new  developments  viable  and   free  up  capital.     Funds  and  operators  typically  have  interest  in  the  implementa5on/development  and   growth  stage  whereas  ins5tu5onal  investors  (including  pension  funds)  have  more   interest  in  the  mature  stage.  The  seed  stage  is  a  significant  challenge  for  most,  ofen   requiring  several  par5es  to  come  together  or  for  someone  to  play  the  seed  investor   role  which  however  is  uncommon  in  the  port  sector.     In  most  cases  there  are  beher  owners  out  there  allowing  par5es  to  either  free  up   their  capital  for  other  developments  or  bring  down  debts  or  commitments.       An  example  of  a  chain  with  changes  in  ownership  could  be  a  fund  together  with  e.g.  a   developer  doing  the  seed  inves5ng,  an  operator  doing  the  actual  development  and   growth  phases  and  a  pension  fund  acquiring  the  asset  once  it  reaches  a  more  mature   stage.
  9. 9. Typical  engagement  challenges     §  The  local  infrastructure  or  port  and  related  owners  have  lihle   or  no  network  to  the  global  investor,  operator  and  cargo   owner/industrials  communi5es   §  Many  investors  have  lihle  knowledge  of  the  infrastructure   and  port  sector  and  the  local  markets  and  therefore  ofen   abstain  from  inves5ng  due  to  lack  of  comfort  or  insight   §  Most  infrastructure  or  port/asset  owners  rarely  engage  in  a   process  of  finding  partners  or  investors  (many  have  never   done  so  and  for  those  that  do  it  is  ofen  only  once  in  the   life5me  of  a  given  project)
  10. 10. Our  engagement  process     Step  4   Deal   Closing  the  deal   1-­‐5    Develop   Step  3   Deal  development   5-­‐10   Step  2   Engage   Engaging  the  most  relevant   10-­‐20   Step  1   Choosing  the  relevant     Focus   investor  segments   100-­‐500   Step  0   Informa8on   Engagement    Proposi8on   Crea=ng  founda=on   Exchange   Agreement   Formula8on
  11. 11. Our  engagement  process  (explained)   As  a  first  step  it  is  important  for  us  to  understand  your  situa5on  and  the   circumstances  surrounding  your  needs  including  the  objec5ves  you  are  looking  to   achieve  (Informa5on  Exchange).     With  a  reasonable  understanding  we  can  then  with  you  work  out  an  Engagement   Agreement  and  terms  that  makes  sense  on  both  sides  and  suit  the  situa5on.     Once  and  agreement  is  in  place  we  will  together  with  you  formulate  a  proposi5on  to   poten5al  investors  or  partners  and  target  the  segments  that  fit  the  objec5ves  you   wish  to  achieve  (Selec5on).       We  then  typically  Engage  a  few  cons5tuents  one  at  the  5me  and  typically  end  up   reaching  out  to  about  10-­‐20  in  order  to  create  substan5al  interest  and  a  good   selec5on  for  the  further  process.     From  there  we  chose  the  candidates  with  highest  fit  and  likelihood  to  close  actual   agreements  with  and  seek  to  facilitate  on  both  sides  (Develop)  un5l  agreement  is   reached  with  one  or  more  investors  and/or  partners  (Deal).
  12. 12. Our  facilita8on  proposi8on     ü  Big  and  diverse  investor,  operator  and  cargo  owner/ industrials  network  (1,000+  investors  and  execu5ves  in  the   community  and  increasing)   ü  Insight  to  both  the  industry  and  investor  communi5es   allowing  us  to  convey  proposi5ons  accurately  and  with  the   right  context  of  the  poten5al  value  these  have   ü  Simple  and  effec5ve  process  to  engage  the  right  par5es  with   the  right  proposi5on  to  ensure  geing  to  agreement  in  short   5me  period
  13. 13. Risk  free  engagement   We  talk  to  new  funds,  investors  and  industrials  every  week  and  as  policy  are   commihed  to  listening  to  anyone  who  wishes  to  further  explore  the  possibility   to  invest  in  or  seek  investors  for  the  infrastructure  market  –  no  strings   ahached!     Our  primary  objec5ve  is  to  provide  access  to  opportuni5es  that  might   otherwise  not  be  available  to  you  and  your  company.     If  such  opportuni5es  might  be  relevant  to  you  or  your  company  we  encourage   you  to  reach  out  to  any  of  our  representa5ves  or  on:
  14. 14. Disclaimer   This  presenta5on  is  issued  for  informa5on  purposes  only  and  does  not  cons5tute  an   agreement,  offer,  obliga5on  or  invita5on  to  enter  into  transac5ons  or  investment   business.       With  this  presenta5on,  INDUSTREAMS  LIMITED  does  not  act  in  any  way  as  your   advisor.  This  presenta5on  is  not  intended  as,  nor  should  it  be,  a  subs5tute  for   consul5ng  with  INDUSTREAMS  LIMITED.     Whilst  this  presenta5on  has  been  produced  from  sources  believed  to  be  reliable,  the   informa5on,  views  and  opinions  expressed  in  this  presenta5on  are  provided  as  of  the   date  of  this  presenta5on  and  remain  subject  to  verifica5on,  comple5on  and  change   without  no5ce.  No  representa5on  or  warranty  whatsoever  (whether  express  or   implied)  is  or  will  be  made  as  to,  or  in  rela5on  to,  the  accuracy,  reliability  or   completeness  of  the  informa5on  contained  herein  or  in  the  appendices  to  this   presenta5on.     INDUSTREAMS  LIMITED  will  not  be  liable  towards  you  or  any  third  party  for  any   eventual  damage  you  may  incur,  caused  by  the  informa5on  contained  in  this   presenta5on  and  its  appendices.
  16. 16. Pension  fund  example       Objec8ve   Pension  and  insurance  funds  typically  invest  to  secure  long  term  stable  returns  (e.g.  5-­‐10%).       Typical  investment  size   Typically  look  to  invest  $100-­‐200  million  as  minimum  per  investment  for  their  own  share  and   therefore  total  investment  size  target  ofen  above  $500  million.         Role  and  shareholding  target   Ofen  limited  to  that  of  a  “financial”  investor  and  thus  typically  looking  only  to  take  a  minority   posi5on  and  for  many  are  not  allowed  to  have  the  main  managing  role.         Investment  stage  and   In  general  look  for  acquisi5on  opportuni5es  or  constella5ons  whereby  they  mi5gate   holding  period   development  and  commercial  risk  and  look  to  hold  assets  for  long  periods  (30+  years).     Emerging  trends  include  pension  funds  seeking  to  take  ownership  along  side  en5re  port   owners  (landlords)  as  that  further  diversifies  their  risk  across  more  assets.         Proposi8on  to  asset/project   Primarily  bring  lower  cost  of  capital  to  the  table  (can  live  with  lower  returns)  but  also   owners   some5mes  specific  capabili5es  and  global  brand.
  17. 17. Operator  example       Objec8ves   Operators  and  some  developers  typically  seek  to  grow  their  poroolio  as  primary  objec5ve  and   require  medium  to  high  returns  (e.g.  10-­‐15%).               Typical  investment  size   Most  investment  sizes    are  relevant  ranging  all  the  way  from  $10-­‐20  million  to  above  $1  billion   (although  in  laher  case  it  might  only  be  a  few  in  the  industry  that  would  want  to  do  that  alone).         Role  and  shareholding   Most  operators  would  like  majority  and  management  and  an  opera5onal  role  ofen  a  must   target   have.             Investment  stage  and   Do  green  fields  as  well  as  acquisi5ons  ofen  without  any  specific  holding  strategy,  but  most  tend   holding  period   to  just  “hold  on”  once  they  secure  an  investment.         Proposi8on  to  asset/project   Operators  typically  bring  significant  know-­‐how  and  skill  and  some5mes  actual  business  to  their   owners   projects.
  18. 18. Infrastructure  fund  example       Objec8ves   Many  infrastructure  funds  (including  private  equity  funds)  invest  on  behalf  of  other  funds  (e.g.   ins5tu5onal  funds  such  as  pension  fund)  and  look  to  achieve  strong  returns  over  a  shorter   period  (e.g.  15-­‐20%),  but  are  typically  also  willing  to  take  on  greater  risk.           Typical  investment  size   As  with  operators  such  funds  invest  in  small,  medium  as  well  as  very  large  scale  investments   (substan5al  diversity).         Role  and  shareholding   Many  funds  are  looking  to  take  majority  but  for  most  however  minority  is  also  an  op5on.  Some   target   of  the  more  sector  specific  ones  would  look  to  have  a  strong  opera5onal  role  as  well  whereas   others  would  not  have  opera5onal  capability  or  interest.         Investment  stage  and   Most  constella5ons  and  stages  are  relevant  for  such,  but  acquisi5ons  are  gaining  popularity,  and   holding  period   ofen  look  to  hold  the  asset  for  8-­‐10  years.         Proposi8on  to  asset/project   Very  mixed  value  proposi5on  depending  on  the  fund  in  ques5on  but  do  have  the  benefit  of   owners   being  very  focused  (once  they  raise  a  fund  the  money  has  to  be  spent  over  a  short  5me  period   or  the  clients  will  withdraw  the  funds  again)  and  thus  tend  to  work  effec5vely  and  with  urgency.
  19. 19. Sovereign  wealth  fund  example       Objec8ves   Sovereign  wealth  funds  and  other  government  type  funds  have  many  different  agendas  but  of   course  mostly  to  further  the  interests  of  the  na5on  they  have  been  mandated  by.  Consequently   they  also  operate  on  a  very  wide  return  range  (e.g.  0-­‐20%).       Typical  investment  size   Work  almost  exclusively  with  larger  scale  investments,  most  in  excess  of  $500  million  and  ofen   more  than  $1  billion.         Role  and  shareholding   Almost  exclusively  look  for  a  pure  financial  stake  but  may  well  want  extensive  influence.   target       Investment  stage  and   Green  fields  and  brown  fields  are  all  scope,  however  projects  ofen  need  to  be  among  key   holding  period   projects  na5onally  or  within  the  region  they  invest  in.         Proposi8on  to  asset/project   Given  the  government  leverage  and  wide  return  spectrum  SWF’s  can  come  with  many  different   owners   kinds  of  proposi5ons  and  some5mes  fit  where  no  others  are  relevant.