YANGZI PORTS    INVESTMENT OPPORTUNITIESIN CHINA’S BIGGEST GROWTH ENGINE   Port Investor - February 2012          By InduS...
The Yangtze River – An overview                                                           The Yangtze river               ...
The Lower Reach   Lower reach covers the section between Nanjing    and Shanghai, it is the main river transportation    ...
The Middle Reach                              Middle reach ports:               Maanshan                                  ...
The Upper Reach   The upper reach covers the section between                                                             ...
Who might this be relevant for? Infrastructure investment funds looking for investments with growth  potential or acquisi...
EXAMPLE 1 – PORT WIDE PARTNERSHIP Investment model                  This purely an illustrative slide for a JV formed     ...
China Consortium and how to participate    We have cooperation with global as well as local Chinese    operators, funds, d...
APPENDIXChina Consortium by Port Investor
Opportunities in the Chinese Port Sector   Massive container, dry bulk, oil and                       CHINA IN THE WORLD ...
Typical challenges in securing investments                                                                 The deal pyrami...
Challenges in the Chinese Port Sector            Many Chinese constituents like building on                 partnerships –...
The purpose of China Consortium                  WHAT   A group of operators, investors, and    developers many of which ...
APPENDIXMarket Development with Port Investor
Why?                      Thousands of ports, assets and projects…                     …hundreds of different investment m...
What?           Bulk                    Financial investor                                                                ...
Who?Pension funds, terminal operators, free zone developers, insurance funds, oil storage  operators, shipping lines, sove...
How?                                                                   Step 4                                             ...
Now!           Contact us on contact@port-investor.com...…and let us help you start developing the propositions you want! ...
APPENDIX Choosing your scope
How can we help you…                                        All constituents have different needs as concerns             ...
How can we help you…                                          Each constituent have different needs as                    ...
APPENDIXJust a few of the many opportunities
Market development……port expansion and new ports potentialPort zones are natural growthengines for the economy. Thepotenti...
Market development……acquisition potentialAmong the big acquisitionopportunities are theportfolios of many shipping        ...
Market development……collaboration potential (1)Greenfield    MATCHING  $1bn        Over the course of a port infrastructur...
Market development……collaboration potential (2)The port industry has              TERMINAL OPERATORSthousands of different...
Market development……collaboration potential (3)The global investment fund           INVESTMENT FUNDS AND PRIVATE EQUITYsec...
Market development……collaboration potential (4)IMMEDIATE COVERAGE FOR INVESTORSFor those with an interest to              ...
APPENDIXThe deal pyramid step by step
The PI Deal Pyramid…                                                                         Step 4…an overview           ...
Step 0……defining purposeWhat is the purpose?Why are you looking foranacquisition, developments or partnerships?           ...
Step 0……identifying the targetWhat specifically isrelevant for you totarget, who to partnerwith or what todevelop?        ...
Step 0……creating the propositionWith the target in mindwhat is your propositionto them? Why shouldsomeone welcome yourinve...
Step 1……focus                                            DealThis is about gettingyour market intelligence                ...
Step 2……engagement                                  DealThis is about creatingtrue engagement – it is                     ...
Step 3……development                                       DealThis is about fast-tracking and developing                  ...
Step 4……deal                                                           Deal                                               ...
APPENDIX About Port Investor
InduStreams was founded in 2011 with a mission to create a more transparent, connected                     and informed in...
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Yangtze Investment Opportunities

  1. 1. YANGZI PORTS INVESTMENT OPPORTUNITIESIN CHINA’S BIGGEST GROWTH ENGINE Port Investor - February 2012 By InduStreams
  2. 2. The Yangtze River – An overview The Yangtze river stretches about 6,300km from Tibet to Shanghai of which 2,600km is navigable The Yangtze runs through 10 provinces covering a region of 430 million population that contributes about 25% of China’s GDP In 2010 more than 1300 mn tonnes of cargo and 7.3mn TEU (containers) were transported on the Yangtze The combination of continuous improvement in capacity (depth and navigability), focus on developing the Western regions and improving the environment create strong fundamentals for continued growth in Yangtze area
  3. 3. The Lower Reach Lower reach covers the section between Nanjing and Shanghai, it is the main river transportation Yangzhou channel of the Yangtze River Delta (YRD), which is one of the most developeded regions in China Nanjing Taizhou Nantong YRD include the provinces of Jiangsu, Zhejiang Zhenjiang and Shanghai. With 130 million people it Changzhou Zhangjiagang contributes 22% of GDP and 28% of Jiangyin Changshu export/import of China. Expect to maintain as Taicang the key manufacturing and export/import center of the country. Throughput in this section is about 70% of total Yangtze throughput In terms of cargo weight. A large share of the current volume in the lower Throughput (mill tons) reach come from transshipment of bulk cargo 160 140 between ocean ports and up river ports. But…. 120 Ocean going vessels ships can reach Nanjing but 100 80 no further up due to bridge blocked way. 60 40 New developments continue to take place 20 0 throughout the YRD and in particular on the north bank.
  4. 4. The Middle Reach Middle reach ports: Maanshan Wuhan - Nanjing The middle reach covers the section Wuhu between Nanjing and Yichang city, and the economies and provinces of Tongling Wuhan Anhui, Jiangxi, Hunan and Hubei. Hinterland provinces have a population of Anqing total 223 million, contributing 13% of Jiujiang national GDP. Throughput in this section is about 25% of total Yangtze throughput In terms of cargo Middle reach ports: weight. Yichang - Wuhan The middle provinces are gaining weight in Wuhan Yichang national industry output and consumption. Transportation via Yangtze has been Jingzhou considered as key factor of development by all provinces in this section. Throughput (mill tons) Deptht varies from 3m to 9m in this section 100 allowing for vessel size of 3,000 to 5,000 50 tonnes or 100-300 TEU for container 0 Maans… Jingzhou Jiujiang Yichang Anqing Wuhu Yueyang Wuhan Tongling shipping. Yueyang New development are seen in many of ports in this section and particularly in Wuhan.
  5. 5. The Upper Reach The upper reach covers the section between Wanzhou Yichang and Yibin, it is largely only Chongqing city and part of Sichuan province Chongqing A population of 110 million live in the area with Fuling an associted economy of (GDP) $328 billion or about 6% of national GDP. Throughput in this section is about 5% of total Yangtze throughput In terms of cargo weight. Luzhou Yibin Rapid volume growth has been seen in this area particularly Chongqing. The “Go West” policy Throughput (mill tons) and the improvement of navigation condition 100 caused by the Three Gorges Dam clearly played a 90 role. 80 Ships from Chongqing port can be as big as 350 70 60 TEU or 5,000 tons. All ships has to pass the Dam 50 to reach lower section of Yangtze 40 30 New development are seen in many of ports in 20 this section and particularly in Chongqing. 10 0 Chongqing Luzhou Yibin Chongqing data include Fuling and Wanzhou
  6. 6. Who might this be relevant for? Infrastructure investment funds looking for investments with growth potential or acquisitions Pension and insurance funds with allocation for infrastructure in Asia or China that have potential to provide stable cash flows Private equity funds looking for small to medium sized investments with high potential upsides Seed investors looking to place early capital for potential sell off at later stage (e.g. to a consortium) Container, bulk, oil and other operators with interest to develop and cooperate with local port groups and governments Developers and contractors with ability to take on large marine infrastructure investments
  7. 7. EXAMPLE 1 – PORT WIDE PARTNERSHIP Investment model This purely an illustrative slide for a JV formed with a local Port Group. Most agreements are made on a negotiated basis in China and (an example) therefore most models are possible. Many port areas have substantial options for further logistics developments on the landside. Port 50% 50% Investor Group Land Resource Joint Venture + Equity + Equity New Logistic Port Area
  8. 8. China Consortium and how to participate We have cooperation with global as well as local Chinese operators, funds, developers, port groups and many others. As development and collaboration opportunities emerge we involve clients that we have formalized cooperation with and (if relevant) parties that may benefit our existing client network for specific developments or acquisitions. China Consortium is already in motion in several locations. If you would like to be part of it please contact us at contact@port-investor.com and we would be glad to discuss your needs and relevant scope for the Chinese infrastructure market. For more information about developing markets with Port Investor see appendix or go to: www.port-investor.com/marketdevelopment
  9. 9. APPENDIXChina Consortium by Port Investor
  10. 10. Opportunities in the Chinese Port Sector Massive container, dry bulk, oil and CHINA IN THE WORLD TODAY liquids markets - representing an (a few key numbers on the Chinese economy and its Port Sector) immense share of world throughput 1.3 >400 New segments such as bio fuel and Billion people >25% Mill. tons others in rapid development Of world container of crude oil demand + throughput target to further increase oil supply Limited competition - many ports with reserves one controlling port group 10% Consistent growth Strong interest with local governments last 30 years – may overtake the US by 11 to attract “multinationals” 2030 Of the worlds 20 biggest ports Negotiated deals are the norm (vs open and 50+ large tender) 10 >60% “secondary” ports  Less competition for developments Trillion USD Of world iron PPP adjusted GDP ore demand  More deal flexibilityBut tapping into this potential requires a significantly different approach than most take - it requires a newmodel that engages local stakeholders in a positive way. For investors just bringing money the window ofopportunity may well have passed in China.
  11. 11. Typical challenges in securing investments The deal pyramid illustrates a few key rules of the marketplace: Deal a) The quality of the output is determined by the 1-5 input – poor market scanning and market Lead intelligence leads to poor leads development b) The most valuable deal leads are created pro- 10 - 50 actively through focused market engagement Focused c) Each deal lead requires a strong contact and market engagement engagement base to develop into an actual 100 - 500 investment Market scanning and d) Only a few of the potential market targets will intelligence end up as deals - without a substantial 1,000 – 5,000 pipeline no investments or dealsMany believe they can avoid building the pyramid – it’s anillusion, the deals you get access to are only as good as yourpipeline.
  12. 12. Challenges in the Chinese Port Sector Many Chinese constituents like building on partnerships – one deal can lead to a larger number of leads and deals Deal With the blessing of local partners and government, deals can be cut quickly Once into a stage of exploration of Lead cooperation there is often presumed exclusivity for a period development Actual leads eventuate from close dialogue and relation development – Any real engagement requires local often very unstructured Focusedrelations and a real proposition to both government and port market engagement Multitude of local stakeholders including local government and port Local presence required for any entities – wide engagement often req. real insight – several sources Market scanning and often required for verification intelligence No or little market intelligence available through desk research
  13. 13. The purpose of China Consortium WHAT A group of operators, investors, and developers many of which have world leading technology, experience and Shipping lines Asia funding capability Port industries Latin America Not a consortium in the traditional sense Energy and resources Middle East – there is no forced collaboration just collaboration opportunities in the many CARGO OWNERS PORT PARTNERS markets and sectors WHY Combined leverage makes it possible to CONSORTIUM create much more clout in the local markets Complementary skill-sets from major port DEVELOPERS INVESTORS OPERATORS infrastructure fields that will allow synergies as each seek to develop in the Free Zone Pension Fund Container market Marine Infra. Private Equity Oil & Liquid We have been active in the Chinese port Dry Bulk Construction Sovereign Fund market for nearly a decade – the market and its constituents are well suited to engage with this form of “consortium”
  14. 14. APPENDIXMarket Development with Port Investor
  15. 15. Why? Thousands of ports, assets and projects… …hundreds of different investment models… …an infinite amount of opportunities! The challenge – how to tap the potential? Too little time – too few resources… Too big – too small… Too expensive – too risky… Too early – too late…The solution – risk free market engagement and effective deal creation! Deal 50,000 targets 1-5 5,000 markets + Develop 500 investment 10-20 models Engage 50-100 Market intelligence and scanning Matching propositions 1,000-5,000
  16. 16. What? Bulk Financial investor Singapore Dampier Corpus Christi London Southampton Shanghai Hamburg Gladstone Bergen Wilhelmshaven Container Rotterdam New York Primorsk Taichung Calais$10+ million Operator Tianjin Nantong Bremen Bombay Baltimore Ningbo Vancouver Long Beach Barcelona Forth Ports Guangzhou Yantai Corpus Christ Sao Sebastiao Bilbao Greenfield Brownfield Qingdao Hong Kong Nanjing Kitakyushu Algeciras Pohang Lake Charles Trieste Pittsburgh Yanbu Qinhuangdao Tangshan New Orleans Texas City Karachi Dalian Itaqui Grimsby Baton Rouge New Mangalore Developer Majority Busan lianyungang Beaumont Saldanha Bay Tampa Nagoya Tubarao Huntington Paradip Milford Haven Shenzhen Marseilles Constantza Jeddah Odessa Acquisition Oil & Liquid South Louisiana Houston Newcastle Kobe Mobile Hampton Roads Tees Manila Leghorn Paranagua Antwerp Amsterdam Ports St. Petersburg Alexandria Paulsboro Ulsan Osaka Valencia Taranto Tarragona Logistic Zone $100+ million Chiba Port Hedland Tanjung Pelepas Sepetiba Plaquemines Dunkirk Gothenburg Tampa Valdez Texas City Port Kelang Richards Bay Madras Jubail Liverpool Rizhao Hay Point Jawaharlal Nehru Tanjung Priok Savannah Yingkou Novorossisk Los Angeles Zeebrugge Brisbane Seed investor Free Zone Kaohsiung Tokyo Genoa Mormugao Lubeck Inchon Santos Calcutta Durban Pascagoula Yokohama Le Havre Izmit Duluth-Superior Angra dos Reis Minority $1+ billionWhether it is acquisitions, green fields, majority, minority, mature assets, high upside propositions, oil, container or bulk… Whether in China, Middle East, Europe, Latin America or any other nation or region… The opportunities exist or can be created!
  17. 17. Who?Pension funds, terminal operators, free zone developers, insurance funds, oil storage operators, shipping lines, sovereign wealth funds, bulk operators, logistics zone operators, private equity funds, construction companies, industrials, general investment funds, port groups… …that wish to invest …that wish to operate …that wish to develop …that wish to partner …that wish to collaborate The great thing about this?There are many more potential partners to cooperate and find solutions with than there are competitors!
  18. 18. How? Step 4 Deal Closing the deal 1-5 Step 3 Develop Deal development 10-20 Step 2 Engage Engage the most relevant 50-100 Step 1 Market intelligence Focus among the many and scanning 1,000-5,000Step 0 Purpose Target PropositionCreate the foundation
  19. 19. Now! Contact us on contact@port-investor.com...…and let us help you start developing the propositions you want! For more information on our market development process and the opportunities in the market place please refer to the appendices.
  20. 20. APPENDIX Choosing your scope
  21. 21. How can we help you… All constituents have different needs as concerns the target locations and the type of investments. These are just a small handful of examples.…relevant scope (1) Bulk Financial investor Singapore Dampier Corpus Christi London Southampton Shanghai Hamburg Gladstone Bergen Wilhelmshaven Container Rotterdam New York Primorsk Taichung Calais$10+ million Operator Tianjin Ningbo Nantong Vancouver Bremen Long Beach Bombay Barcelona Baltimore Forth Ports Guangzhou Yantai Corpus Christ Sao Sebastiao Bilbao Qingdao Nanjing Algeciras Lake Charles Pittsburgh Greenfield Brownfield Hong Kong Kitakyushu Pohang Trieste Yanbu Qinhuangdao Tangshan New Orleans Texas City Karachi Dalian Itaqui Grimsby Baton Rouge New MangaloreDeveloper Majority Busan Nagoya lianyungang Tubarao Beaumont Huntington Saldanha Bay Paradip Tampa Milford Haven Shenzhen Marseilles Constantza Jeddah Odessa South Louisiana Newcastle Mobile Tees Leghorn Acquisition Oil & Liquid Houston Kobe Hampton Roads Manila Paranagua Antwerp Amsterdam Ports St. Petersburg Alexandria Paulsboro Ulsan Osaka Valencia Taranto Tarragona Chiba Tanjung Pelepas Plaquemines Gothenburg Valdez Logistic Zone $100+ million Port Hedland Sepetiba Dunkirk Tampa Texas City Port Kelang Richards Bay Madras Jubail Liverpool Rizhao Hay Point Jawaharlal Nehru Tanjung Priok Savannah Yingkou Novorossisk Los Angeles Zeebrugge Brisbane Seed investor Free Zone Kaohsiung Inchon Tokyo Santos Genoa Calcutta Mormugao Durban Lubeck Pascagoula Yokohama Le Havre Izmit Duluth-Superior Angra dos Reis Minority $1+ billion
  22. 22. How can we help you… Each constituent have different needs as concerns the deal pyramid. Some look for solutions all the way from market intelligence to…relevant scope (2) closing actual deals, others only up to and including engagement of the relevant authorities and potential partners. Step 4 Deal Closing the deal 1-5 Lead Step 3 development Deal development 10-20Step 2 FocusedEngage the most relevant market engagement 50-100Step 1 Market intelligenceFocus among the many and scanning 1,000-5,000
  23. 23. APPENDIXJust a few of the many opportunities
  24. 24. Market development……port expansion and new ports potentialPort zones are natural growthengines for the economy. Thepotential to develop and Port Property Dry Port Oil Storageexpand to generate economicgrowth and trade for most Bio Cruiseports far exceeds their currentfootprint. Fuel Logistic Bulk ZoneThis includes the developmentof trade hubs, freezones, industry zones and Trade Energyother concepts. Hub HubFor investors this givespotential to invest in some of Intermodal Hub Free Zone In-Port Industriesthe most valuable industryproperty and portinfrastructure.
  25. 25. Market development……acquisition potentialAmong the big acquisitionopportunities are theportfolios of many shipping …just a few examples…lines that are expected to Target Transaction value Acquiring partyface a difficult period and Portek portfolio $146mn Mitsui Tin Can Container Terminal (Zim lines $154mn China Merchantsport owners - some of which 47.5% share)are looking to do a.o. PPP Malta Freeport (CMA CGMs 50% share) $285mn Yildirim Group DPW Australia portfolio (75% share) $1.5bn Citi Infrastructure Investorstype deals that essentially Chennai International Terminals (Sicals Not reported PSA Internationalare asset sales. 27% sare) ACS Dragados Spanish port portfolio €720mn JP Morgan led consortium Yantian International Container $520mn Cosco PacificMany single asset owners Terminals (APM Terminals 9.7% share) Poti Sea Port (80% share) Not reported APM Terminalsalso sit with acquisition Santos - BTP (50% from MSC) Not reported APM Terminalsopportunities, some with fullownership of a terminal or aport and some with majorityor minority holdings inspecific assets.
  26. 26. Market development……collaboration potential (1)Greenfield MATCHING $1bn Over the course of a port infrastructure project • Private Equity the nature of the investment changes from stage • Construction Development Company Port Group to stage. Investors (as well as operators and developers) all have different preferences, some Oil are more suitable for green-field whereas others • Investment Operator look for mature facilities. Likewise each Fund Growth • Operator constituent brings its own set of strengths and Container skills to the table that amongst others can allow Operator the undertaking of larger projects. • Pension Fund Bulk Maturity Operator SYNGERGIZING (1 + 1 = 3) Ultimately this is all about finding synergies Investment between parties with different skills and needs to Fund accelerate development that may not otherwise have been possible or less attractive.
  27. 27. Market development……collaboration potential (2)The port industry has TERMINAL OPERATORSthousands of different APM Terminalsoperators and port owners that Oiltankingare ready to collaborate for ICTSIdifferent types of projects at Vopakdifferent stages of the projectin different geographies. PORT OWNERS Port of RotterdamLikewise on the side of the Shanghai International Port Groupparties actually owning cargo Abu Dhabi Terminal Companythere are many that either Santos Port Grouphave a need to get bettermarket access on the sea side CARGO OWNERSor have existing facilities that Shipping linesthey wish to outsource. Mining and mineral companies Energy companies Industrial Zones
  28. 28. Market development……collaboration potential (3)The global investment fund INVESTMENT FUNDS AND PRIVATE EQUITYsector manages more than Macquarie Infrastructure Group$100 trillion. Many want to “get Brookfield Infrastructure Partnersreal” (assets) and “go direct” JP Morgan Infrastructure Fund(ownership) - they want real Citi Capital Advisorsassets with real purpose.Owners or developers of port SOVEREIGN FUNDSassets are in an ideal position to Abu Dhabi Investment Authoritytap into that. China Investment Corporation Government of Singapore Investment CorporationMany of the major funds prefer Malaysia Mining Corporationgetting in after the developmentand optimization of a given port PENSION AND INSURANCE FUNDSasset and want substantial deal Ping An (2nd biggest Chinese insurance fund)size - often $100+ million. Ontario Teachers Pension Fund ATP (biggest Danish fund) APG (biggest Dutch fund, 3rd biggest globally)
  29. 29. Market development……collaboration potential (4)IMMEDIATE COVERAGE FOR INVESTORSFor those with an interest to The PI Consortiumenter, expand or invest in a specific A new model for investors, developers and operatorsregion (e.g. China) and covering all thekey markets within months. Shipping lines Asia Industrials Latin AmericaREAL ENGAGEMENT Fabrication Middle EastOur on the ground network directlyengages the local decision makers CARGO OWNERS PORT PARTNERSCOMPLEMENTARYA group of leading firms withcomplementary skills and objectives CONSORTIUMenabling a strong proposition towardsports. DEVELOPERS INVESTORS OPERATORSSYNERGISTIC AND NO RISKNo heavy regional setup or local office Free Zone Pension Fund Containerbefore you start running Marine Infra. Private Equity Oil & Liquid Construction Sovereign Fund Dry Bulk
  30. 30. APPENDIXThe deal pyramid step by step
  31. 31. The PI Deal Pyramid… Step 4…an overview Deal Closing the deal $1bn Develop Step 3 Deal development 10-20 Step 2 Engage Engage the most relevant 50-100 Step 1 Focus Market intelligence and scanning 1,000-5,000 Step 0 Purpose Target Proposition Create the foundation
  32. 32. Step 0……defining purposeWhat is the purpose?Why are you looking foranacquisition, developments or partnerships? Purpose
  33. 33. Step 0……identifying the targetWhat specifically isrelevant for you totarget, who to partnerwith or what todevelop? Purpose Target
  34. 34. Step 0……creating the propositionWith the target in mindwhat is your propositionto them? Why shouldsomeone welcome yourinvestment, collaborateor partner with you? Purpose Target Proposition
  35. 35. Step 1……focus DealThis is about gettingyour market intelligence Developand scanning in place. Itis about getting theright targets in sight. Expose and EngageWithout it you aregoing to be wastingvaluable time andresources while others Focuscut deals. 1,000-5,000 Purpose Target Proposition
  36. 36. Step 2……engagement DealThis is about creatingtrue engagement – it is Developnot about desk researchit is about on theground direct contact Engagewith the real decisionmakers and getting 50-100your proposition outthere in the right form. Focus 1,000-5,000 Purpose Target Proposition
  37. 37. Step 3……development DealThis is about fast-tracking and developing Developreal leads, creatingsubstantial 10-20opportunities and Engagecreating real leverageto close the deal. 50-100 Focus 1,000-5,000 Purpose Target Proposition
  38. 38. Step 4……deal Deal $1bnGoal! Now use all the greatefforts you did in step 0 to 3 Developto make many more! 10-20 Engage 50-100 Focus 1,000-5,000 Purpose Target Proposition
  39. 39. APPENDIX About Port Investor
  40. 40. InduStreams was founded in 2011 with a mission to create a more transparent, connected and informed infrastructure market place. We launched Port-Investor.com in July 2011, a specific sector pilot with focus on port investing and the global port industry. Current state of affairs  200+ port groups and 1,000+ executives and decision makers in the network and increasing  China Port Investor and other regions are being launched  Specific concepts in development with select investors and port groups The Vision  Connecting all substantial port markets (5,000+ globally) with investors (1,000+ globally)  Creating a transparent and informed market place driven by industry leaders and experts  Unleashing the potential inherent in this sector by creating thousands of new investment opportunities (we expect investment potential to exceed $1 trillion) Want to know more or simply engage… …contact us on: contact@port-investor.com

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