Yangtze Investment Opportunities v2


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Yangtze Investment Opportunities v2

  1. 1. YANGTZE PORTS INVESTMENT OPPORTUNITIES IN ONE OF CHINA’S BIGGESTS GROWTH ENGINES Port Investor - February 2012 By InduStreamscontact@port-investor.comwww.port-investor.com
  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 with a population of 430 million that contributes about 25% of China’s GDP  In 2010 more than 1.3 billion tonnes of cargo and 7.3 million 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 areacontact@port-investor.comwww.port-investor.com
  3. 3. The Lower Reach  The lower reach covers the section between Nanjing and Shanghai, it is the main river Yangzhou transportation channel of the Yangtze River Delta (YRD), which is one of the most Nanjing Taizhou developed regions in China. Nantong Zhenjiang  YRD include the provinces of Jiangsu, Zhejiang and Shanghai. With 130 million people it Zhangjiagang contributes 22% of GDP and 28% of Changzhou Jiangyin Changshu Taicang export/import of China and is expected to remain the key manufacturing and export/import center of the country. Lower reach ports:  Throughput in this section is about 70% of Shanghai - Nanjing total Yangtze throughput in terms of cargo weight. Throughput (million tonnes in 2009)  Ocean going vessels ships can reach Nanjing 200 but cannot go beyond due to bridges after 150 Nanjing. 100 50  New developments continue to take place 0 throughout the YRD and in particular on the north bank.contact@port-investor.comwww.port-investor.com
  4. 4. The Middle Reach Middle reach ports: Maanshan Wuhan - Nanjing The middle reach covers the section between Nanjing and Yichang city, and the economies Wuhu and provinces of Anhui, Jiangxi, Hunan and Tongling Wuhan Hubei. The hinterland provinces have a population of Anqing total 223 million, contributing about 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 national industry output and consumption. Yichang Wuhan Transportation via Yangtze has been considered as key factor of development by Jingzhou all provinces in this section. Depth varies from 3m to 9m in this section Throughput (million tonnes) allowing for vessel size of 3,000 to 5,000 100 50 tonnes or 100-300 TEU for container 0 shipping. Maans… Jingzhou Jiujiang Yichang Anqing Wuhu Yueyang Wuhan Tongling New developments are seen in many of ports Yueyang in this section and particularly in Wuhan.contact@port-investor.comwww.port-investor.com
  5. 5. The Upper Reach  The upper reach covers the section between Wanzhou Yichang and Yibin.  Chongqing is the main port in the area but the hinterland economy stretches far into among Chongqing Fuling others the Sichuan province.  A population of 110 million live in the area with an associated economy of (GDP) $328 billion or about 6% of national GDP.  Throughput in this section is about 5% of total Luzhou Upper reach ports: Yibin Yangtze throughput In terms of cargo weight. Yichang - Yibin  Rapid volume growth has been seen in this area particularly in Chongqing.  The “Go West” policy and the improvement of Throughput (million tonnes) 100 navigation condition caused by the Three 80 Gorges Dam have are playing a big role in that.  Vessels from Chongqing port can be as big as 60 40 350 TEU or 5,000 tonnes. All vessels have to 20 pass the Dam to reach lower section of Yangtze. 0  New development are seen in many of ports in Chongqing Luzhou Yibin this section and particularly in Chongqing. Note: Chongqing data include Fuling and Wanzhoucontact@port-investor.comwww.port-investor.com
  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 investmentscontact@port-investor.comwww.port-investor.com
  7. 7. EXAMPLE 1 – PORT WIDE PARTNERSHIP Investment model This purely an illustrative slide for a JV formed with a local Port Group or Government. Most agreements are made on a negotiated basis in (an example) China and therefore most models are possible. Many port areas have substantial options for further logistics developments on the landside. Port X% X% Investor Group Land Resources Joint Venture + Equity + Equity New Logistic Port Areacontact@port-investor.comwww.port-investor.com
  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 please go to: www.port-investor.com/marketdevelopmentcontact@port-investor.comwww.port-investor.com
  9. 9. APPENDIX China Consortium by Port Investorcontact@port-investor.comwww.port-investor.com
  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 flexibility But tapping into this potential requires a significantly different approach than most take - it requires a new model that engages local stakeholders in a positive way. For investors just bringing money the window of opportunity may well have passed in China.contact@port-investor.comwww.port-investor.com
  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 deals Many believe they can avoid building the pyramid – it’s an illusion, the deals you get access to are only as good as your pipeline.contact@port-investor.comwww.port-investor.com
  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 contact@port-investor.com www.port-investor.com
  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”contact@port-investor.comwww.port-investor.com
  14. 14. APPENDIX Choosing your scopecontact@port-investor.comwww.port-investor.com
  15. 15. 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 Mangalore Developer 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+ billioncontact@port-investor.comwww.port-investor.com
  16. 16. 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 10-20 Step 2 Focused Engage the most relevant market engagement 50-100 Step 1 Market intelligence Focus among the many and scanning 1,000-5,000contact@port-investor.comwww.port-investor.com
  17. 17. APPENDIX About Port Investorcontact@port-investor.comwww.port-investor.com
  18. 18. 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 contact@port-investor.comwww.port-investor.com