Yangtze Investment Opportunities v2

YANGTZE PORTS
INVESTMENT OPPORTUNITIES
IN ONE OF CHINA’S BIGGESTS GROWTH ENGINES

Port Investor - February 2012
By InduStreams

contact@port-investor.com
www.port-investor.com

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 area

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.


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.


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 Wanzhou


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

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 Area


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/marketdevelopment

APPENDIX
China Consortium by Port Investor


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.

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.

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
Focused
relations 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


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”


APPENDIX
Choosing your scope


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+ billion


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
1,000-5,000


APPENDIX
About Port Investor


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:

Yangtze Investment Opportunities v2

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