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ENDORSING PARTNERS

A private sector perspective of
PPPs

The following are confirmed contributors to the business and pol...
DELIVERING
O N TH E P R O MI S E .

Plenary Group
A Private Sector Perspective on PPPs (Public Private
Partnerships)
30 Se...
Outline

• Plenary Group Profile
• Evolution of Public Private Partnerships
• Government Objectives and Private Sector Mot...
Plenary Group Profile
Office Locations

Key statistics
Established 2004
Projects 22
Total Project Value +A$12bn

Australia...
Melbourne Convention Centre (VIC, Australia)

5
CSEC (Ottawa, Canada)

6
Gold Coast Light Rail (QLD, Australia)

7
Disreali Bridges Project (Winnipeg, Canada)

8
Victorian Comprehensive Cancer Centre (VIC, Australia)

9
Evolution of Public Private Partnerships
• Social (or availability payment) infrastructure
• 1990s
– Small discrete projec...
Evolution of Public Private Partnerships
• 2010s
– Complex and network assets (and any other projects where
benefits accru...
Government Objectives and Private Sector Motives
• Governments have become sophisticated procurers of long-term
infrastruc...
Consortium Dynamics
• The main ‘actors’
– Sponsors - usually Builder(s), Financier, Operator(s)
– Design consultants
– Equ...
Role of Private Capital
• Private capital is fundamental to PPPs – the key ingredient that changes the
dynamics between Go...
Trends in Private Capital
• Debt Providers
– Banks vs debt capital markets
– Refinancing risk
– Should Governments pay the...
Australia in a Global Context
• Strengths
– Experience and sophistication
– Technical and commercial depth
– Equity demand...
DELIVERING
O N TH E P R O MI S E .

Plenary Group
A Private Sector Perspective on PPPs (Public Private
Partnerships)
30 Se...
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SMART Infrastructure Business and Policy Dialogue Event: A private sector perspective of PPPs

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A presentation conducted by Mr Paul Oppenheim, Managing Director, The Plenary Group. Presented on Monday the 30th of September 2013.

• The evolution of Public Private Partnerships
• Government objectives and private sector motives
• Consortium dynamics
• The role of private capital
• Australia in a global context

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SMART Infrastructure Business and Policy Dialogue Event: A private sector perspective of PPPs

  1. 1. ENDORSING PARTNERS A private sector perspective of PPPs The following are confirmed contributors to the business and policy dialogue in Sydney: • Rick Sawers (National Australia Bank) • Nick Greiner (Chairman (Infrastructure NSW) Monday, 30th September 2013: Business & policy Dialogue Tuesday 1 October to Thursday, Dialogue 3rd October: Academic and Policy www.isngi.org Presented by: Mr Paul Oppenheim, Managing Director, The Plenary Group www.isngi.org
  2. 2. DELIVERING O N TH E P R O MI S E . Plenary Group A Private Sector Perspective on PPPs (Public Private Partnerships) 30 September 2013
  3. 3. Outline • Plenary Group Profile • Evolution of Public Private Partnerships • Government Objectives and Private Sector Motives • Consortium Dynamics • Role of Private Capital • Australia in a Global Context 3
  4. 4. Plenary Group Profile Office Locations Key statistics Established 2004 Projects 22 Total Project Value +A$12bn Australia Adelaide Melbourne Sydney Singapore Offices 9 Employees 120+ Canada Vancouver Winnipeg Toronto Ottawa Business Model • Infrastructure sponsor, developer and long-term equity investor; inhouse financial advisory • Focused on availability-based concessions; being a long-term partner to governments United States Los Angeles 4
  5. 5. Melbourne Convention Centre (VIC, Australia) 5
  6. 6. CSEC (Ottawa, Canada) 6
  7. 7. Gold Coast Light Rail (QLD, Australia) 7
  8. 8. Disreali Bridges Project (Winnipeg, Canada) 8
  9. 9. Victorian Comprehensive Cancer Centre (VIC, Australia) 9
  10. 10. Evolution of Public Private Partnerships • Social (or availability payment) infrastructure • 1990s – Small discrete projects – Less risk transfer / scope for innovation – Government accounting treatment important – Types of projects: • Regional hospitals • Government offices • 2000s – Larger projects – Key drivers: risk transfer / design and/or cost innovation – Types of projects: • Metropolitan hospitals • Urban infrastructure 10
  11. 11. Evolution of Public Private Partnerships • 2010s – Complex and network assets (and any other projects where benefits accrue) – Increased focus on service delivery and stakeholder outcomes – Government accounting treatment more nuanced – Types of projects: • Public transport systems • Non-core government services • Any project where private sector innovation/financial discipline should deliver superior outcomes • Financial structures and participants have changed significantly over past 20 years – Debt providers – Equity investors 11
  12. 12. Government Objectives and Private Sector Motives • Governments have become sophisticated procurers of long-term infrastructure and related services • Outcomes and objectives are now better articulated – Encourage interaction between government and bidders – Open to new ideas and international best-practice – Sometimes cost is really important • Private sector drivers – not always what you think – A fair risk-adjusted return, earned through competitive process – Ironically private sector often more long-term focused than governments – Relationships are paramount • Governments, communities, stakeholders, customers • Commercial partners 12
  13. 13. Consortium Dynamics • The main ‘actors’ – Sponsors - usually Builder(s), Financier, Operator(s) – Design consultants – Equity investors – Lenders – Various advisers • Everyone wants to win – not everyone knows how – Engaging with the client – Best for bid – Commercial balance • Competition delivers outcomes – Governments benefit from constructive tension… …but be careful about affecting consortium dynamics 13
  14. 14. Role of Private Capital • Private capital is fundamental to PPPs – the key ingredient that changes the dynamics between Government and contractors Technical / Commercial Expertise Risk Appetite • Interpret Government objectives • Assist with design, cost, whole-of-life optimisation • Performance risk • Due diligence rigour • Management of issues throughout project Independence • Interests aligned with long-term government objectives • Facilitator • Identify commercial opportunities Innovation Commercial Balance Stakeholder Awareness Improved prospects of optimal solution 14
  15. 15. Trends in Private Capital • Debt Providers – Banks vs debt capital markets – Refinancing risk – Should Governments pay the current debt premium? • Equity Investors – Financial vs Industrial – Real money vs Agents – Greenfield vs Brownfield – Investment horizons – Shareholder arrangements – Exit provisions – Vetoes – Conflicts of interest – Additional funding 15
  16. 16. Australia in a Global Context • Strengths – Experience and sophistication – Technical and commercial depth – Equity demand – Governments adapting to financial constraints • Weaknesses – Debt competition – Cost of bidding – Clarity on Government priorities • Conclusion – Private sector and Governments getting better at understanding each other, thankfully, because these are long-term partnerships 16
  17. 17. DELIVERING O N TH E P R O MI S E . Plenary Group A Private Sector Perspective on PPPs (Public Private Partnerships) 30 September 2013

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