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\\nlon14p20507a\AIGIP$\5 - Presentations\2007-02-05 - Mumbay Conference\Infrastructure Financing Presentation - Mumbai Conference.ppt - Jan 31 2007 - 20:33 /1
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6 February 2007
THESE MATERIALS MAY NOT BE USED OR RELIED UPON FOR ANY PURPOSE OTHER THAN AS SPECIFICALLY CONTEMPLATED
BY A WRITTEN AGREEMENT WITH GLOBAL INFRASTRUCTURE PARTNERS.
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Table of Contents
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1.
Executive Summary
2.
3.
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1.
Executive Summary
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Executive Summary
D2
R3
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A5
F6
T7
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by Region ($327bn)
Asia 6%
Australia 7%
CEE/FS
U 3%
by Sector ($327bn)
Financial +
Strategic 3%
OECD
North
America
41%
Middle East /
Africa 1%
OECD
Europe
38%
Transport
20%
Financial
29%
Strategic
68%
Latin
America
3%
Energy
80%
Source: SDC
Assets
have
pricing
power
Provide
basic,
everyday
services
Consistent,
inelastic
demand
Long-life,
high-value
physical
assets
Significant
barriers to
entry
Low risk of
technological
obsolescence
Strategic
competitive
advantage
Fixed-cost
base, low
variable
cost
Strong cash
generation
Revenues
correlated to
inflation
Generally low
Low
ongoing
correlation to
capex
other asset
requirements
classes
Capital
growth
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Da te
Ta rge t
Acquire r
Airports
Dec-06
London City
GIP / AIG
Jun-06
Dec-05
BAA
Budapest
Ferrovial
BAA
Oct-05
Copenhagen
Macquarie Airports
Nov-04
Brussels
Macquarie Airports
Jul-02
Jun-02
Bristol
Sydney
Apr-01
Jul-00
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LTM EV / EBITDA
Ne t De bt / EBITDA
1.1
27.6x
14.9x
23.6
2.0
16.3x
30.0x
12.1x
15.6x
2.3
10.2x
8.0x
1.6
12.3x
8.5x
Ferrovial / MAp
Ferrovial / MAp
0.4
3.0
18.3x
17.7x
13.0x
11.6x
Newcastle
Copenhagen Airports
0.6
16.4x
8.3x
Rome
Leonardo Consortium
2.7
17.2x
9.0x
18.4x
11.2x
Ave ra ge
Ca r Pa rks
Dec-06
Dec-06
Chicago Parking
Charterhouse
Morgan Stanley
Epolia
0.4
0.4
NA
14.6x
NA
NA
Jul-06
Jul-05
Q-Park
3i
Car Park
NCP
0.3
0.8
17.7x
13.1x
NA
NA
15.1x
NA
Ave ra ge
Ports
Nov-06
Dec-06
OOCL
P&O Ports North America
1.9
0.5
24.0x
N/A
NA
NA
Jun-06
Dec-05
AB Ports
PD Ports
Goldman Sachs
Babcock & Brown
5.0
0.4
16.7x
13.2x
11.5x
NA
Nov-05
Feb-05
P&O
Mersey Docks
5.8
1.4
13.4x
11.4x
NA
NA
15.7x
NA
Ave ra ge
Toll Roa ds
Aug-06
Jan-06
Europistas
Indiana Toll Road
Dec-05
Dec-05
APRR
ASF
Dec-05
Oct-04
SANEF
Chicago Skyway
Ave ra ge
(1)
(1)
Sacyr Vallehermoso
Cintra / MIG
1.5
3.2
25.5x
44.7x
NA
52.9x
Eiffage / MIG
Vinci
12.0
19.2
12.3x
12.3x
10.7x
9.1x
Abertis
Cintra / MIG
8.9
1.5
12.0x
45.8x
9.5x
38.8x
25.4x
24.2x
(1) For Skyway and ITR 2006 EV/EBITDA and Net Debt/EBITDA have been used, in all other cases the LTM multiple has been adopted
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Fund raising by
investment banks and
PE accelerating
Decreasing IRRs
Equity IRR (%)
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25
20
15
Embryonic
Market
Maturing
Market
10
5
Time
Efficient
Market
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Australian
Investment Bank
North American
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European
Middle East
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Over 1,2,3,5 & 10 years the infrastructure sector has outperformed equities and government
bonds by a material margin
This fundamental re-rating has occurred across all regions and sub-sectors, based on the slow
but steady realisation by the market of the attractive fundamentals of the sector
Global Infrastructure & Utilities Performance
30%
70%
25%
60%
50%
20%
40%
30%
15%
20%
10%
10%
0%
5%
-10%
1 Yr
2 Yrs
3 Yrs
5 Yrs
-20%
0%
1 Yr
2 Yrs*
3 Yrs*
5 Yrs*
10 Yrs*
-30%
Toll Roads
Communications Infrastructure
Diversified Infrastructure
Airports
Ports
Source: UBS Investment Research, Q-Series: Infrastructure & Utilities, 10 November 2006
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Phase II:
Post Cintra IPO,
Pre BAA Acquisition
Phase I:
Pre Cintra IPO
Phase III:
Post BAA
Acquisition
300
25.0x
250
20.0x
200
62%
150
15.0x
100
10.0x
50
100%
Toll Roads
Car Parks
18 Toll Roads
1,689 Km
238,200 Lots
Airports
4 Airports
36m Passengers
0
Jan-04
5.0x
Jul-04
Jan-05
Jul-05
Ferrovial Indexed Price
IBEX Index
25
October
2004:
Cintra
sets final
IPO price
of 8.24 /
share
14 March
2005:
Signature
of the
TransTexas
Corridor
Contract
Jan-06
EV / EBITDA
08 February
2006:
Ferrovial
announces it
is planning a
possible
takeover of
BAA
Jul-06
Jan-07
06 June
2006:
Unanimous
agreement
between
Ferrovial and
BAA on new
takeover offer
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Perpetual / Long
Concession Assets
No/Limited Commodity
Price Risk
Investment Grade
Characteristics
Conservative
Management
Controllable Operating
Expenditure
Simple Assets
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Structure to Allow
Dividends from Start
Security Imperfect
Due to Regulation
High Overall
Leverage
No Cash Sweep or
Amortisation
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Financing Options
Significant portion of infrastructure deals being done in the structured banking market
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Traditional
Project
Financing
Securitisation
Corporate
Bond Market
Traditional
Bank
Financing
Structured
Banking
Product
Increasing Leverage
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Infrastructure
LBO Market
No dividends
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Project Financing
Infrastructure
Stable cashflows
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OpCo
Senior Debt
HoldCo
Junior Debt
Equity Investors
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Debt sized from financial ratios for initial / constant implied ratio or BBB min
Upon default at OpCo, junior voting rights are subrogated to the senior lenders,
according to an Intercreditor Agreement
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Enterprise Value
Ferrovial Consortium
Consortium consisted of Grupo Ferrovial, the lead partner, Caisse
de dpt et placement du Qubec and an investment company
managed by GIC Special Investments Pte Ltd
BAA de-listed from the London Stock Exchange on 15 August 2006
Ferrovial is now one of the world's leading infrastructures groups, with
a capitalisation which exceeds 8bn and over 78,000 employees
Consortium Structure
Ferrovial
CDPQ
c.62%
c.28%
GIC SI
16.3x / !23.6bn
4.3bn
Equity
12.1x
0.6bn
Toggle
0.4bn PIK
2.0bn
Junior Facility
9.1x
4.7bn
Senior Holdco
Share alternative,
listed in AIM
10%
FGP
Topco (UK)
90 95%
16.3x
EV/EBITDA
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Altitude
Assets (UK)
4.5x
5% 10%
ADI Holdings
(UK)
Acquisition
SPVs (UK)
Acquisition
Facilities
BAA (UK)
Existing
Debt
4.6bn
Existing Senior Opco
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Transaction Summary
GIC
Enterprise Value
GSIL
Infracapital
23.33%
10%
16.7x
33.33%
33.33%
16.7x / 3.4bn
1.1bn
Equity
Jersey Co
100%
Bond Co
11.5x
100%
Junior Acquisition
Debt Facility
Senior Acquisition
Debt Facility
Admiral
100%
EV/EBITDA
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Associated British Ports (ABP) owns, operates and develops ports and associated activities, including providing port facilities and
services to shippers and cargo owners
The largest port group in the UK, handling approximately a quarter of the countrys seaborne trade through its 21 ports located in
England, Scotland and Wales.
On 23 June 2006, Admiral Acquisitions, a consortium comprised of Borealis, GIC, GS IL and Infracapital, and ABP announced that
they had reached agreement on the terms of a recommended cash offer of 910 pence per share for the acquisition of the entire issued
share capital of ABP by Admiral
Offer valued ABPs existing share capital at c. 2,794m (EV equivalent to 16.3x 06E EBITDA) on a fully diluted basis
Employees: 3,030 (as of December 2005)
9.8x
Refinancing &
Capex Facility
ABPH
2.0bn
Senior
100%
Non Ports
Operations
ABP
0.4bn
Junior
Revolving Credit
Facility
Subsidiaries
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Transaction Summary
Acquisition of 100% of London City Airport (LCY) by a
consortium comprising AIG Financial Products and CS/GE
Capitals new infrastructure investment JV, Global
Infrastructure Partners, announced on October 10, 2006
LCY was owned by private investor Mr Dermot Desmond, who
acquired the company in 1995
Total enterprise value of c. 750m
Debt at c. 405m senior, pricing grid based on leverage,
no rating requirements, 7 year bullet
Source: Factiva, company information
Revenues(2)
(Total: 50m(3))
EBITDA
(Total: 27m(4))
Jet Centre
12%
Jet Centre
12%
Non-Aviation
18%
Aviation
70%
Airport
88%
(1) December year end (2) Aviation and non-aviation revenues are airport revenues (3)
Revenues include cons. adjustment (not included in pie chart) Source: Company information
Key Financials
Dec YE ( in millions)
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2004A
2005A
2006E
Revenues
Growth (%)
35.7
43.6
22.2%
50.1
14.9%
EBITDA
(1)
Growth (%)
Margin (%)
17.5
49.0%
21.2
21.1%
48.6%
27.2
28.3%
54.3%
Capex
Margin (%)
0.9
2.5%
2.7
6.2%
4.5
9.0%
Implied Multiples
2006E
( in millions)
Metric
Multiple
EV/Revenues
50.1
15.0x
EV/EBITDA
27.2
27.6x
(1) Excludes non-recurring items and s106 costs (2) 2.5m relates to the unwinding of s106
provisions, Source: Company information
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3,278.5
385.1
385.1
Total Sources
4,048.6
Uses
Payment to Indiana Finance Authority
Revenue Stabilisation Reserve
Fees payable to Macquarie for advisory
Other
3,850.0
100.0
32.6
66.0
Total Uses
4,048.6
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Situation Overview
Equity
Gross Equity: $770m
Forecast IRR between 12.5% - 13.5% p.a.
Risk premium between 8.0% - 9.0% p.a. over US 10-yr bond
yield
Average expected yield of 2.6% p.a. over the first 5 years
Anticipated 15 year payback period to equity
Bank Facility
Bank Debt: $3.28bn
Bank Debt Tenor: 9 years
Interest Rate: LIBOR + Margin
Margins: ~0.9% - ~1.3%, ratchets with maturity
Partial cash sweep
Liquidity Facility
Liquidity Facility: $100m
Tenor: 9 years
Margins: ~0.9% - ~1.3%, ratchets with maturity
Capex Facility
Capex Facility Size: $700m
Tenor: 9 years
Margins: ~0.9% - ~1.3%, ratchets with maturity
Hedging Terms
Fully hedged debt profile for 20 years
Covers: Bank Facility, Liquidity Facility, Capex Facility
Swap rates step up gradually from 2006 to 2026, starting at
3% p.a.
Source: GIP estimates, Macquarie presentation on Indiana Toll Road Acquisition
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EURO, UK & US 30-Yrs SWAP Curves
6.0
5.5
5.0
4.5
4.0
3.5
3.0
1 1 2 3 4 5 6 9 1 2 3 4 5 7 10 15 20 30
Wk Mo Mo Mo Mo Mo Mo Mo Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr
EUR
Step-Up Swap
Accreting Swap
GBP
USD
Step-Up Swap
5.0%
4.5%
4.0%
3.5%
3.0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
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Swap Schedules
Both ratings agencies and debt providers are
becoming increasingly comfortable with the
analytical framework required to rate and
underwrite loans/bonds. Their primary focus in
assessing these transactions includes:
Specific cash flow characteristics of the assets
Strength of the overall business and its
prospects
Credibility of projections
Strength of structural provisions aimed at
protecting lenders and bondholders
Track record of management team
10%
8%
6%
4%
2006
2007
2006
2007
Enterprise Value
1,830
1,830
3,800
3,800
Debt
1,550
1,550
3,279
3,279
EBITDA
40
41
62
85
Capex
20
10
47
73
EV / EBITDA
45.8x
44.6x
61.3x
44.7x
Debt / EBITDA
38.8x
37.8x
52.9x
38.6x
Statistics
13%
2%
01-Jul-06
01-Jul-07
01-Jul-08
01-Jul-09
01-Jul-10
01-Jul-11
01-Jul-12
01-Jul-13
01-Jul-14
01-Jul-15
01-Jul-16
01-Jul-17
01-Jul-18
01-Jul-19
01-Jul-20
01-Jul-21
01-Jul-22
01-Jul-23
01-Jul-24
01-Jul-25
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All-In Rate
12%
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Financing
Structuring Considerations
Taken
Potential
Bridge Financing
Senior Debt - Capital
Accretion
1. Zero-Coupon
Note:
Subordinated / Preferred
Equity @ 35-45%
Initial
Equity @ 25%
Refinancing
Swap
Counterparty
Fixed rate
coupon
Note
2. Cash-pay
Bond:
Issuer
Coupon
payment
Bond
proceeds
Bond
Market
2. Structure to offer
terms attractive to the
investor base
This structure allows to customize cash flows to achieve targeted return requirements
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Innovative and sophisticated financings for Chicago Skyway and Indiana Toll Road
(extended concession period, increased debt quantum, deferred repayment) have led
S&P to re-assess their approach to investment grade credit rating for toll-road projects:
Long-term revenue assessment:
Unreliability of long-term traffic models
Conservative approach to traffic forecast
(<1% growth) and toll increase
Leverage level:
Recent projects >30x Debt/EBITDA
Only mature assets with strong historical
performance, robust legal environment and
predictable cash flow can achieve these
levels for investment grade rating
Additional debt issuance:
Only for project performing beyond
expectations
Debt issuance for shareholder distribution
and subordination carefully examined
Bullet repayment / non-amortising debt:
Need to ascertain if cash flows can support
the peaks induced later in the concession to
aggregate debt service requirements
DSCR:
As structures increasingly move away from
fully amortising debt, DSCR becomes less
relevant
Necessary analysis of expected repayment
profile
Dividend distribution:
Only when performance in line or beyond
expectations to preserve credit quality
Detailed analysis of lock-up tests
Swap transactions:
Potential credit issue if transaction is swapdependent
Assessment of minimum credit quality of
collateral posting
Replacement requirements if minimum
credit rating levels violated by counterparty
Refinancing:
Risk need to be factored into analysis
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Conclusion
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High growth markets such as India / China likely to get a large share
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