euro 2012 football championship as business opportunity
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European Bank for Reconstruction and Development Your Partner in Ukraine. EURO 2012 Football Championship As Business Opportunity. Israel Business Conference December 2007. Mark Magaletsky, Principal Banker. What is EBRD?. - PowerPoint PPT PresentationTRANSCRIPT
EURO 2012 Football Championship As Business
Opportunity
Israel Business Conference
December 2007
European Bank for Reconstruction and Development European Bank for Reconstruction and Development Your Partner in Ukraine Your Partner in Ukraine
Mark Magaletsky, Principal Banker
What is EBRD?
Established in 1991 to promote market reforms in ex-communist countries of Eastern and Central Europe
Owned by 61 countries and two multilateral institutions
Operates in both public and private sectors on the basis of the market principles – no “soft loans”
As of end 2006, EUR 33.3 bn of cumulative commitments, mobilizing EUR 69.6 bn from other sources for a total project value of EUR 102.9 bn
EBRD in Ukraine since 1993….
Extensive knowledge of local economy, business environment and practices and in problem resolution.
Excellent working relationships with the central and local Government at the highest levels.
Full range of financial products and tenor tailored to client needs (debt, equity, trade finance).
Door opener for foreign investors: Willingness to share risks, including political risks.
Signed 183 projects for over EUR 3.0 billion
Equity9%
Loans91%
Public sector28%
Private sector72%
25%
3%
3%
6%
2%
6%18%
21%
16%
Financial Institutions
Industry
Agribusiness
Transport
Telecommunications
Property and Tourism
Power and Energy
Natural Resources
Municipal Infrastructure
EBRD Cumulative Business Volume in Ukraine – Allocation by Sector (end 2007)
EURO 2012: Hosting Cities in Ukraine
Kiev Dnipropetrovsk Lviv Donetsk Kharkiv Odessa
EURO 2012: National Preparation Program
Approved by the Government of Ukraine
Covers all related preparatory work: sport infrastructure, transport, utilities, emergency services etc
Total size of investments - $25 bn
$20 bn are expected to come from the private investors and financial institutions
EURO 2012: Key Sport Arenas
Kiev: $300 mln major reconstruction of the National Olympic Stadium, to be funded by the state, works not started yet
Dnipropetrovsk: new arena is nearing completion, funded by the local sponsors
Donetsk: new arena is under construction, completion in 2008, funded by the local sponsors
Kharkiv: construction of the new arena is not started yet, to be funded by the local sponsors
Odessa: construction of the new arena is not started yet, to funded by the local sponsors (?)
Lviv: investment tender for construction of the new arena is announced, closing on 18 December 2007
EBRD in Ukraine Transport Sector
Projects in all key subsectors (railway, road, shipping, ports, aviation, air navigation, airports)
Experience with both public and private sector
More than $800 mln funding committed
Agreement on co-financing with European Investment Bank
Ongoing EBRD Transport Projects Relevant to EURO 2012
Rehabilitation of M06 road Kiev-Chop:
– 824 km magistral road connecting Kiev with EU border
– EBRD financing €375 mln + €200 mln from EIB
– I phase completed in 2005, II phase to be completed in 2008, III phase - in 2010
Financing of Ukrainian railways modernisation:
– EBRD financing $172 mln
– Reconstruction of Beskyd tunnel
– Procurement of track maintenance machines for fast passenger services
Investment Opportunities in Ukraine Transport Sector Related to EURO 2012
Reconstruction of airports in the hosting cities All hosting cities plan major reconstruction/expansion of
the local airports (both airside and passenger terminals)
Size of investment projects range from $50 - $200 mln
All hosting airports (except Kiev Borispol) are controlled by the local authorities
Different development strategies
Opportunities for concessions (most likely Lviv and Odessa), but final decisions are yet to be made
Investment Opportunities in Ukraine Transport Sector Related to EURO 2012
Road sector State Road Program is approved by the Government
Key sources of funding: state budget, loans from IFIs and commercial banks under sovereign guarantees, private investments
Good opportunities for contractors: volume of road works to reach about $2 bn p.a
Some opportunities for concessions, but specific projects are yet to be prepared
Investment Opportunities in Ukraine Transport Sector Related to EURO 2012
Railways Railway infrastructure is state owned, no plans for
privatization, but gradual opening of the sector to private business starting from non-core activities
Key opportunities for the private business at this stage:
For investors: leasing of the rolling stock (freight, passenger, locomotives)
For contractors: reconstruction of stations, tunnels, bridges, electrification of the lines
Investment Opportunities in Ukraine Municipal Sector Related to EURO 2012
Key features Good base infrastructure in all hosting cities, but huge
investment needs in upgrade and rehabilitation
Utilities are predominately owned by municipalities with limited private sector involvement in such areas as urban transport and waste management
Tariffs are usually below cost recovery
Limited opportunities for concessions (weak regulatory basis, political pressure)
EBRD in Ukraine Municipal Sector
Water / waste water project in Zaporizhzhia – USD 28 mln Water / waste water project in Dnipropetrovsk – EUR 20 mln Public transport project in Kyiv – EUR 100 mln In preparation:
– District heating projects in Cherkasy, Odessa, Vinnytsia, Dnipropetrovsk and Zhytomyr
– Water and wastewater projects in Yalta and Zhytomyr Total EBRD financing for projects signed and under
preparation is around EUR 225 million
Investment Opportunities in Ukraine Tourism Sector Related to EURO 2012
Key features Most of the hosting cities are “underhoteled”
All products are in demand: 2*/3*/4*/5*, international chains, boutiques, business class, hostels, out of city resorts
Private sector – to play a key role
Green light from the authorities (hopefully!) - municipalities are under pressure to deliver
Alternative solutions might be a success (e.g. sea-river cruise ships for overflow guests in Kiev, Dnipropetrovsk and Odessa)
EBRD in Ukraine Real Estate Sector
Financing tailored to the nature of each project Long-term (up to 10 years) Local / foreign currency Target gearing varies Competitive pricing Clear and fair distribution of risks and returns between
different financing partners Alignment of each financing feature (timing of
disbursement / repayment, level of return, etc.) with the underlying risk
Financing predominantly for new developments
EBRD in Ukraine Real Estate Sector Radisson SAS Kiev
EUR 6.79 mln equity contribution (28.6% of the total equity) EUR 1.5 mln stand-by equity EUR 23.74 senior loan (including EUR 13.91 of the participating
bank)
Project
Development of the first international quality hotel in Ukraine
Experienced local and international sponsors
Classic project finance Commissioned in 2005
EBRD participation
EBRD in Ukraine Real Estate Sector GTC Ukraine
EBRD’s USD 10 million equity contribution invested pro-rata with the sponsor in individual sub-projects
Potential additional support through senior debt financing at sub-project level
Project
A well established international sponsor Total equity investment of USD 100
million Development of office, retail and
residential projects in Kiev and major regional cities
EBRD participation
CONCLUSIONS
Ukraine is close, big and growing
Do not wait until all is perfect!
It will be too late then !!
Be careful, but start now.
How to contact us
Tel: +380 44 270 6132Fax: +380 44 270 6813
Email: [email protected]
www.ebrd.com/ukraine
Kiev Resident Office27/23 Sofiyvska StreetKiev 01001 Ukraine