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www.industreams.com
SOURCING INVESTORS AND STRATEGIC PARTNERS
With InduStreams -‐ June 2012
www.industreams.com
Summary
What
• Iden8fying the most relevant investors and/or partners
• Introducing your proposi5on to relevant execu5ves and decision makers from global and regional leading companies
• Facilita8ng to secure agreement
How
• If you engage us we wish to deliver – so Step 1 is understanding your situa5on and needs
• Step 2 is typically an engagement agreement
• Step 3 fast track process to find 3-‐5 high relevance investors/partners (example)
Why
• We have big and diverse investor, operator and cargo owner network
• We have insight to both the industry and investor communi8es allowing us to facilitate effec5vely
• We have simple and effec8ve processes
www.industreams.com
Introduc8on
§ There are thousands of investors, operators and cargo owners looking to invest in and par5cipate in the development of ports and infrastructure
§ There are as many infrastructure, port and asset owners looking to source investors and strategic partners
§ There are substan5al challenges in connec5ng from either side including lack of network and insight
§ We have built the network, insight and process to facilitate effec5vely between the two sides
§ In what follows is a short introduc5on to sourcing investors and strategic partners
www.industreams.com
Investor appe8te and magnitude
§ $100+ trillion in the funds management sector alone
§ Big appe5te for increased alloca5on to infrastructure investments
§ Pension and insurance funds alone may quadruple their infrastructure holdings
§ No lack of cash in the funds sector
§ Further to this industry operators and industrials have substan5al funds they are looking to allocate
www.industreams.com
Investor diversity (port example)
CARGO OWNERS Container shipping Oil shipping, Bulk shipping Mineral companies Energy companies Agriculture companies
OPERATORS Container terminal Oil and liquid terminal Bulk terminal Free/logis5c/property zones
DEVELOPERS Construc5on Marine infrastructure Economic zones Port industry/logis5c zones
PARTNERS South American, Asian, Middle Eastern port groups
INVESTMENT FUNDS AND PRIVATE EQUITY Macquarie Infrastructure Group Brookfield Infrastructure Partners JP Morgan Infrastructure Fund Ci5 Capital Advisors SOVEREIGN FUNDS Abu Dhabi Investment Authority China Investment Corpora5on Government of Singapore Investment Corpora5on Malaysia Mining Corpora5on PENSION AND INSURANCE FUNDS Ping An (2nd biggest Chinese insurance fund) Ontario Teachers Pension Fund ATP (biggest Danish fund) APG (biggest Dutch fund, 3rd biggest globally) DEVELOPMENT BANKS AND INSTITUTIONS World Bank and IMF EU related development banks and funds IFU and other niche banks
Greenfield Brownfield
Acquisi2on
Container
Bulk
Oil & Liquid
Logis2c Zone
Free Zone
Majority
Minority
Financial investor
Developer
Operator $10+ million
$100+ million
$1+ billion
Seed investor
www.industreams.com
Investor diversity (explained)
The investor space and its many cons5tuents is much wider and varied than most think. They vary greatly in their investment objec5ves, preferences, size etc. From big ins5tu5onal investment funds with more than $100 billion to small operators and funds with less than $50 million to invest. The diversity in the target investment size, investment stage, investment horizon, target shareholding and investor role, proposi5on to project owners etc is vast. On the one extreme you have very short term focused funds ofen with high return requirements (15-‐20%) and on the other you have very long term focused e.g. pension funds with fairly low return requirements (5-‐10%), each seeking to invest in their own part of the value crea5on chain (refer later slide). The great diversity among investors, their preference and proposi5ons to owners offers great poten5al to develop, fund and operate most projects with reasonable commercial founda5on.
www.industreams.com
The value crea8on chain
Seed Implement Grow Mature
Expand
Transform
Divest Seeding the investment - from idea, opportunity or need to attractive proposition
Creating the product – from greenfield to operation
Creating the market - building the top line and foundation for efficiencies
Scaling the investment – from low to high yield
Continued value creation…
www.industreams.com
The value crea8on chain (explained)
The diversity in preference across the investor value crea5on chain (not only in investment types) gives further opportuni5es to make new developments viable and free up capital. Funds and operators typically have interest in the implementa5on/development and growth stage whereas ins5tu5onal investors (including pension funds) have more interest in the mature stage. The seed stage is a significant challenge for most, ofen requiring several par5es to come together or for someone to play the seed investor role which however is uncommon in the port sector. In most cases there are beher owners out there allowing par5es to either free up their capital for other developments or bring down debts or commitments. An example of a chain with changes in ownership could be a fund together with e.g. a developer doing the seed inves5ng, an operator doing the actual development and growth phases and a pension fund acquiring the asset once it reaches a more mature stage.
www.industreams.com
Typical engagement challenges
§ The local infrastructure or port and related owners have lihle or no network to the global investor, operator and cargo owner/industrials communi5es
§ Many investors have lihle knowledge of the infrastructure and port sector and the local markets and therefore ofen abstain from inves5ng due to lack of comfort or insight
§ Most infrastructure or port/asset owners rarely engage in a process of finding partners or investors (many have never done so and for those that do it is ofen only once in the life5me of a given project)
www.industreams.com
Our engagement process
Deal
Develop
Engage
Focus
1-‐5
5-‐10
10-‐20
100-‐500
Step 1 Choosing the relevant investor segments
Step 2 Engaging the most relevant
Step 3 Deal development
Step 4 Closing the deal
Informa8on Exchange
Engagement Agreement
Proposi8on Formula8on
Step 0 Crea=ng founda=on
www.industreams.com
Our engagement process (explained)
As a first step it is important for us to understand your situa5on and the circumstances surrounding your needs including the objec5ves you are looking to achieve (Informa5on Exchange). With a reasonable understanding we can then with you work out an Engagement Agreement and terms that makes sense on both sides and suit the situa5on. Once and agreement is in place we will together with you formulate a proposi5on to poten5al investors or partners and target the segments that fit the objec5ves you wish to achieve (Selec5on). We then typically Engage a few cons5tuents one at the 5me and typically end up reaching out to about 10-‐20 in order to create substan5al interest and a good selec5on for the further process. From there we chose the candidates with highest fit and likelihood to close actual agreements with and seek to facilitate on both sides (Develop) un5l agreement is reached with one or more investors and/or partners (Deal).
www.industreams.com
Our facilita8on proposi8on
ü Big and diverse investor, operator and cargo owner/industrials network (1,000+ investors and execu5ves in the community and increasing)
ü Insight to both the industry and investor communi5es allowing us to convey proposi5ons accurately and with the right context of the poten5al value these have
ü Simple and effec5ve process to engage the right par5es with the right proposi5on to ensure geing to agreement in short 5me period
www.industreams.com
Risk free engagement
We talk to new funds, investors and industrials every week and as policy are commihed to listening to anyone who wishes to further explore the possibility to invest in or seek investors for the infrastructure market – no strings ahached! Our primary objec5ve is to provide access to opportuni5es that might otherwise not be available to you and your company. If such opportuni5es might be relevant to you or your company we encourage you to reach out to any of our representa5ves or on:
www.industreams.com
Disclaimer
This presenta5on is issued for informa5on purposes only and does not cons5tute an agreement, offer, obliga5on or invita5on to enter into transac5ons or investment business.
With this presenta5on, INDUSTREAMS LIMITED does not act in any way as your advisor. This presenta5on is not intended as, nor should it be, a subs5tute for consul5ng with INDUSTREAMS LIMITED.
Whilst this presenta5on has been produced from sources believed to be reliable, the informa5on, views and opinions expressed in this presenta5on are provided as of the date of this presenta5on and remain subject to verifica5on, comple5on and change without no5ce. No representa5on or warranty whatsoever (whether express or implied) is or will be made as to, or in rela5on to, the accuracy, reliability or completeness of the informa5on contained herein or in the appendices to this presenta5on.
INDUSTREAMS LIMITED will not be liable towards you or any third party for any eventual damage you may incur, caused by the informa5on contained in this presenta5on and its appendices.
www.industreams.com
Pension fund example Objec8ve
Pension and insurance funds typically invest to secure long term stable returns (e.g. 5-‐10%).
Typical investment size
Typically look to invest $100-‐200 million as minimum per investment for their own share and therefore total investment size target ofen above $500 million.
Role and shareholding target
Ofen limited to that of a “financial” investor and thus typically looking only to take a minority posi5on and for many are not allowed to have the main managing role.
Investment stage and holding period
In general look for acquisi5on opportuni5es or constella5ons whereby they mi5gate development and commercial risk and look to hold assets for long periods (30+ years). Emerging trends include pension funds seeking to take ownership along side en5re port owners (landlords) as that further diversifies their risk across more assets.
Proposi8on to asset/project owners
Primarily bring lower cost of capital to the table (can live with lower returns) but also some5mes specific capabili5es and global brand.
www.industreams.com
Operator example Objec8ves
Operators and some developers typically seek to grow their poroolio as primary objec5ve and require medium to high returns (e.g. 10-‐15%).
Typical investment size
Most investment sizes are relevant ranging all the way from $10-‐20 million to above $1 billion (although in laher case it might only be a few in the industry that would want to do that alone).
Role and shareholding target
Most operators would like majority and management and an opera5onal role ofen a must have.
Investment stage and holding period
Do green fields as well as acquisi5ons ofen without any specific holding strategy, but most tend to just “hold on” once they secure an investment.
Proposi8on to asset/project owners
Operators typically bring significant know-‐how and skill and some5mes actual business to their projects.
www.industreams.com
Infrastructure fund example Objec8ves
Many infrastructure funds (including private equity funds) invest on behalf of other funds (e.g. ins5tu5onal funds such as pension fund) and look to achieve strong returns over a shorter period (e.g. 15-‐20%), but are typically also willing to take on greater risk.
Typical investment size
As with operators such funds invest in small, medium as well as very large scale investments (substan5al diversity).
Role and shareholding target
Many funds are looking to take majority but for most however minority is also an op5on. Some of the more sector specific ones would look to have a strong opera5onal role as well whereas others would not have opera5onal capability or interest.
Investment stage and holding period
Most constella5ons and stages are relevant for such, but acquisi5ons are gaining popularity, and ofen look to hold the asset for 8-‐10 years.
Proposi8on to asset/project owners
Very mixed value proposi5on depending on the fund in ques5on but do have the benefit of being very focused (once they raise a fund the money has to be spent over a short 5me period or the clients will withdraw the funds again) and thus tend to work effec5vely and with urgency.
www.industreams.com
Sovereign wealth fund example Objec8ves
Sovereign wealth funds and other government type funds have many different agendas but of course mostly to further the interests of the na5on they have been mandated by. Consequently they also operate on a very wide return range (e.g. 0-‐20%).
Typical investment size
Work almost exclusively with larger scale investments, most in excess of $500 million and ofen more than $1 billion.
Role and shareholding target
Almost exclusively look for a pure financial stake but may well want extensive influence.
Investment stage and holding period
Green fields and brown fields are all scope, however projects ofen need to be among key projects na5onally or within the region they invest in.
Proposi8on to asset/project owners
Given the government leverage and wide return spectrum SWF’s can come with many different kinds of proposi5ons and some5mes fit where no others are relevant.
