This presentation by Guy CHETRIT was made at the 7th Meeting on Public-Private Partnerships held on 17-18 February 2014. Find more information at http://www.oecd.org/gov/budgeting/ppp.htm

1. The European PPP market:
trends and developments
Guy Chetrit
OECD, February 2014

2. Introduction
Objective:
• Overview of PPP market developments in Europe
• Look at new trends for financing PPPs in Europe
• Are institutional investors filling the gap?
Dataset:
• DBFOs / DBFMs (including concessions) for public services
which reach financial close
• Sourced from commercial databases, specialised publications,
EIB and EPEC Members
• Provisional data for 2013
• Far from perfect!
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3. The European PPP Market in 2013: out of the crisis?
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4. Headlines for 2013
• Increase in aggregate market value: EUR 16.7 billion (EUR 11.7
billion in 2012)
• More deals closed: 80 transactions compared to 68 in 2012
• Average deal value at EUR 208 million (EUR 188 million in 2012)
• 6 large deals (over EUR 500 million) compared to 4 in 2012
• UK, Italy and France account for two thirds of the overall market
value
• 14 countries closed at least one deal (compared to 9 in 2012)
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5. The UK still in the lead
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6. Incidence of large deals (over EUR 500 million)
• Thameslink rolling stock (EUR 1.9 billion)
• Royal Liverpool hospital (EUR 509 million)
• BreBeMi motorway (EUR 2.3 billion)
• Milan Eastern ring road (EUR 1.8 billion)
A1/A6 motorway Schiphol-Amsterdam-Almere (EUR 1 billion)
Phase 1 of Gebze-Izmir toll road (EUR 1.1 billion)
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7. Transport and education as prime sectors
Value
Number of transactions
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8. Overall improvements but…
• Weak project pipelines and issues with project quality and
regulatory environments in certain places
• Important PPP policy reviews have been completed / may
feed a wave of ex-post evaluation analyses
• Significant institutional frameworks changes are taking place
in a number of countries (e.g. Cyprus, Portugal)
• Financing appears to be less of an issue (although pricing is
still very high)
• Institutional investors are more active lenders in more
mature markets only
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9. Closed PPP deals involving institutional investors
• Something is happening!
• 17 deals over the last two years (out of 116 PPPs closed)
• In 2013, almost 30% of the market
• Over EUR 1.3 billion of investors debt has been secured
• Long-term debt indeed (up to 41 years)
• Large share of debt financing package
• Availability-pay deals
• Very high country concentration
• Many (very) different structures
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10. Structures / initiatives involving institutional investors
• Many caveats to our research…
• 21 initiatives, 16 in operation, 5 in preparation (1 closed down)
• Over EUR 15 billion of debt available
• Four main models:
• Direct lending
• Credit enhancement platforms
• Debt funds (asset managers)
• Managed accounts and soft partnerships with banks
• All seek to marry the expertise of banks (or bankers) with the
capital of investors
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11. Structures / initiatives involving institutional investors (2)
• A wide range of products (e.g. senior debt, private placements,
junior debt, credit enhancement for bonds)
• Mix of greenfield and brownfield to diversify risks and build an
infrastructure asset class
• Varying risk appetite (construction, post-completion,
availability, demand)
• Typical sectors with important focus on availability-based deals
• Varying degrees of sophistication and transformation into
commercial bank-like debt
• High geographic concentration
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12. Some challenges to attract institutional investors debt
• There are real issues for weaker PPP countries (financing
issue remains significant)
• Pipelines!
• Role for the public sector:
• Improve regulatory and institutional frameworks
• Adjust procurement processes to attract investors
• Playing a more active role in refinancing
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13. European PPP Expertise Centre
epec@eib.org
www.eib.org/epec
Twitter: @EpecNews
Telephone: +352 4379 22022
Fax: +352 4379 65499
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