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

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. 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. 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. 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. Melbourne Convention Centre (VIC, Australia)
5

6. CSEC (Ottawa, Canada)
6

7. Gold Coast Light Rail (QLD, Australia)
7

8. Disreali Bridges Project (Winnipeg, Canada)
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9. Victorian Comprehensive Cancer Centre (VIC, Australia)
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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. 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. 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. 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
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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. 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
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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. 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