BOARD OF REGISTRATION OF ARCHITECTS AND QUANTITY SURVEYORS (BORAQS) KENYA. CONTINUOUS PROFESSIONAL DEVELOPMENT (CPD) SEMINAR ON THE THEME: “PROJECT FINANCING AND INVESTMENT PLANNING”. BY OUMAR DIOP ENG, MBA, PMP

1. CPD SEMINAR
Thursday & Friday 1st & 2nd September, 2016
Safari Park Hotel (Nairobi)
Eng. Oumar DIOP, MBA, PMP
Director Portfolio & Projects Management – Shelter Afrique
Directeur Gestion de Portefeuille & Projets
PROJECT FINANCING & INVESTMENT PLANNING
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2. Content
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Shelter Afrique in Brief
Project Finance Cycle
Quantity Surveyors role in project financing
What is Project Financing ?
Key Debt Parameters – Raising Capital
Project Financing Products & Services
Selected Projects in East Africa

3. Shelter Afrique in Brief
• Strategic Goals
• Providing a full suite of funding solutions for affordable
housing & Infrastructures related projects across Africa.
• Membership & Impact
• 44 Member Countries, Leader and channel of choice for
affordable housing & Infrastructures across Africa
• Expert on best practice government policies and processes to
support affordable housing
• “Go-to Lender” for affordable housing projects and investor in
projects with significant social impact
• Expert in innovative private-public partnerships (PPPs) to
unlock and develop land
• Knowledge repository for new and innovative technologies to
reduce costs of housing
• Moody’s Baa - stable rating (2015)
• 4 regional offices Nigeria – Kenya- Cote d’Ivoire - Zambia
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4. Shelter Afrique Value Proposal
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National
and local housing
entities
Local and state
governments
Large developers
Materials and
equipment suppliers
Large construc-tion
companies
Financial institutions
▪ Link developed projects to banks to ensure there is end-user financing
▪ Connect quality developers with large projects (Master plans, PPPs, etc.)
▪ Provide guidance on permitting where SHAF has relationship with govt.
▪ Pilot projects with new types of materials to reduce costs and improve quality
▪ Connect contractors with large projects in need of high quality contractors
▪ Co-develop standardized building designs and construction processes
▪ Support banks to develop mortgage markets
▪ Invest in private equity funds with a focus on affordable housing
▪ Provide technical advice on housing development initiatives
▪ Coordinate PPPs and co-develop innovative structures on new projects
▪ Providing technical advice on appropriate housing delivery strategies

5. Shelter-Afrique Projects
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Residential Office Buildings Shopping Malls Mixed Real Estate
Developments
Social
Housing
Sites and
Service/Infrastructure
Slums upgrading Equipment and
Material procurement

6. What is project financing?
Defining Project Financing
• Project finance is the long-term financing of projects
based upon the projected cash flows of rather than
the balance sheets of its sponsors
• A project financing structure involvesa number of
equity investors,known as 'sponsors',a 'syndicate' of
banks or other lending institutions that provideloans
to the operation
• Project are most commonly non-recourseloans, which
are secured by the project assets and paid entirely
from projectcash flow, rather than from the general
assets or creditworthinessof the projectsponsors
• Higher risk projects may require the surety/guarantees
of the project sponsors
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Parties to a project financing
• Sponsor
• Lenders, Debt Financiers
• Financial Advisors (A & QS)
• Technical Advisors (A & QS)
• Legal Advisors
• Equity Investors
• Regulatory Agencies
• Multilateral Agencies

7. Project Finance Cycle
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8. Project Finance Cycle (Cont’d)
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Screening of projects
– Justificationof
eligibility
Presentation to
Internal Loans
Committee – Issue
of Indicative Offer
Letter
Appraisal Mission -
Final Evaluation
Report
Board of Directors -
Final Approval and
Final Offer
Signing of the Loan
Agreement and
Legal
Documentation
The Project
•Feasibility Study
•Architectural and Engineering Designs
•Bill of Quantities
•Project Description
•Evidence of approval by relevant authorities
•Land title – Free from any encumbrances
•Environmental Impact Assessment Report
•Profiles of Technical Team
The Sponsor
•ApplicationLetter
•Brief description of Sponsor’s background
•Certificate of Incorporation
•Memorandum and Articles of Association
•Audited FinancialAccounts
•Bank References

9. Quantity Surveyors role in project financing
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• Advising on the potential of a site and working out what a client
can afford to build, often termed ‘feasibility’.
• Presenting detailed information on the cost of particular elements
of work on a periodic basis to enable payment for those works
carried out to date. This process is known as ‘valuations’.
• Organising the division of a project into its component work
packages, then awarding these work packages to smaller, more
specialised construction companies (known as subcontractors).
• Dealing with contractual and legal matters.
• Managing costs to make sure that the initial budget isn’t exceeded.
• Arranging staff payments and, at the end of a job, settling the final
accounts.
• Acting as financial advisors and monitoring progress for the
Sponsor.
What does a Quantity
Surveyordo?

10. PROJECT BRIEF
PROJECT
INFORMATION
SUMMARY
BOARD PAPER
PROJECT
MANAGEMENT
PLAN
PROJECT
EXECUTING
PROJECT
CLOSING
Baseline Definition
@ PIS OUPUT
• IPM Report & PIS
Approval Sheet
Baselines Monitoring@
Executing - OUPUT
Initiating Report
Planning Report
Executing Report
Inspection Report
Escrow AccountStatement
Debt Recovery Report
Disbursement Forecast
Disbursement requests
Restructuring Requests
Baselines Validation @
Appraisal - OUTPUT
• Technical , Marketing
Assessment Report
RISK DEPARTMENT
•Loan Classification Report
•SCN on Restructuring
•Portfolio Risk Report
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FINANCE DEPARTMENT
•Loan Disbursement Report
•Invoices to Customers
•Receipt of payment - Customers
•Feedback on forecasts
•Loans Overdue Report
LEGAL DEPARTMENT
•Agreements
•Legal Opinions
•Discharge Request
•Valuations
BUSINESS DEVELOPMENT
DEPARTMENT
•Feasibility Study
•Market Survey Report
•Design & Drawings
•BOQ & Specifications
•Program of Works
•EIAReport
2
DEVELOPER/BORROWER
• Equity Injection Schedule
• Sales Projections
• Disbursement Projections
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Architects, Quantity Surveyors & Project Finance Cycle in SHAF

11. Key Debt Parameters – Raising Capital
Security/Collateral
• MortgageChargeon Land and Construction Works:
• Preferably freehold land
• Leasehold is acceptable
• All risk Insurance to cover works with Shelter-Afrique’
interest duly endorsed
• Pledge of Shares of the BorrowingCompany
• Corporate Guarantees of Parent/Holding Company
• Personal Guarantees main shareholders
• Assignment of all Project Proceeds
• Payment for construction works will be against an
Architect’s Certificateand valuation of works done by QS.
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12. Key Debt Parameters – Raising Capital (cont’d)
Pricing & Fees
• Interest rate: Variable Base + Margin%p.a.
• Tenure: 2-7years inclusive of grace period of 18-36 months
• Repayment: Quarterly instalments of principal
• Appraisal Fee: 0.5% of the loan amount
• Front-end fee: 1% of loan amount upon signing of the Loan
Agreement
• CommitmentFee: 0.85%per annum of any undisbursed
loan balance.
• Loan ManagementFee : 0.5% per annum on any disbursed
and outstanding loan amount payable quarterly
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13. Project Financing Products & Services
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Direct
Lendin
g
Lines of
Credit
Corpor
ate
Loans
Syndic
ation
Direct Lending
• Financing of real
estate projects
• KES, FCFA, Euro, US$
• Tenor: 5-7 years
• Grace Period: Up to
3 years
• Financing: 60%
• Maximum KES 1.2
billion.
Lines of Credit
• Availablein KES,
FCFA, Euro, US$
• Banks and financial
institutions
• Tenor : 10 years
• Grace Period: Upto 2
years
• Maximum KES 1.2
billion.
CorporateLoans
• Portfolio of projects
• Availablein KES,
FCFA, Euro, US$
• Large scale sponsors
• Tenor: 5-7 years
• Grace Period: Up to
3 years
• Maximum KES 1.2
billion.
Syndication
• Co-financing
availablein KES,
FCFA, Euro, US$
• Large scale projects
• International
partners

14. Project Financing Products & Services
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Trade Finance
• Opening and confirmation of
documentaryletters of credit
• Import and Export of
construction materials and
equipment
• Financial institutions
• Real estate developers
Equity Participation
and Joint Ventures
• Provision of risk capital
resources
• Participation in equity financing
• Participation in PPPs
• Partnership with real estate
developers
Guarantees
• Loans from local institutions
• Tradesuppliers
• Financial institutions
• Real estate developers
Equity
Participa
tion
Trade
Finance
Joint
Ventures
Guarant
ees

15. Selected Projects in East Africa
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16. Selected projects In Kenya
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Country: Kenya
Developer: Magnolia
Investments Ltd
Project: Magnolia Heights

17. Selected projects In Kenya
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Country: Kenya
Developer: Kenya Medical
Association
Project: KMA Estate

18. The Rugarama Project
RWANDA
Mixed use development of 2,700 homes
including schools, health facilities, shopping
and related infrastructureservices in
Rugarama,Kigali.
The project will be implemented in at least 4
phases with exit opportunities at the end of
each phase.
Phase has started.
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19. The Kenya Housing
Implementation
Programme (KHIP)
Financing & Constructions of 100,000 nos.
housing units and related infrastructures for
the National Police Service and Kenya Prisons
Service over five years.
The program is divided into phases and is
estimated to cost Kshs 16.2 billion (US$ 162
million) for Phase 1, involving the
construction of 20,000 units.
Funding for Phase 1 will be provided by the
African Development Bank (AfDB), Shelter
Afrique and Other Partners.
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20. THANK YOU
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