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Global Infrastructure Finance Review

H1 2010

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Researc e an pu s e n Ju y August 2010 or In rastructure Journa an Emap Lty Mu a at Ma mu ova, Gaurav S arma an Yoann Rey

Terms o use an copyr g t con t ons

T s report s copyr g te . A r g ts reserve an no part o t s pu cat on may e repro uce , store n a retr eva system ortransm tte n any orm w t out pr or perm ss on o t e pu s ers.

We have taken every precaution to ensure that details provided in this report are accurate. The publishers are not liable for anyom ss ons, errors or ncorrect nsert ons, nor or any nterpretat ons ma e rom t e report.

For more n ormat on or a copy o our Cr ter a & Met o o ogy, p ease contact:

Jo n K orstaHea o Researc & Ana ys s

In rastructure Journa

Greater Lon on House, Hampstea RoaLon on NW1 7EJ

T: +44 0 207 728 5413E: [email protected]

www. on ne.com

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Contents

Headline Figures Project Finance 1

Regional Analysis 4

Africa & the Middle East 5

Asia Pacific 6

North America 7

Latin America 8

Eastern Europe 9

Western Europe 10

Indian Subcontinent 11

Sector Analysis 12

Oil & Gas 13

Power 14

Renewables 15Transport 17

Social Infrastructure 18

Water & Sewage 20

Telecoms 20

Mining & Metals 21

League Tables 22

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Sectors c ose ea s, g o a vo umeLeading players

First Half 2010

BNP Paribas (MLA) RBC Capital Markets (Bond Arranger) Socit Gnrale (Financial Adviser) Allen & Overy (Legal Adviser) Stone & Webster (Technical Adviser) ExxonMobil (Sponsor)

Second Half 2009

Calyon (MLA) Credit Suisse (Bond Arranger) Royal Bank of Scotland (Financial Adviser) Allen & Overy (Legal Adviser) Mott MacDonald (Technical Adviser) Global Infrastructure Partners (Sponsor)

First Half 2009

Grupo Santander (MLA) FI-FGTS (Bond Arranger) Itau-Unibanco (Financial Adviser)

Linklaters (Legal Adviser) Mott MacDonald (Technical Adviser) Reliance Power (Sponsor)

* Includes deals in allsectors t at qua i y as a PPP

or PFI transaction

Arrows s ow c anges romH1 2009 to H1 2010

O & Gas2010 20, US 38.93 nH109 23, US$9.95bnH209 32, US 27.53 n

Transport2010 25, US 17.49 nH109 44, US$24.63bnH209 20, US 14.62 n

ower

2010 27, US 16.78 n109 20, US$23.04bn209 27, US 18.56 n

Renewables

2010 91, US 13.69 nH109 93, US$12.93bnH209 97, US 15.90 n

Soc a In ra

2010 40, US 9.74 n109 42, US 5.87 n209 52, US 6.71 n

M n ng & Meta s

2010 9, US 2.36 nH109 11, US 4.34 nH209 9, US 2.50 n

Water & Sewage

2010 4, US 0.36 nH109 11, US$1.07bnH209 7, US 4.80 n

Te ecoms

2010 4, US 0.36 nH109 6, US$2.61bnH209 6, US 4.14 n

PPP/PFI*

2010 68, US 27.45 nH109 79, US 25.64 nH209 70, US 21.53 n

1

Global Volume:US$100bn

G o a vo ume tota e t p us tota equ ty up 18%

Dea count down 11%

De t m te -recourse oans an on s up 24%

Copyright 2010 Emap Limited

Changes from H1 2009 to H1 2010

2009 volume: US$176bn2008 volume: US$284bn2007 volume: US$312bn

2009 deal count: 4972008 deal count: 6772007 deal count: 693

2009 total debt: US$120bn2008 total debt: US$217bn2007 total debt: US$256bn

H209 volume: US$92bnH208 volume: US$127bnH207 volume: US$168bn

H209 deal count: 250H208 deal count: 297H207 deal count: 351

H209 total debt: US$68bnH208 total debt: US$100bnH207 total debt: US$133bn

H109 volume: US$84bnH108 volume: US$157bnH107 volume: US$144bn

H109 deal count: 247H108 deal count: 380H107 deal count: 342

H109 total debt: US$52bnH108 total debt: US$117bnH107 total debt: US$123bn

Project Finance First Half 2010

Previous Years

Deal Count:220

Total Debt:US$65bn

igures roun e to t eearest i ion.

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Global InfrastructureFinance Review

4 Copyright 2010 Emap Limited

Regional Analysis

Overall regional uncertainties about the health of the market,including weak economic growth, sovereign and currency risks,new bank regulations and the drying up of government stimuluscontinue to persist.

However, project financing is recovering from the fall-away seenin early 2009, buoyed by growth in Asia and some other markets.That said, not all markets have performed equally well in terms ofclosing deals. In the first half of this year the volume of deals thatreached financial close was considerably higher in Asia Pacificand Europe and held-up strongly in North America.

Volumes were dramatically down this half year in the IndianSubcontinent, Middle East and Africa. Latin America also saw aslight dip in investment volume of deals that raised project finance

unding in H1 2010.

Indian Subcontinent started the year on a weak footing as dealsstruggled to proceed beyond the procurement stage. Middle East,previously the second largest region for project investments, saw asharp dip in volumes courtesy of the fluctuation in oil prices and theeconomic woes that hit the regions European lenders especiallyor the first three months of 2010.

Presently industry observers say the challenge for developers is tolook at a mix of funding options for their schemes as the atmospherein the market is different with banks slowly starting to underwritedeals. The syndication market is not yet an option, but multilateralsand other types of financiers are entering as fully active players.

The developers that faced difficulties in securing favourable projectfinance loan terms were prompted to look at capital marketsto fill the funding gap, either to complement bank financing orrefinance expensive loans with more attractive bonds. In the H12010 there were as many as 12 projects with bond financing in theirdebt structure.

Growth in project finance will be driven by the increased use ofpublic-private partnerships schemes, particularly in Western Europe,and the growth of investments in the renewable energy sector. Thelong-term financing for infrastructure will depend on the ability ofinternational lenders to lend on domestic transactions as well asthe ability of local lenders to raise funding. The cost of funds mayalso be an issue as some domestic lenders source dollars in orderto lend into deals.

Capital markets are still insufficient to support project finance. Inthe future, it is likely that local pension funds will become moreactive participants in infrastructure finance as sovereign wealthfunds are already today.

Governments need to create an appropriate legal and regulatoryframework for infrastructure that is favourable to debt financing andfosters private sector investment. This may include decreasing risksto lenders and developers, as well as attractive return incentives tolure investment from the emerging class of regional infrastructureand private equity funds.

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Africa & the Middle East

Africa & the Middle East finished the first half of 2010 with a projectfinance volume of US 3.82 billion down 78 per cent from US 17.28billion in the second half of 2009. Comparison with the equivalentperiod shows that the volume was down by 50 per cent.

However, deal activity shows that for the first time in the project

finance market there were more transactions in Africa than in theMiddle East 7 deals out of 9 in total. Nigeria was the most activecountry in the region with four project finance transactions raisingthe total of US$369 million in commercial and multilateral debt. Asin the previous years, the MEA region was dominated by energyprojects.

Activity in the Middle East was led by the US$2.25 billion RiyadhPP11 IPP, the only other deal that closed there was US 109 millionEgyptian New Cairo Wastewater PPP. Government fundingespecially in Gulf Cooperation Council (GCC) countries, whichincreased rapidly over 2007-2008 especially for PPP projects, hasnow subsided. With the fall of oil prices many governments cut thelong-term financing into deals.

Project finance in the region was short of social infrastructure andrenewable energy projects.

*Leading Players H1 2010

Credit Agricole Group (MLA) Citigroup / Credit Agricole Group (Financial Adviser) Norton Rose (Legal Adviser) Fichtner (Technical Adviser) Saudi Electricity Co (Sponsor)

Outlook

From the start of the year, many African countries saw activeinvestment opportunities in infrastructure. Despite the globalrecession, African economies will go through gradual recovery

with average growth reaching 4.5 per cent in 2010 and 5.2 percent in 2011, according to African Development Bank.

The infrastructure gap in Africa is vast, and to drive recovery theregion needs to address policy gaps, institutional capacity gaps aswell as financing. Funding is available to help boost investments inAfrican infrastructure.

The African Development Bank (AfDB) is expected to nearly doubleits infrastructure funding to the region over the next five years toUS 10 billion to accelerate economic growth. The AfDB approveda loan of US 40 million for Burkina Faso to fund a rural electrificationproject. China is an active investor in several African countries - itwill lend Congo around US 700 million to build a hydroelectric damin the north Sangha region.

Sector Value (US$m) Top Deal Location Value (US$m) Financial Close

ower , Riya PP11 IPP Sau i Ara ia , 25 06 2010

Oi & Gas Accugas Pipe ine ger a 29 06 2010

n ng eta s umwana opper n ng e nanc ng am a

Te ecoms 150 He ios Towers Nigeria Expansion Nigeria 150 04 02 2010

Transport 128Da ar Container Termina s

ConcessionsSenega 128 30 03 2010

Water & Sewage 109 New Cairo Wastewater PPP Egypt 109 03 02 2010

The International Finance Corporation (IFC) is investing US$100million in the second Africa Infrastructure Investment Fund (AIIF2),which was aimed at promoting the development of basicinfrastructure on the African continent.

The UK and South Africa have signed a memorandum of

understanding committing the UK to provide 67 million to help theregional economic communities improve transport infrastructurein eight countries. India has approved a total of US 125 million incredit for Zambia, part of it to finance a key power project the120MW Itezhi-tezhi hydroelectric project, worth US 240 million. TheIndian Export and Import Bank (Exim) will contribute US$50 millionto the project.

Recently, the governments of Mozambique and Botswana signeda memorandum of understanding to develop a deep water port atTechobanine point, in Mozambique. Additionally, the governmentof Mozambique will build a new bridge across the Zambezi River toallow for a giant coal mining project in the interior Tete province.

The USAID programme will launch four tenders worth over US$300million late this year to rebuild roads and improve water andsanitation in Mozambique. In Egypt, there are plans to build a US$1billion tunnel under the Suez Canal at Port Said.

Ethiopias government announced plans to target infrastructuredevelopment to drive growth. Even in small countries, like Lesothofor instance, the authorities plan to start construction of their newMetolong dam and raw water pumping station in early 2011.

Ghana will fast-track construction of a deep sea oil port andrevamp a major rail link in 2010 to help exploit its energy andminerals. In the Middle East, the governments are targeting areassuch as high-speed rail, water and renewables. Middle Easterngovernments have committed over US 100 billion on rail projectsin the coming years. Renewable energy is on the rise, with SaudiArabia developing large solar projects on the rooftop of King

Abdullah University (KAUST) and UAE developing a massive 100MWsolar plant outside of Abu Dhabi Shams 1.

*Leading Players identified in this report are determined by the number ofc ose transactions comp ete in a sector or region an ta en rom IJ s rst

a 2010 eague ta es. Tota va ue is use to rea a tie.

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Asia Pacific


Oi & Gas , ExxonMo i PNG LNG P ase I apua ew u nea , 16 03 2010

ower , a ton In onesia , 08 03 2010

enewa es , o gar n arm ustra a

Transport 840 Peninsu a Lin PPP Austra ia 781 05 02 2010

Mining & Meta s 283Kooragang Is an termina

ExpensionAustra ia 232 14 05 2010

Socia In rastructure 223 Ararat Prison PPP Austra ia 223 27 05 2010

Te ecoms 60 Ka imantan Fi re Optic Financing In onesia 60 26 03 2010

Asia Pacific finished H1 2010 with a project finance volume ofUS 26.07 billion up 84 per cent from US 4.3 billion in the sameperiod last year, and overall exceeding the annual project financeinvestment volume in Asia Pacific last year.

The regions dramatic rise was primarily due to US 18.2 billion PNG

LNG Phase I deal in Papua New Guinea, which accounted for over70 per cent of total investments in the region. However, the overalldeal count was also up as 22 deals closed from the start of theyear, compared to 17 in the same period last year.

Active sectors in Asia Pacific in terms of the volume of investmentsincluded oil & gas (US 18.6 billion) and power (US 4.8 billion).In terms of the number of deals, the most active sectors wereconventional (eight deals) and renewable power sectors (fivedeals).

Renewable energy projects are picking up in the region, in Australiaand South Korea as well as China. All three countries announcedmore investments in renewables this year. South Korea will investaround US$18.6 billion in renewable energy over the next threeyears as announced by the government in July.

One social infrastructure deal closed in Australia the US 227.78million Ararat Prison PPP. In transport, two transactions worthUS 840.3 million reached financial close in Australia Peninsula LinkPPP and the refinancing of the port of Portland.

Leading Players H1 2010

SMBC (MLA) PwC (Financial Adviser) Allens Arthur Robinson (Legal Adviser) International Power (Sponsor)

Outlook

Asian infrastructure will remain dynamic for the remainder of theyear. Almost all regional governments have announced massiveinfrastructure spending. Record growth in the value of investmentsshows that energy sector will be driving force for infrastructure

investments in this region. Chinese and other Asian governmentspledged more than US$600 billion to invest and develop theregional infrastructure.

Market experts are of the opinion that Asia has to develop itsconsumer markets and expand its consumption base in order toreduce their vulnerability from the exposure to the markets of otherregions.

One of the largest multilateral investors in the region is AsianDevelopment Bank (ADB) which loaned about US 10 billion lastyear and will increase its lending to about US 12 billion this year.

According to ADB, developing Asia with the annual investmentof around US$800 billion in transport, communication, and energyinfrastructure during 2010-2020, is likely to reap welfare gains ofUS$1,616.3 billion (in 2008 prices) in 2020, or 10 per cent of theregional projected aggregate gross domestic product.

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North America finished H1 2010 with a project finance volume ofUS$12.97 billion roughly the same volume of investments as in thefirst half of 2009 (US 12.4 billion). Deal count in the first half was 32,a few short of the results in the same period last year.

The region continues to be dominated by energy, notably therenewable energy sector. At the same time, the volume ofinvestments in oil and gas and power diminished.

Renewables was the regions largest sector this half year supportedby the US Governments policy to encourage investments inrenewable energy. The sector saw total investments of US 4.3 billion.The renewable sector was followed by oil & gas and transport.

Despite reduction in the number of deals, oil & gas attracted ahigh volume of investments, particularly, Ruby Pipelines US 2.9billion long-term financing. Transport volumes were boosted by abig-ticket Lyndon B Johnson Freeway Managed Lanes P3 projectworth US 2.66 billion. Transport could see more investments goingto high-speed rail projects as the political support grows aroundthis a much hyped but under-delivered asset class.

The US project finance market is expected to grow this yearsupported by tax credits and government grants (see Renewablessection). Canadian social infrastructure remains consistent, but ashift in focus towards renewable energy was also noted over H12010; two PV solar parks and a wind farm with the total capacity of

42MW secured funding since the start of the year.


Bank of Tokyo-Mitsubishi UFJ (MLA) Credit Suisse (Financial Adviser) Latham & Watkins (Legal Adviser) RW Beck(Technical Adviser) Meridiam (Sponsor)

u oo

Canadian and US markets are intensely involved in developinginfrastructure domestically as well as through an action planto strengthen infrastructure via an integrated cross-borderapproach.

There is strong political support for infrastructure projects, includingPPP projects and renewable energy. The US government aims toboost job creation, long-term economic growth and sustainabilityof recovery from the global economic crisis.

North America


Renewa es 4,324 150MW A ta Win I Long-Term De t Unite States 03 03 2010

Transport 3,230Lyn on B Jo nson Freeway Manage

Lanes P3Unite States 2,661 22 06 2010

Oi & Gas 3,189 Ru y Pipe ine Long-Term Financing Unite States 2,910 05 05 2010

ower , TrAIL Re nancing Unite States 20 01 2010

Socia In rastructure 649CRCHUM Montrea University

Hospita Researc CentreCana a 431 21 05 2010

Mining & Meta s Minera Par Mine Re nancing Unite States 26 04 2010

In the US, the financial crisis has caused a flight to safety, makinginfrastructure investment more attractive than it used to be.Although economic recovery in the US is fragile, many infrastructuresectors are being driven by stimulus funding, which will result inpositive growth in the near-term future. Between 2010 and 2014,infrastructure is forecast to grow by 3.4 per cent on average peryear.

The US Government is allocating tens of billions in funds to anumber of infrastructure and construction projects especiallyhigh speed rail projects, large loan guarantees for power plants,and renewable energy projects. Many PPP projects in the transportsector are seen moving forward.

In Canada, the outlook for infrastructure investments is positive asis the level of activity in the market so far into 2010. Renewableenergy projects and social infra projects are underway across thecountry. However, domestic reports are indicative of project delaysthat could potentially cost Canadians millions of dollars in federalinfrastructure spending aimed at stimulating the economy.

Canadas Infrastructure Stimulus Fund was set up in 2009. The fundworks in the following way - cities and provinces have to identifyprojects and then apply to obtain money to help pay for part ofthe project. The fund will share the costs of those local projects butone of the key conditions for federal funding is that the project haso e comp e e y arc .

The countrys Parliamentary watchdog states that currentlythere are delays and only 25 per cent of CAD4 billion has beenallocated to individual projects, running a risk that many projectsmay not start or be completed by the deadline. Besides the delaysin realisation of the stimulus programme, there is also the issue ofwhat may happen when the two-year stimulus programme ends,which is a growing point of concern for Canadian politicians.

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Latin America


Oi & Gas 2,586 Tupi FPSO Project Brazi 800 30 03 2010

Power 1,397 AEI Jaguar Energy Guatema a 758 01 04 2010

Renewa es 1,115 Eurus 250MW Win Farm Mexico 514 04 06 2010

Mining & Meta s 1,040 Pue o Viejo Mine Dominican Repu ic 1,040 30 04 2010

Transport 335 Re Via n4 Concession PPP Peru 335 11 02 2010

Socia In rastructure 131 Ixtapa uca Hospita PPP Mexico 131 25 02 2010

Latin America finished H1 2010 with a project finance volume ofUS$6.6 billion; a depreciation of 67 per cent from US$20.1 billionH1 2009.

Fewer transactions have closed in the region in the first half ofthis year. The largest decline in activity was noted in the transportsector but some energy sectors power, renewables and miningalso suffered. The number of deals that made it to financial closeell to 13 down from 28 transactions in the same period last year.

There was a decline in project finance activity throughout thewhole of Latin America. A devastating earthquake in Chile broughtproject financing to a halt. This affected the overall investmentvolume in the region, as Chile has always been one of the majormarkets for project finance investments in Latin America. A sharpdecline in Brazil, from the record activity witnessed last year, sawtwo project financed deals in the oil & gas industry making tofinancial close viz. Tupi FPSO and Sevan Driller II.

The start of the year brought improvement to the Mexican projectfinance market. Mexico closed five deals across oil and gas, power,

renewable and social infrastructure sectors.


SMBC (MLA) Royal Bank of Scotland / Rothschild (Financial Adviser) Shearman & Sterling (Legal Adviser) Garrad Hassan (Technical Adviser) Ashmore Energy International (Sponsor)

Outlook

Latin America experienced a dramatic drop in the private sectorcapital flows starting from the second half of last year. Despite thelow figure of project finance investments in the first half of the year,market experts are optimistic about the prospects for the region.However, the latest data does not back this optimism in the projectfinance market.

There are strong regional disparities in terms of infrastructuredevelopment. However, the annual investment needed to closeinfrastructure gaps in the region amount to US 114 billion, or 2.8 percent of regional GDP.

The governments of several countries announced measuresto mitigate the effects of the economic crisis by stimulatinginfrastructure investments through national infrastructureprogrammes, budgetary investments, guarantees, and new lawsthat offer flexible legal framework for public private partnerships.Mexico and Brazil are leading the region in terms of value andnumber of deals.

Brazil is the largest market with infrastructure needs estimated atUS$85 billion over the next decade in transportation and energy,according to Banco do Brasil. Two major global sporting events (i.e.2014 Soccer world cup and the 2016 Olympics), offshore oilfielddevelopment and expansion of the domestic housing programmewill boost infrastructure spending in the years to come.

From the start of the year, there was an increased activity inconsolidating private equity and setting up funds focusedon investments in Latin American infrastructure. In March,Corporacion Andina de Fomento (CAF) committed US$40 millionto a Peru-focused infrastructure fund managed by BrookfieldAsset Management of Canada and local private equity firm ACCapitales, with commitments totalling US 500 million, targetinginvestments in Perus transportation, energy, water and sewageand telecoms sectors. The US 150 million Central AmericanMezzanine Infrastructure Fund (CAMIF) formed at the end of lastyear is currently offering long term funding in 10 countries in CentralAmerica, Mexico, Colombia, and the Dominican Republic.

In January, Macquarie launched Macquarie Mexican Infrastructure

fund (MMIF) with Ps$5.2 billion (US$408 million) in initial commitmentsfrom 7 Mexican pension funds. FONADIN (Mexicos nationalinfrastructure fund) and Macquarie solely focused on investment ininfrastructure projects including roads, rail, airports, ports, water andwastewater, energy as well as social infrastructure and telecoms.

In the tight credit markets, Export Credit Agencies are also tryingto fill the financing gap. ECAs increased their support to LatinAmerica by 16 per cent, over US 10 billion in sectors such asairports, railroads, water, oil & gas, and manufacturing.

Ex-Im Bank of the United States accounts for about 20 per cent of allactivities in Latin America. Export Development Canada recentlyopened its fourth office in Peru to explore opportunities in themining, energy, infrastructure, and telecom sectors. China, SouthKorea and Japan have also been investing actively in the region.China is also making substantial sovereign wealth investments inregional energy resources, as well as other infrastructure.

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Eastern Europe ended H1 2010 with a project finance volume ofUS 14.3 billion up from US 3.6 billion in H1 2009, thereby exceedingthe annual PF investment volume of last year.

The region was the third largest in terms of the total project finance

investments after Western Europe and Asia Pacific. It closed 13transactions up from 9 in the same period last year.

Big-ticket deals included the US$7.6 billion Nord Stream GasPipeline, benchmark transport deals in Russia and the US 1.2 billionBayabat Hydroelectric Power Plant in Turkey. In the last few years,the region has been experiencing unprecedented levels of activityaimed at modernising transport, energy and social infrastructure.

The governments of Romania, Bulgaria, Slovakia, Poland andTurkey are all supporting the implementation of PPP through aseries of policy initiatives to provide stimulus to their respectiveeconomies.

Last year, energy sector projects attracted most of the investmentsin the region, particularly power, oil and gas and mining. However,

renewable energy is picking up as well. Poland and Turkey areleading the way for renewables in Eastern Europe, especiallywind energy. Poland closed two wind farms from the start of thisyear, and Turkey project financed 41MW Cataltepe Kuyucak windarm.


Garanti Bank(MLA) Socit Gnrale (Financial Adviser) Clifford Chance (Legal Adviser) Stone & Webster (Technical Adviser) Gazprom (Sponsor)

Outlook

Eastern Europe requires significant infrastructure investments. Lastyear governments in the region were prompt to enact a series ofanti-crisis measures, adjust national procurement process, as wellas guarantee the provision of government support to developers inthe form of up-front payments, co-lending and direct guarantees.Infrastructure projects in energy and transportation are set togrow. Most Eastern European countries will see moderate growthin electricity consumption over the decade of 2010-2020 due toincrease in personal income and demand for electricity. This willincrease clean power and renewable energy development andmore investments in transmission and grid development in theregion.

Eastern Europe


Oi & Gas 9,121 Nor Stream Gas Pipe ine P ase I Russia Germany 7,631 22 01 2010

ransport ,Moscow-St Peters urg To Roa -

Section 1uss a , 26 04 2010

Power 2,220 513MW Boya at Hy roe ectric Tur ey 1,214 15 01 2010

enewa es146MW Po is Win Farm

Re nancingo an

n ng eta sBoguc ans y Bri ge Loan Faci ity

Re nancinguss a

Te ecoms 97 MTS Mo i e Networ s Financing Russia 97 29 03 2010

With an estimated 500 billion in total infrastructure investmentneeded, the issue of financing is prevalent. Commercial debthas so far been the primary source of finance with the marketdominated primarily by western European banks. However, theglobal financial crisis in the European continent overall adds

pressure on Eastern Europes ability to obtain necessary funding.Public sector budget consolidation across many countries in theregion will continue, and credit tightening will ease slowly.

Several Eastern European countries such as the Russian Federation,Slovak Republic, Slovenia, and Romania have entered themunicipal bond market to finance large infrastructure projects.Other available sources of financing are EU money as wellmultilateral development funding from the EBRD, EIB and the WorldBank, which have all already been active in financing infrastructureinitiatives in the region.

The countries where investment opportunities are the mostplentiful are Poland, Hungary, Czech Republic, Slovakia andRomania. Besides shoring up public finances and addressingfunding constraints, many countries in the region have yet to

establish proper legal frameworks to use the PPP model for futureinfrastructure investments.

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Western Europe


Oi & Gas 12,450 Nor Stream Gas Pipe ine P ase I Russia Germany 7,631 22 01 2010

ransport ,Portuga Hig Spee Rai Poceirao

to Caia PPPPortuga , 07 05 2010

Socia In rastructure 8,737 F emis Sc oo s PPP Be gium 2,831 10 06 2010

enewa es ,Eneop 2 Win Port o io 480MW

P ase Iortuga ,

Power 3,876 Exe tium Power Purc ase Financing France 2,685 12 04 2010

Water & Sewage 255 Aguas e Cascais PPP Portuga 108 31 03 2010

Mining & Meta s 50 Minas e Aguas Teni as Spain 50 30 03 2010

Te ecoms 49Hautes-Pyrenees Hig -Spee

Networ PPPFrance 49 18 02 2010

Western Europe finished H1 2010 with a project finance volume ofUS 34.72 billion up 35 per cent from US 25.7 billion in H109, and alsohigher by 66 per cent from the second half of last year.

The deal count was 125 transactions, five deals short from the results

of the same period in 2009 but the same as in the second half oflast year. The regional market shows an overall improvement onan annualised basis but the market sentiment is still one of caution.The region continues to be the largest project finance region

accounting for 35 per cent of the global volume with a longtrack record and experience closing deals.

Spain once again led the Western European market with thehighest number of transactions (46) and had the largest volume(US 9.9 billion). The Spanish renewable energy market continues todominate project finance activity in the region with investmentsof US 3 billion on 29 PV and thermal solar and wind transactions.

France is the second largest market with investments totallingUS$7.4 billion over 18 deals. France closed a number of big-tickettransactions in transport and power. French renewable energy

investments grew almost five times over the same period last yearand stand at US 705 million.

The UK closed 25 transactions worth US 3.4 billion slightly below 28deals in H109 with the capital value of deals not exceeding US 200million excepting Birmingham Highways and Southmead Hospitalprojects. The UK also saw two renewable energy projects secureunding the 48MW Hill of Towie wind farm and the refinancing of

the 40MW Bicker Fen & Walkway wind farm.


La Caixa (MLA) KPMG (Financial Adviser) Garrigues (Legal Adviser)

Mott MacDonald (Technical Adviser) Building Schools for the Future Investments (Sponsor)

Outlook

Overall, economic recovery in Europe will be underpinnedby measures taken across the region for the developmentof infrastructure. In the next 2 to 3 years, improved transport

connections are expected to boost the region requiring increasedcapacity for ports (boosted by the increase in container traffic), tollroads (albeit at a modest pace compared to previous years) andairport traffic.

Europe will lead in the provision of privately financed transportinfrastructure. The increased investments will be supported byvarious regulatory measures such as tolls and congestion charges.Overall, the rating agencies predict a stable outlook for theinfrastructure industry in the region. Moodys notes that thegenerally benign debt capital market conditions for infrastructureare expected to continue over the coming 12 to 18 months.Nevertheless, it believes that periods of turbulence can beexpected.

The most critical infrastructure will be required to meet growing

demand for electricity and water. Earlier this year a study by PwCfound that Europe and North Africa could source 100 per cent ofits energy needs from renewable sources. This will require updatingthe regional power systems to a shared system. Europe is nowengaging in a number of alternative energy projects; the biggestof which is a plan to build a 400 billion super-grid to link bothEurope and the Middle East so the continents can benefit fromtheir respective power sources.

However, the private sector is right to demand a clear frameworkfor getting paid before committing to an investment drive.Currently there is regulatory and policy uncertainty over how toproceed with such ambitious plans. The risks should be identifiedand the rewards need to be tailored to take the risks into account.Just as wind and solar were incentivised to get them going, the

early builders of, for instance, the first leg of the Supergrid, shouldbe allowed, and be clearly seen to be making good money fromthe investment.

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Indian Subcontinent


ower GVK Goin wa Sa i Power P ant In ia 01 02 2010

ransport NH3 Ma1 Hig way PPP In ia 31 03 2010

n ng eta s o su oa ne n a

Renewa es 15 In ian Energy T eni Win 16.5MWase

In ia 15 29 04 2010

The Indian Subcontinent finished H1 2010 with a project financevolume of US 1.22 billion down 88 per cent from US 10.4 billionin H1 2009.

During H1 2010 the number of deals fell to four, down from the 14in the corresponding period last year. There was also one projectin Pakistan a US 23.5 million expansion of Karach Gas-fired powerplant expansion.

The downward trend of investments in the Indian project financemarket last year and the beginning of this year is due to delaysin procurement, as well as the structural issues that the Indian

financial market faces. The power sector was sluggish as a resultof cancelations of some coal power projects on environmentalgrounds, and delays in supplies of equipment, especially since theintroduction of restriction on the import of Chinese equipment andlabour.

Despite the slowdown of project financing, India introduced anumber of policy changes, including a landmark Solar Mission,as well as set feed-in-tariffs to boost investments in PV solar andwind energy. As a result Indias renewable energy market volumessurged since the end of 2009.


IDBI Bank(MLA) BI Capital Markets (Financial Adviser) J Law (Legal Adviser) Lahmeyer International (Technical Adviser) GVK Power & Infrastructure (Sponsor)

Outlook

In 2010, India is likely to see significant investment activity ininfrastructure. The asset class is expected to progress at a faster ratethan ever before as it is heavily backed by government legislation.The Indian government is going ahead with several initiatives toboost investments in infrastructure - the Jawaharlal Nehru NationalSolar Mission Programme, ambitious wind energy targets 22GWby 2022, feed-in-tariffs for wind and solar, tax incentives, ViabilityGap Funding Scheme to promote PPP scheme for infrastructuredevelopment.

Local assessment suggests that Indian infrastructure needsinvestment levels of US 90 billion over the next five years. Half ofthis money will come via the private sector followed by multilateralagencies, pension funds, and sovereign wealth funds.

India is keen to develop its infrastructure to support its economicgrowth. It is the second-fastest growing major economy afterChina. To achieve double digit growth, India needs massiveinvestments in various infrastructure projects and industries suchas power generation, ports and roads, renewable energy andcommunication. So far investments were heavily subsidised bythe Indian government but the way ahead is for reduced level of

subsidies as the government seeks to attract private sector andoreign direct investment.

Most of the future power generation capacity in India willcome from coal. It is the governments plan to increase powergeneration capacity by 55GW from the current level of 159GW by2012. Although India is the worlds third-largest producer of coal,domestic supplies and transportation networks are yet to keeppace with demand growth. The country will continue to rely onimports to cap the supply-demand gap.

Although Indias reliance on conventional power is vast, it alsoannounced a National Action Plan on Climate Change. Accordingto plan, the contribution of renewable energy resources to powergeneration would be increased to 10 per cent by 2015 and 15 percent by 2020, as opposed to the current level of 4 per cent.

Market experts forecast that governments focus on infrastructureand the rural economy, the surge in industrial production, andservice sector will sustain GDP growth at around 7.5 per cent in2010-11.

Overall, this year will be one of consolidation that is likely to lay theoundation for the years to come. A large part of the infrastructure

expenditure is expected to start paying dividends between 2011and 2013. Government and the Reserve Bank of India will continueto play a very important role in shaping the economic future ofIndia in 2010.

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Sector Analysis

The renewables sector accounted for bulk of the 220 deals closedover H1 2010 coming in at 91, followed by social infrastructure,power and transport. The total represents a decline from the 247deals noted during H109 and 250 noted over H209; a far cry from

the H108 figure of 380 deals. Of the total deals noted over H1 2010,68 were PPPs valued at US 27.45 billion.


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Name Value (US$m) Financial Close Location

ExxonMo i PNG LNG P ase I 18,200 16 03 2010 Papua New Guinea

Nor Stream Gas Pipe ine P ase I 7,631 16 03 2010 Russia Germany

Ru y Pipe ine Long-Term Financing 2,910 05 05 2010 Unite States

Castor UGS Gas Storage 1,901 10 06 2010 Spain

Perenco RBL aci tiy 1,721 18 05 2010 France

To o s Po ypropy ene P ant Project 1,490 22 01 2010 Russia

Gas Natura Ma ri Networ Sa e 1,041 12 03 2010 Spain

Tupi FPSO Project 800 30 03 2010 Brazi

PetroRig III 661 30 04 2010 Mexico

C icontepec Oi Fie 600 31 03 2010 ex co


Oil & gas transactions totalled US 38.93 billion during H1 2010 upmarkedly from US$9.95 billion in H109. However the number oftransactions dipped from 23 to 20. In fact, the number of deals hasbeen steadily declining from H107 wherein 47 transactions wererecorded. Before, during and indeed after the credit squeeze, the

oil & gas infrastructure investment market has seen a tricky fewyears.

It is widely acknowledged that the price of crude oil influences,if not dictates infrastructure development in the sector. As the oilprice touched the dizzy heights of US$147 a barrel prior to andduring the first phase of the global financial crisis, when investorsdistanced themselves from plummeting financial markets andpoured capital into the commodities market - investment in oil& gas infrastructure improved. The crude price made extractionrom zones perceived as difficult to extract from seem attractive.

Following that over much of 2008 and 2009, crude prices reversedthe gains of the last couple of years.

This is clearly mirrored in IJs half yearly project valuation data. InH207, oil & gas transaction valuation came in at US 38.43 billionwith 46 transactions, rising to US$49.5 billion with 56 transactions byH108. However, by H109 this had plummeted to US 9.95 billion. Asthe oil price is being seen as stabilising above US$70 a barrel formuch of 2010 and with many commentators suggesting it wouldend the year around or at the US$90 a barrel mark an improvedinvestment scenario may be witnessed.

Another interesting development is the emergence of shale gas.It was ignored as a hydrocarbon by-product by oil & gas majorsprior to 2007 as they believed it to be too expensive to developon a larger scale. Gas prices then rose and shale development ona much wider scale not only increased investment but in turn also

cut project costs to an extent that it seems to be commonplacenow for major oil companies to be driving shale gas investment.

Overall, ExxonMobil PNG LNG Phase I (valued at US 18.2 billion),Nord Stream Gas Pipeline (US 7.63 billion) and Ruby Pipeline Long-Term financing (US$2.91 billion) were the three leading projects byvaluation to reach financial close.

The remainder of the current fiscal year could see gas projectsdrive growth in sector much more aggressively than oil projects.The importance of gas projects cannot be understated. However,IJ analysts would not go as far as to suggest big gas wouldovertake big oil over the next couple of years. A longer term shiftin hydrocarbon investment priorities is the more likely outcome.


Crdit Agricole Group (MLA) Socit Gnrale (Financial Adviser) Clifford Chance (Legal Adviser) Stone & Webster (Technical Adviser) ExxonMobil (Sponsor)

Top 10 by Value

Global InfrastructureFinance Review Oil & Gas

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Global InfrastructureFinance ReviewPower

14


Exe tium Power Purc ase Financing 2,685 12 04 2010 rance

Riya PP11 IPP 2,253 25 06 2010 Sau i Ara ia

Paiton 3 IPP 1,519 08 03 2010 In onesia

513MW Boya at Hy roe ectric Power P ant 1,214 15 01 2010 Tur ey

Mann eim B oc 9 CHP Coa -Fire Expansion 1,090 24 02 2010 Germany

GNPower Marive es Coa -Fire P ant 1,000 29 01 2010 P i ippines

TrAIL Re nancing 20 01 2010 Unite States

aguar nergy 01 04 2010 Guatema a

o n wa a ower ant n a

Internationa Power Haze woo Re 678 21 01 2010 Austra ia


Top 10 by Value

Total valuation of power projects for H1 2010 came in at US 16.78billion down from US$23.04 billion noted over H109 and US$26.51billion for H108. IJ data on total valuations indicates that volumeshave been in terminal decline since H107 when a figure of US$37.83billion was noted; the highest since IJ commenced the present

data series in 2005.

Volumes in North America, Western Europe and Asia Pacificcontracted the most, but Latin America led by Brazil weatheredthe finance lull of 2009 and emerged stronger over H1 2010. Brazilsperformance can be explained by the proactive involvement ofthe Brazilian development bank (BDNES) in helping some majorprojects reach financial close in 2009, most notably in the powersector. Its two main beneficiaries last year were the US 5.15billion Jirau hydropower project and US$5.4 billion Santo Antoniohydroelectric plant. The US 3.7 billion loan made available to Jiraumarked the largest ever loan made by the BDNES.

These power projects are crucial for Brazils growing electricityneeds. Hydroelectricity accounts for over 90 per cent of powergenerated in Brazil. The trend continued in H1 2010, as the Braziliangovernment approved the controversial 11GW Belo MonteHydroelectric project. In April, following clearance from localcourts, its energy agency awarded the contract to Norte Energia,with Companhia Hidro Eltrica do So Francisco (CHESF) as theleading contractor.

Belo Monte has never been short of controversy with concernsabout the regional environment and welfare of indigenous tribalinhabitants. Some of the countrys leading infrastructure players,such as Camargo Correa and Odebrecht, pulled out of theauction, over rumours that power rates will be capped at BRL83(US$47) per MWh; a rate deemed too low to assure a decentreturn on investment. Surprisingly, the winning consortium - NorteEnergia - offered an even lower rate of BRL78 (US$44.4) per MWh.

On completion, Belo Monte would be the worlds third largesthydroelectric station after Chinas Three Gorges and Itapu,another Brazilian power project. Its peak wattage of 11200MWwould appreciate Brazils existing generating capacity by about10 per cent.

Away from Latin America, Frances Exeltium Power Purchasefinancing (valued at US 2.69 billion), Saudi Arabias Riyadh PP11IPP (US 2.53 billion) and Indonesias Paiton 3 IPP (US 1.52 billion)topped the field by valuation. Of these Exeltium stands out, as itfollows a unique model in that it finances a future power plant bygoing to end-users and asking them to raise money to forward-purchase power long-term at consistent prices from the utilitywhich wants to build an expensive nuclear plant.

Riyadh PP11 follows the trend of Middle Eastern power market whichdelivered big ticket projects in 2009. Concurrently, GuatemalasAEI Jaguar Energy project valued at US 758 million which reachedfinancial close in April also deserves a special mention given thatit was in a difficult jurisdiction and was creatively financed by localinstitutions when international lenders had pulled out.

Overall, the of number of deals actually rose from the 21 notedover H109 to 27 by end-June 2010, but nowhere near the high of 48deals noted in H107. Looking at previous data for the whole year,the total number of deals fell to 47 in 2009 from 88 in 2008. Lookingahead, the present fiscal year may not be able to match the highsof 2008, but could cap the performance of 2009.


Crdit Agricole Group (MLA) Natixis (Financial Adviser) Latham & Watkins (Legal Adviser) Fichtner (Technical Adviser)

International Power (Sponsor)

See conventiona power an renewa e energy grap ic on page 16.

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15

Renewables


Eneop 2 Win Port o io 480MW P ase I 1,197 29 01 2010 Portuga

206MW Co gar Win Farm 680 31 03 2010 Austra ia

ermosoar stexso pa n

Eurus 250MW Win Farm 514 04 06 2010 Mexico

150MW A ta Win I Long-Term De t 477 03 03 2010 Unite States

192MW Wau ra Win Farm 448 18 02 2010 Austra ia

49.9MW Hu son Ranc Power I 390 13 05 2010 Unite States

Du e Energy Win Port o io Re nancing 377 24 05 2010 Unite States

150MW Ce ro Hi Win project 374 10 03 2010 Unite States

50MW He ioenergy II 372 06 05 2010 Spain

The renewables sector saw a lot of activity over the first half of 2010with 91 deals reaching financial close valued at US 13.69 billion.The latest half-yearly performance marked an improvementover H109 wherein 78 deals to the tune of US 12.93 billion wererecorded. How the year 2010 may end is contingent upon the USAsrenewable energy drive which saw it overtake Western Europeanmarkets such as Germany and Spain in 2009. Additionally, Chinasenthusiasm for renewable energy could very well trump the USmarket over the next couple of years.

Renewables finished 2009 with a total value of US$28.3 billiondown 24 per cent from US 37.3 billion noted at the end of 2008.Data projections suggest 2010 may match or even cap theperformance of 2009, given that following global financial crisis,stimulus packages of a number of governments include renewableenergy initiatives.

Overall, four US projects featured among the top ten deals toreach financial close. However, Portugals Eneop 2 Wind Portfolio480MW Phase I (valued at US$1.2 billion), Australia 206MW Collgar

Wind Farm (US 680 million) and Termosolar Astexsol 2 in Spain(US$523 million) were the top three projects by valuation to reachfinancial close.

Elsewhere in the table, a key Latin American project to reachfinancial close was Mexicos Eurus 250MV wind farm. However, thecontinent clearly has a lot of catching up to do and its largestmarket Brazils penchant for large-scale hydroelectric power iscertainly not helping.

In a complete contrast, the North American landscape hasbeen dominated over the last couple of years by the US market,especially for wind farm projects. Of the 36 North Americanrenewables projects to reach financial close in 2009, 31 were inthe USA valued at US 6.91 billion. Of these projects 24 were wind

farm initiatives. At the time of writing this report, the USA is deemedthe market leader in wind power according to the Global WindEnergy Council. In 2009, along with China, it added the most windcapacity thereby overtaking Germany. At end-2009, the total USWind Power capacity stood at 34,863 MW, according to the USDepartment of Energys National Renewable Energy Laboratory(NREL).

Altogether, the USA accounted for 22.3 per cent of total windpower capacity that existed globally in 2009. Chinese investmentmay alter this dynamic over the coming years, but US wind energyis likely to hold its own for the remainder of 2010 at the very least.The US government has been furthering wind power by awardingfederal cash grants in lieu of the 30 per cent investment tax credit(ITC), under the American Recovery and Reinvestment Act (2009),to projects wherein construction begins on or before December

31, 2010 and those projects that are completed before specifiedoutside date(s) up and until January 1, 2013.


Top 10 by Value

However a potential problem for renewables could arise in theshape of a buy American drive. In March, US Senator CharlesSchumer (Democrat-NY) and a group of Democratic Senatorsintroduced S. 3069, the American Renewable Energy Jobs Act.

The Act would amend the existing Treasury grant rules to makethe award of grants discretionary, to make grants subject tobuy American requirements, and to make the award of grantscontingent on the applicants creation and or preservation ofAmerican jobs.

The rise of non-western wind turbine manufacturers - particularlyChinese ones - is probably a main reason behind efforts in the USto extend buy American legislation to the wind turbine sector,although such local-content rules do not appear to be imminent.Paradoxically, it could harm those US firms that have so far bankedon cost advantages inherent in manufacturing in low-cost China.

By making the award of grants discretionary, the SchumerProposal raises serious concerns for potential financing parties anddevelopers. As a result, there has been a strong lobbying effort

against it. If adopted, it is uncertain how this would impact thedevelopment and cost effectiveness of US renewable energyprojects.

In summation, a US-China push could herald an exciting yearahead for the renewables projects. If India belatedly closes someof its projects rumoured to be in the pipeline, 2010 could be abumper year yet for the sector.

In terms of the type of renewable energy projects, a break-up offigures suggests that wind power dominates the market; as it hasbeen consistently doing since IJ commissioned the present dataseries in 2005. In H1 2010, wind power projects accounted for 29.2per cent of all renewables projects reaching financial close upfrom 19.6 per cent in H1 2009.

Next in line were PV solar energy (7.6 per cent) and Thermal solar (4.2per cent) for the year to end-June. Interestingly, the gap betweenconventional power and renewable energy project financemarket share also appears to be narrowing though the former stillleads. During H109 conventional power projects accounted for 64per cent of the market against 36 per cent for renewables. Thisnarrowed over H1 2010 to 55.1 per cent for conventional powerversus 44.9 per cent for renewable power.


BBVA (MLA) Deloitte (Financial Adviser) Garrigues (Legal Adviser)

Garrad Hassan (Technical Adviser) Acciona (Sponsor)

ee renewa e energy nrea own grap ic on page 16.


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F emis Sc oo s PPP 2,831 10 06 2010 Be gium

New Karo ins a So na University Hospita PPP 1,366 30 06 2010 Swe en

out mea osp ta , n te ng om

Turin Waste-to-Energy Faci ity re nancing 582 22 01 2010 Ita y

CRCHUM Montrea University Hospita Researc Centre 431 21 05 2010 Cana a

T iene-Sc io Hospita PPP 262 29 04 2010 Ita y

Ararat Prison PPP 223 27 05 2010 Austra ia

Roya Cana ian Mounte Po ice Regiona HQ PPP 219 22 04 2010 Cana a

Zoo e Vincennes PPP 194 24 02 2010 France

A u t Mater Hospita Extension PPP 184 23 03 2010 Ire an

Social infrastructure was among the few sectors to witness a risein investment over H1 2010, given that both before and after thecredit crisis, governments poured resources into social projects aspart of their respective economic stimulus packages. During the

year to end-June, 40 social infrastructure deals valued at US 9.74billion were recorded. This marked a 66 per cent rise over H109when 39 deals worth US 5.87 billion were noted.

Current indications are that the social infrastructure investmentvolume in 2010 will top the figure of US$12.5 billion noted at theend of 2009, though surpassing the 2008 investment volume ofUS$22.4 billion will be harder.

A further break-up of figures within social infrastructure investmentsuggests that akin to the last two previous half-yearly assessmentperiods, healthcare and education lead the way. Over H1 2010,healthcare saw 14 deals to the tune of US 4.04 billion reachfinancial close up from US 1.67 billion with the same number oftransactions in H109. Concurrently, education saw 14 deals worthUS 3.87 billion up from H109 figures of US 1.11 billion and 13

transactions as several UK projects pushed ahead to securefunding before the new government acted on BSF.

Western Europe, a global leader in social infrastructure publicprivate partnerships, lead the way in line with IJ analystsexpectations with the region accounting for seven of the top tenprojects in the sector.

Another noteworthy development is the decline in global defenceprojects, plummeting from four deals worth US$5.55 billion during

H108 to nil in H1 2010. Government and fire & rescue segments alsorecorded nil values. Elsewhere, the data series reveals that socialhousing projects have also taken a knock falling from a transactionvolume of US 1.31 billion in H109 to a mere US 58.1 million during

H1 2010. The total number of transactions also fell from three to oneover the stated period.

Overall, Belgiums Flemish Schools PPP (valued at US$2.83 billion),Swedens New Karolinska Solna University Hospital PPP (US 1.37billion) and UKs Southmead Hospital PFI (US$1.05 billion) were thethree leading projects by valuation. Beyond Western Europe, twoCanadian projects and an Australian initiative also find their placein the table.

Looking ahead, the UKs prominence in the sector is likely to diminishollowing its new Conservative & Liberal Democrat coalition

governments announcement of spending cuts. Most notablyamong these is the cancellation of the BSF programme. Impact ofthe British cuts would only be assessed in concrete terms once thegovernments public spending review is published in October.


Barclays (MLA) Grant Thornton (Financial Adviser) Addleshaw Goddard (Legal Adviser) o ac ona (Technical Adviser) Carillion (Sponsor)

Top 10 by Value

Global InfrastructureFinance ReviewSocial Infrastructure

See also social infrastructure subsector graphic on page 19.

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Telecoms

Telecoms totalled a mere US 0.36 billion during H1 2010, down from

US 2.61 billion over H109. However, valuation volumes aside, thenumber of deals have gradually risen in single figures from a singledeal during H108 to 3 and 4 over H109 and H1 2010 respectively.

The biggest deal by transaction volume came from Nigeria wherethe Helois Towers Expansion project reached financial close valuedat US 150 million. Russias MTS mobile networks financing (US 97billion) and Indonesias Kalimantan Fibre Optic financing (US$60billion) were other noteworthy telecoms deals to reach financialclose.

Overall, the sectors performance has been disappointing,especially given the fact that telecoms finished 2009 with a totalvalue of US 6.8 billion, an annualised appreciation of 39 per centover 2008 when a total value of US 4.9 billion was recorded. Lookingahead to H2 2010, there remains a very real possibility that rollouts

of broadband projects in Asia Pacific and Russia may improvetransaction volumes and number of deals, thereby recuperatingthe sectors performance as a whole.


He ios Towers Nigeria Expansion 150 04 02 2010 Nigeria

MTS Mo i e Networ s Financing 29 03 2010 uss a

Ka imantan Fi re Optic Financing 60 26 03 2010 In onesia

Hautes-Pyrenees Hig -Spee Networ PPP 18 02 2010 rance


Crdit Agricole Group (MLA) Rothschild / RBC Capital Markets / Grant Thornton

(Financial Adviser) Allen & Overy (Legal Adviser) Atkins / Cistra (Technical Adviser) AXA Private Equity / Vinci / SFR (Sponsor)

Top 4 by Value

Global InfrastructureFinance ReviewWater & Sewage


New Cairo Wastewater PPP 109 03 02 2010 Egypt

Aguas e Cascais PPP 108 31 03 2010 Portuga

In aqua Feira Concession PPP Re nancing 86 10 02 2010 Portuga

Post Trasvase Jucar - Vina opo Pipe ine 61 08 03 2010 Spain

The overall trend in the Water & Sewage sector during H1 2010has been one of decline in investment levels. This is reflected bothin the transaction volumes as well as the number of transactionsreaching financial close. Over the year to June-end, only fourwater & sewage projects reached financial close, a marked fallfrom the ten projects noted during H109, 12 for H108 and 18 for

.

Transaction volume for the first half of 2010 came in at US$0.36billion well below the US 1.07 billion noted over H109. This signifiesa year over year decline of 66 per cent. The sector ended 2009and 2008 with total volumes of US 5.9 billion and US 3.2 billionrespectively. It is difficult to fathom how the sector could replicate

volumes near enough these levels for 2010.

Spain closed five water transactions in 2009 worth US 366 billion,and the market makes its mark in H1 2010 data as well with thePost Trasvase Jucar Vinalopo Pipeline valued at US 61 millionreaching financial close in March. Investment activity has alsobeen recorded widely across the Middle East some of whichmay reach financial close over the remainder of 2010.

Overall, the three leading projects in the sector were Egypts NewCairo Wastewater PPP valued at US$109 million and PortugalsAguas de Cascais PPP and Indaqua Feira Concession PPPRefinancing initiative valued at US 108 billion and US 86 billionrespectively

Top 4 by Value


Millennium BCP / Grupo Santander (MLA) F9 Consulting / Grupo Santander (Financial Adviser) DLA Piper / Gide Loyrette Nouel / Baker & McKenzie /

Zulficar & Partners (Legal Adviser) Orascom Construction Industries / Aqualia (Sponsor)

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Mining & Metals


Pue o Viejo Mine , 30 04 2010 Dominican Repu ic

Lumwana Copper Mining Re nancing 400 09 03 2010 Zam ia

Boguc ans y Bri ge Loan Faci ity Re nancing 260 15 03 2010 Russia

Kooragang Is an termina Expension 232 14 05 2010 Austra ia

Minera Par Mine Re nancing 26 04 2010 Unite States

The mining sectors downslide in valuation terms continues wellinto the year coming in at US 2.36 billion for H1 2010 down fromUS$4.34 billion noted in H109; a depreciation of 46 per cent onan annualised basis. IJs latest data follows on from 2008 whensector valuation stood at US$14.9 billion for the whole year whichsubsequently fell to US 6.8 billion for 2009; an annualised fall of 54per cent.

The number of deals in the sector has also been steadily falling from23 in H108 to a mere 9 in H1 2010. The relative drop in commoditiesprices has contributed to the decline in investment in the sector

as activity in Asia Pacific and the Indian subcontinent contractedand knocked the sector as a whole. Allied factors also contributedto the lack of investment, especially in the case of Australia.

Former Australian Prime Minister Kevin Rudds Resource Super ProfitsTax (RSPT) proposal levied a 40 per cent tax on mining companies.Following his ejection from office, his successor Julia Gillard hasproposed a lower Mineral Resource Rent Tax (MRRT) pegged at 30per cent, ahead of the countrys general election scheduled for 21August. The new proposals also indicate that smaller iron ore andcoal companies, with annual profits below Aus 50 million (US 41.9million), will not be required to pay the new tax. However, both theintricacies of the proposal as well as the outcome of the Australianelection are far from certain.

Top 5 by Value


So the outlook for Australia and by default for the wider AsiaPacific region remains mixed. IJ expects the market to stabilisefollowing the Australian general election outcome as it would enduncertainty at the very least. However, growth is not expected untilat least until H1 2012.

Financiers preference for smaller deals as opposed to capitalintensive ones, which the mining sector demands, also knockedinvestment. In terms of specific projects, Dominican RepublicsPueblo Viejo Mine (valued at US 1.04 billion), Zambias LumwanaCopper Mining Refinancing (US 400 million) and Boguchansky

Bridge Loan Facility Refinancing (US 260 million) were the threeleading deals by valuation to reach financial close.


Socit Gnrale (MLA) Royal Bank of Scotland / Rothschild (Financial Adviser) Clifford Chance (Legal Adviser) Lahmeyer International (Technical Adviser) Barrick Gold Corporation (Sponsor)

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Rank Company Total US$ m Transactions Market Share (%)

Stone & We ster 7,631.45 14.80

2 Arup 7,364.69 3 14.28

3 At ns 4,178.06 5 8.10

4 Mott MacDonald 3,695.77 8 7.17

5 F c tner 2,689.83 4 5.226 Br ge armer & Assoc ates 2,661.00 5.16

= LBJ Mo ty Coor nator 2,661.00 1 5.16

8 Garra Hassan 2,570.38 8 4.98

9 Lenpromstroyproekt 2,132.84 1 4.14

10 C stra 1,633.72 1 3.17

Global Technical Adviser (Top 10 by Value)

Rank Company Total US$ m Transactions Market Share (%)

1 ExxonMo 6,042.40 1 6.16

2 O Searc 5,278.00 5.38

3 Gazprom 3,892.04 1 3.97

In epen ent Pu c Bus nessCorp

3,021.20 3.08

5 Exe t um 2,684.92 1 2.74

6 Santos 2,457.00 1 2.50

7 V nc 1,931.84 3 1.97

8 C ntra 1,916.57 2 1.95

9 Perenco 1,721.00 1 1.75

10 S ur Ho ng 1,490.00 1 1.52

Global Sponsor (Top 10 by Value)

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